Next Wednesday will be a pivotal day in Israeli politics. The verdict in Avigdor Lieberman’s fraud and breach of trust case will not only determine the fate of one of the most powerful men in the country, it could also have a profound effect on the coalition’s future and on Prime Minister Benjamin Netanyahu’s flexibility in pursuing the diplomatic process with the Palestinians.

An acquittal will mean that Mr Lieberman, who resigned last year as foreign minister, will return to frontline politics. If convicted, he will be forced to leave the Knesset and, if he receives a prison term, he will not be allowed to run for re-election for seven years after the end of his sentence, effectively ending his political career.

If acquitted, it is unclear whether Mr Lieberman will return to the Foreign Ministry. At his insistence, the position was not filled pending his return, but there is a possibility of a mini-reshuffle with Finance Minister Yair Lapid moving to the Foreign Ministry and Mr Lieberman replacing him. Whatever his position, he will struggle to re-establish himself as the number two in the cabinet, which now includes powerful new ministers such as Mr Lapid, Economics Minister Naftali Bennett and Justice Minister Tzipi Livni — Israel’s lead negotiator with the Palestinians.

The other pressing political issue will be the future of Mr Lieberman’s party, Yisrael Beiteinu, and its alliance with Likud. Although they ran together in the elections, moves towards a formal unification remain on hold. Three developments of the past two weeks do not bode well for future co-operation. These are the failure of Mr Lieberman’s candidate to win the Jerusalem mayoral elections; Mr Netanyahu’s overturning of Mr Lieberman’s boycott of the United Nations Human Rights Council; and the opposition of Yisrael Beiteinu to the release of Palestinian prisoners.

If Mr Lieberman is forced out of the Knesset, he will continue to exert influence over his party, at least for a while, and will most likely oppose uniting Likud and Yisrael Beiteinu.

The presence of an obstructionist party within the coalition will hamper Mr Netanyahu, while Yisrael Beiteinu’s departure from the government will leave Likud significantly weakened .