After losing 26 of its then-38-seat bloc in 2006, Likud climbed out of political oblivion on Tuesday to grab hold of 27 seats in the new government—one shy of Kadima’s 28. With right-leaning parties winning a 65-55 majority over the left in the election, Likud Chairman Benjamin Netanyahu stands the best chance of replacing Ehud Olmert as Israel’s next prime minister.

In 2006, the Israeli electorate seemed more concerned about economic issues. This time around, even though the global economy is tanking, national security was clearly the hot-button issue. And after public support for unilateral withdrawals from southern Lebanon and Gaza resulted in two wars against Iranian proxies, it’s hard to find fault with the current sentiment.

In many ways, Israel’s swing to the right can be seen as a referendum on the futility of the Oslo peace process. Israelis are simply fed up with the concessions-for-terror “strategy” of the past 15 years.

This has not sat well with the new administration in Washington, which is intent on jump-starting the faltering Arab-Israeli peace talks. Yesterday, the Jerusalem Post cited a source on Capitol Hill as saying “there would be great unease” in the Obama administration if Netanyahu presided over a right-wing coalition. When Netanyahu served as prime minister during the 1990s, the Post noted,

he had a troubled relationship with many of the American officials who served under then President Bill Clinton, several of whom are returning to office under Obama.Dennis Ross, Clinton’s Middle East envoy and likely to be a top regional representative, described Netanyahu as “overcome by hubris” after his first election to the premiership and recalled him being “nearly insufferable, lecturing and telling us how to deal with the Arabs” in his book on the Oslo peace process.

We have written for some time about the inevitable collision of interests between Washington and Jerusalem. That is happening before our eyes.

Meanwhile, the Arab street views Likud’s resurgence as an Israeli endorsement of war and extremism over peace. In Ramallah, Palestinian Authority Chairman Mahmoud Abbas is calling on world leaders to shun Likud the way they did Hamas after the 2006 Palestinian elections.

This is the same Mahmoud Abbas, remember, who pinned the blame for the recent Gaza war squarely on the shoulders of Hamas. He wanted Israel to crush Hamas so that his Fatah faction could return to power in Gaza and restore a Palestinian unity government over which he would preside.

When it became clear that Israel would not topple the Hamas regime, however, Abbas reversed course and denounced Israel’s bombardment, even as Hamas fighters used the war as cover for their cold-blooded torture of hundreds of Fatah loyalists suspected of collaborating with Israel.

Hamas’s survival during the Gaza war significantly boosted its political power and stature among Palestinians in Gaza and the West Bank, as recent polls have indicated.

Now, in a desperate attempt to remain relevant within Palestinian political circles, Mahmoud Abbas is using Israel’s right-wing swing as an excuse to cut all ties with Israel in order to reunite with Hamas. His political survival depends on it.

“Despite the violence by Hamas gunmen against Fatah activists in Gaza since the Israeli offensive,” Time wrote yesterday, “many in Fatah view their movement’s only hope of re-establishing a leading role in Palestinian politics as joining a unity government with Hamas—and beginning to directly challenge the Israeli occupation in the West Bank” (emphasis mine throughout).

Thus, even as Washington worries about the possibility of a Likud-led government in Israel, it turns a blind eye to the Hamas-led Palestinian unity government that is now forming next to Israel.

To many in his own movement, Mahmoud Abbas “gambled everything on the willingness of the U.S. to press the Israelis to deliver a credible two-state peace solution and lost,” Time wrote.

Now many of those in Fatah are inclined to bet on a third intifada. … [I]t will not have been lost on Fatah activists that Hamas’s more confrontational stance has forced the Israelis, however reluctantly, to the negotiating table, as in the case of the Egypt-brokered Gaza-truce negotiations.

Three years ago, on the Key of David television program, Gerald Flurry said it appeared Hamas was “about to get control of the Palestinians.” Three weeks after that program aired, Palestinians elected a Hamas majority into their legislative council. Today, Hamas is in the final stages of its takeover.

At the outset of the recent Gaza war, even as Hamas was getting pounded, we said that if Hamas survived, it would win. And a win, we wrote, would mean Hamastan would “remain at the front line of the Palestinian struggle against Israel, garner more popular support throughout the Arab world, receive international legitimacy and enjoy the rapid advancement of its power and influence, both politically and militarily.”

That has happened. As Time wrote yesterday, the Gaza war “cemented the stature of Hamas as the dominant political force among Palestinians.” It is now flexing its newfound strength in order to pull the Fatah-led faction back into the Palestinian fold.

On Wednesday night, according to Ma’an News Agency, a Fatah parliamentarian and an aide to Mahmoud Abbas met with a Hamas delegation in Cairo to discuss the Gaza ceasefire and reconstruction, the politically motivated arrests and torturous tactics employed by both factions, the Palestinian media incitement and the outcome of the Israeli election. These talks were held in advance of a more comprehensive dialogue to be held between both parties later this month. Memri reported that both sides have already agreed to stop the media war.

Momentum is building for a Hamas-led Palestinian unity government. Watch for it.

It will also be important to watch how fast the relationship between Washington and Jerusalem deteriorates. This will cause Israel to turn to Germany for help in solving the Middle East conflict, which is prophesied.

Then there is Israel’s new government. Besides the additional strain it will bring into the U.S.-Israeli relationship, its formation will inevitably add fuel to an already raging Palestinian inferno, particularly if the new government includes Avigdor Lieberman’s “Israel Is Our Home” party. Netanyahu’s advisers have indicated that Likud wants to build a national-unity government rather than settle for a right-wing coalition. But on the day after the election, both Netanyahu and Tzipi Livni immediately began courting Lieberman’s support.

In the short run, especially following the Gaza offensive, a stronger Israeli government may bring a certain amount of security and stability to the region. But Bible prophecy says it won’t last.

In Hamastan, and in Tehran, preparations are well underway for the next intifada.