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Michael Bell served the Canadian government in Israel on three occasions stretching from 1975 to 2003, twice as ambassador.

Benjamin Netanyahu has pulled off a stunning election win, defying each and every poll. This will have broad consequences among Israelis, Palestinians and Western governments.

His right-wing Likud Party garnered 30 of 120 Knesset seats against 24 for the centrist Zionist Union (the Labour Party and its smaller ally, Hatnuah), previously thought to be in a dead heat.

The Prime Minister ran an extraordinarily effective, if remarkably rough, campaign. His focus on the Iranian threat, his speech to the U.S. Congress and his last-minute declaration that he would never tolerate a Palestinian state seem to have worked.

He will have no difficulty putting together a solid centre-right coalition, leaving the ultra-orthodox parties out in the cold and thereby ensuring that his secular reforms, such as a common school curriculum, are implemented.

The visceral controversies provoked by Mr. Netanyahu resulted in the highest voter turnout in recent memory, at 72 per cent. If he completes a full term, he will become Israel's longest-serving prime minister, surpassing Israel's founding father, David Ben-Gurion.

Both the far right and left have been weakened. But the Arab parties, running as a single entity, the Joint List, won 14 seats, making it the third party among the 10 that will be represented in the Knesset.

Monumental challenges face Mr. Netanyahu on both the domestic and foreign-policy fronts. He portrays his policies and practices as vital to Israel's well-being, and ultimately to its survival as a Jewish state. This fear card was played during the election campaign and alienated many. He will now have to deal with the consequences.

To encourage right-wing supporters to go to the polls, he took advantage of what was correctly predicted as an electoral breakthrough for Palestinian Arab citizens of Israel. He called on potential Likud voters to get to the polls to counterbalance what he characterized as the "Arab threat."

Leftist Israeli journalists are now accusing him of being an unabashed proponent of a racist apartheid state. One can expect members of the Joint List to take their cue from the Prime Minister's language.

Feelings will be raw, the language acerbic and confrontation inevitable, whether or not the Joint List holds together, its membership ranging as it does from communist to Islamist.

On Monday, the day before the election, Mr. Netanyahu ruled out the two-state solution by which a Palestinian state would have been created within the West Bank and Gaza, thereby establishing two states for two peoples.

For many, this was not a surprise, given ongoing Israeli settlement construction and infrastructure development in the West Bank. Israeli settlers now total 650,000 in the disputed land of the West Bank and East Jerusalem, according to The New York Times.

Misgivings about Mr. Netanyahu's commitment to the two-state solution were reinforced by last year's collapse of a peace initiative driven by U.S. Secretary of State John Kerry. Now Mr. Netanyahu has come clean on something that had heretofore been a suspicion.

Palestinian reaction is one of intense disappointment. Under a government led by Isaac Herzog and Tzipi Livni of the Zionist Union, Palestinians would have had an Israeli government sympathetic to their most basic requirements, even if that government's ability to deliver, given settler opposition and the reigning chaos in the Arab world, rendered comprehensive action moot.

Under Mr. Herzog, Israeli governance in the West Bank would almost certainly been more responsive to basic Palestinian requirements. There would have been recognition that the Palestinian need for dignity would require political progress rather than simply an improvement in material wellbeing. Tax revenues withheld by Israel for perceived Palestinian transgressions, and other seemingly punitive measures, would have been improbable under Mr. Herzog.

The Palestinian Authority, discouraged, angry and despondent, will now likely hit back where it can. It will not give up security co-operation with the Jewish state or, as an institution, resort to violence. But it will use every other means at its disposal. Most dramatically, it can be expected to vigorously pursue attempts to bring Israel before the International Criminal Court for war crimes.

Western countries are certain to oppose this war-crime venture, but Israel's international relations are likely to deteriorate. Mr. Netanyahu's 2009 pledge to permit a two-state solution kept European doubters of Israeli intent at bay. There will now be no "business as usual." European commercial restrictions and enforcement of rules of origin and will be used to underscore concerns about what is increasingly called the "illegality" of the occupation.

Prime Minister Stephen Harper may be sanguine about the results, given the close relationship he shares with the Israeli Prime Minister, but the administration in Washington will take no solace, particularly given that President Barack Obama apparently sees Mr. Netanyahu's recent speech to Congress as a personal insult.

These challenges would give the ablest of leaders pause for thought, but Mr. Netanyahu has proven himself a master of strategic dilemmas in the past and may well prove so again.