Jerusalem: Binyamin Netanyahu cited “five central principles” for his new coalition government when he addressed subdued campaign activists shortly after it became clear that his party had taken a battering in the election.

Number one was “to prevent Iran from obtaining nuclear weapons”. Number three referred to an “aspiration to achieve real peace” with the Palestinians. The others were economic responsibility, equality in military conscription and the cost of living.

Netanyahu, however, has emerged from the election in a much weaker position to pursue his agenda. The rightwing alliance he forged with the former foreign minister Avigdor Lieberman won only 31 seats in the 120-place parliament, with Netanyahu’s party’s share weighing in at around 20. That compares to 27 in the last parliament. Netanyahu retained his post, wrote Aluf Benn on Haaretz, “but only after a painful slap in the face from voters”.

The coming days and weeks will be spent attempting to assemble a viable coalition government from nine parties now in the Israeli parliament, the Knesset (it is inconceivable that three Israeli-Arab parties, which won 12 seats, would be invited to join a ruling coalition).

It is inevitable that Netanyahu will have to make some concessions to his new coalition partners, and the final composition of the government will help determine its approach on his “central principles”.

On Iran, significant change is not expected in the Israeli government’s stance. The hawkish rhetoric of last year has given way to a more modulated tone, but Netanyahu still regards the Iranian nuclear programme as an existential threat which must be halted by military action if sanctions and diplomacy fail to produce results. The key question is whether Israel acts unilaterally or whether it falls into line with the United States.

The issue of Iran barely figured in the election campaign. Aside from Netanyahu, the main party leaders said little on the subject “so it’s very hard to predict how this will figure in coalition discussions”, said Emily Landau of the Institute for National Security Studies.

With speculation centring on the prospects of a centre-right coalition, as opposed to a right-extreme-right-religious composition, there may be “more moderate elements” in the government that could act as a restraint, said Landau. But “Netanyahu moved the timeline to the spring or summer of 2013, and we won’t hear strong voices until then,” she added.

Amos Harel, defence correspondent for Haaretz, wrote, “With a coalition that will squint towards the centre, it seems the chances of an Israeli attack, one that is not co-ordinated with the Americans, are shrinking significantly. In the Iranian context, even though you won’t catch anyone among the top brass in the IDF admitting it out loud, you can bet that at the general staff there were many sighs of relief as the election results came in.”

But the Iranian-born analyst Meir Javedanfar predicted nothing would change. “Netanyahu’s stance is based on rhetoric, on threatening military action, as a way of maintaining international focus on the Iranian nuclear issue. The results of the election won’t change that. In any case, a decision to attack Iran is extremely unlikely to be taken in Jerusalem rather than Washington.”

The Israeli public, he added, did not want to “see a nuclear armed Iranian regime. But people don’t believe that the country is on the verge of annihilation. For Yair Lapid (whose party came second in the election), Iran is not a priority — and maybe that’s one reason why he did so well.”

A centre-right coalition could have a more significant impact on the moribund peace process, although there is also scepticism.

Lapid gave an interview to the AP last week, in which he criticised Netanyahu’s failure to hold meaningful talks with the Palestinians.

He would not be a “fig leaf” for a hardline position taken by the next government, he said. He favoured withdrawing from smaller outlying settlements in the West Bank but opposed dividing Jerusalem, saying the Palestinians should relinquish their claim on the eastern half of the city.

A partnership with Lapid “may have a softening effect (on Netanyahu) but it’s unlikely to bring major change,” said David Newman of Ben Gurion University’s department of politics. “Even though Netanyahu’s been hit very hard, he’s still going to be prime minister. And his own MPs are now much more rightwing, and will put a lot of pressure on him to continue his pro-settlement policies.”

Among Palestinians, “no one is jumping with joy”, said Hanan Ashrawi of the Palestinian Liberation Organisation executive committee. The Israeli elections would not produce major change, she told a press conference in Ramallah. “We do not think that peace is on the horizon. I do not expect a miraculous transformation in Israeli policy.”

Regardless of Netanyahu’s strength or weakness, or the composition of the next coalition, there would be no breakthrough in the peace process until there was a “credible interlocutor” on the Palestinian side, said Amotz Asa-El of the Shalom Hartman Institute. “The international community plays a game of make-believe, but they watch (the region) with trepidation and they know the truth. If we signed a deal (with the Palestinians) now, we would instantly have rocket launchers and all kinds of Al Qaeda types in the West Bank.”

By arrangement with the Guardian