Israel has a government

38 days after their recent parliamentary elections, Israel has a government. That link goes to a JPEG file with pics and party affiliations of all the ministers. So it’s 12 Kadima members, seven from Avoda (Labor), two Pensioners, and four from Shas. (Amazing how similar the neatly-groomed bearded men of Shas look like their Hamas counterparts.)
Jonathan Edelstein says he expects this government will be fairly stable:

My primary reaction to the cabinet lineup (other than being unutterably glad that this idiot [i.e., Avigdor Lieberman] isn’t in it) was how much of an apparatchiks’ gallery it is; other than Peretz at Defense, Rafi Eitan in his new senior citizens’ portfolio and possibly Yuli Tamir at Education, I can’t see any of them making any radical or controversial policy changes..

Here is the list that HaAretz published of the eight agreed policy guidelines that will form the basis of the government’s work.
Crucially, in terms of the prospects for peacemaking, the second and third points are these:

2. The government aspires to bring about the definition of the state’s permanent borders as a Jewish state with a Jewish majority, and as a democratic state, and will act to do so through a negotiated agreement with the Palestinians on the basis of mutual recognition, existing agreements, the principles of the road map, an end to violence and the disarmament of the terror organizations.
3. The government shall endeavor, as stated, to conduct negotiations with the Palestinians … but if the Palestinians do not behave as stipulated in the near future, the government shall act even in the absence of negotiations and an agreement with them … The government shall determine the borders of the state. The Israeli settlement in Judea and Samaria must be reduced.

“The near future” makes it sound as though they’re not going to give the Palestinians very long at all to respond on this. Note also the non-specificity of saying “the Palestinians” throughout, rather than “the PA”.
Actually, I still think there’s a fairly high probability that the system of two parallel unilateralisms, on both the Palestinian and Israeli sides, that we saw throughout the past 15 months will continue and become more engrained in the practice of both leaderships, at least for the coming couple of years.
As part of this, I believe there’s a distinct possibility the Olmert government might act fairly soon (if still discreetly) to urge Washington to ease up some on the efforts to strangle the Palestinian administration through financial/administrative means.
It is only the Israeli government that is in a position to persuade Washington to do this– and of course, Israel hasn’t had a government able to do it ever since their election campaign started there in late February.
It truly is not in the interests of either the Israelis or anyone else to see an exacerbation of the pain in the Palestinian community. Added to which, using basic international aid payments and the Palestinians’ own tax revenues as a lever to force compliance is quite immoral… And then– they seek compliance with what? with a ‘road map’ that now really doesn’t exist and that Olmert has never believed in?
Anyway, the weeks ahead will tell. let’s check back on this issue in, say, four months, and see how matters stand then.
… One last point: The Israelis got their coalition government formed 38 days after their election… The Palestinians, operating under the difficult logistic conditions imposed by the Israeli occupation authorities, got theirs formed 63 days after their election… And in US-occupied Iraq? Well, it is now 140 days— exactly 20 weeks– since their election, and they still don’t have a government. Ain’t American military occupation a wonderful thing? (Heavy irony alert at the end there.)