A coalition agreement with the Yisrael Beitenu party has been signed by Benjamin Netanyahu, the designated Israeli prime minister and leader of the Likud party.
The deal says that Avigdor Lieberman (photo, from bbc.co.uk), Yisrael Beitenu’s leader, would be foreign minister, Israel Radio reported on Monday.
This agreement is the first step towards establishing a new coalition government.
After days of negotiations, Yisrael Beitenu, which takes a hawkish, nationalist line on domestic and security policies, signed an initial agreement naming Mr Lieberman as the incoming foreign minister, said an official from the party.
With the agreement, Yisrael Beitenu is also given charge over the ministries of internal security, infrastructure, tourism and the integration of new immigrants.
Mr Netanyahu has a deadline, imposed by Shimon Peres, the Israeli president, to form a cabinet by April 3.
In order to achieve a majority within Israel’s 120-seat parliament, the two parties are poised to secure agreements with other parties.
As both the Kadima and Labour party have refused to join his government, Mr Netanyahu, who served as prime minister from 1996 to 1999, is likely to form a cabinet dominated by conservatives.
Al Jazeera’s Mike Hanna in Jerusalem said: “Seeing how the government is set up and how the US administration is beginning to position itself, combined with the demands of the Palestinians between these factors, it’s very difficult to see anything but a long period of wrangling and anger as well as little progress in peace negotiations.
“The important point to note is that Yisrael Beiteinu agrees to a two-state solution, perhaps different from the kind of two-state solution that Palestinians might envisage.
“Lieberman’s wants a pure Jewish state and anyone who doesn’t pledge an oath of allegiance to Israel must be deported to another state alongside, which he sees as a Palestinian state”, he said.
Mr Lieberman’s appointment as foreign minister raised concerns that Israel’s international ties will be harmed.
He has been accused of being a racist demagogue because of his plans to require loyalty oaths from Israeli Arabs as a pre-condition for gaining citizenship.
A prominent role for Mr Lieberman and a narrowly based government could put Mr Netanyahu (photo, from aljazeera.net) on a collision course with the administration of Barack Obama, as the US president has pledged to pursue an Israeli-Palestinian peace deal.
In the 120-member parliament, Yisrael Beiteinu won 15 seats. The party wants to trade land where Israeli-Arab citizens live in exchange for illegal Jewish settlements in the West Bank in any peace deal with Palestinians.
Despite the deal with Mr Lieberman’s party, Mr Netanyahu’s deputies are continuing efforts to form a broad-based coalition by winning support from Tzipi Livni, the outgoing foreign minister and Kadima leader.
As a condition for joining any government, she has demanded Mr Netanyahu to commit to US-backed talks with Palestinians for a two-state solution.
And she demanded a power-sharing arrangement in exchange for joining a government alongside him.