Israel is expecting a renewed push to restart the peace talks with the Palestinians now that the American midterm elections are over. According to sources close to Prime Minister Netanyahu, he will agree to a new form of building freeze in the settlements.
Peace talks with the Palestinians ground to a halt a month and a half ago when the ten-month moratorium on building in the West Bank ended.
Mr Netanyahu since then has steadfastly refused demands both from within Israel and the international community to renew the freeze, despite a series of offers and inducements from the Obama administration.
Among the offers was an American commitment to supporting a continued presence of Israeli security forces along the Jordan River. One idea was to allow Israel to lease the area for an undefined period.
While still refusing this week to commit to any change in his policy, sources close to Mr Netanyahu have acknowledged that he is aware that now that the midterms in America are over, the administration will increase its pressure and Israel will find it hard not to agree to a new settlement freeze in some form.
In the next few weeks, most of the prime minister's political efforts will be focused on passing the two-year state budget through the Knesset but, after that, he will have to come up with a diplomatic solution which would very likely cause the right-wing parties in his government to quit the coalition.
Another source of pressure on the prime minister is his left-wing coalition partner, the Labour Party. While senior figures in the party have been threatening for months to leave the coalition if peace talks are not resumed, this week the threat became more serious as two of the party's ministers announced that they would be challenging Defence Minister Ehud Barak for the leadership. Avishai Braverman and Yitzhak Herzog both called for Mr Barak to step down and for the party to appoint an interim leader until new leadership primaries take place. The ministers have accused Mr Barak of keeping Labour in the coalition despite no advance in the peace process.
The Labour leader is Mr Netanyahu's closest ally within the cabinet, undertaking many of the functions of the foreign minister, including the dialogue with the Obama administration. Mr Barak travels to Washington every few weeks on the prime minister's behalf and, without Labour, Mr Netanyahu would be left in his coalition with only right-wing parties opposed to any concessions to the Palestinians.
Mr Barak responded to the challenge to his leadership by saying that the party's constitution allows him to stay leader for another two years, but the prime minister's advisers believe that the only way to prevent a full-blown revolt within Labour ranks and preserve Mr Barak's leadership - at least for a few more months - is a speedy return to the peace talks and probably a change in the coalition's make-up.
To this end, the prime minister has resumed contact with the leaders of the main opposition party, centrist Kadima. After months of no talks, he met with Kadima Leader Tzipi Livni, and another meeting is expected to take place soon. No real negotiations have yet taken place regarding a coalition deal in which Kadima would enter the government in the place of right-wing parties, but both sides have confirmed off the record that Mr Netanyahu is laying the groundwork.
Meanwhile, the Palestinian Authority has ramped up its threats to bypass the negotiations and establish an independent state unilaterally.
In a meeting with the Egyptian Foreign Minister in Ramallah last Thursday, President Mahmoud Abbas said that "we are prepared to return to the negotiating table the moment Israel freezes the settlements", but added that the Palestinians are also exploring other options including a request from the UN Security Council to unilaterally recognise an independent Palestinian state. He said that such a move could happen "in a matter of months".