The summer war between Israel and Hizbullah that took place between July 12th and August 14th was hardly a substantial war by any objective measure. Yet, it had deep consequences for the region and for Israeli politics. The war erupted against the political backdrop of deep overhaul of the political scene in Israel. The overhaul included the crushing of the right-wing ruling Likud party, the establishment of Kadima by then-Prime Minister Ariel Sharon and the transformation of the Labor Party into a party with a strong social-welfare agenda. The results of the March 2006 elections had Kadima emerging as the largest party with 29 seats out of a 120-seat parliament (The Knesset) and Labor as the second largest party with 19 seats. The creation of a ruling coalition of the two parties seemed to herald new hopes for the future both with respect to the Palestinians and Israelis. The success of Kadima meant that unilateralism emerged as the policy of choice offering hope on the Israeli – Palestinian front. Following the failure of negotiations during the 1990’s with the Camp David summit in the summer of 2000, the people increasingly came to view unilateral acts as the best way to ensure that Israel can continue to move forward, even when the Palestinians are ready to negotiate. These acts included the withdrawal from Lebanon in the summer of 2000 and the disengagement from Gaza in the summer of 2005.Leading up to the elections, the withdrawal from Lebanon was generally considered a success, bringing quiet to Israel’s north and taking the edge off Hizbullah’s claim to legitimate resistance. Disengagement, while increasingly problematic due to the barrage of Kassam rockets on Sderot, was perceived to have substantially improved Israel’s international standing, contributing to its overall security. Buoyed by the perceived success of these policies, Kadima and Labor were voted in to carry out a third withdrawal in the West Bank, thereby nearly completing the process of unilaterally determining Israel’s borders and coming very close to realizing the international vision of a division of the land between a Jewish state and a Palestinian state. The domestic political agenda became more civilian and social-economic. The rise of Amir Peretz to the chairmanship of the Labor Party, with his emphasis on the social and economic issues, was seen by large swaths of Israel’s public as ushering in a new age in which such issues would receive as much political attention as security issues. The election of Ehud Olmert to Prime Minister and the absence of former generals in any important ministry, including Defense, seemed to signal a new age of civilian politics. These messages were accompanied by what was seen as almost an irreversible defeat of the rightand its pessimistic visions of the future. Now, the summer war has radically altered this picture. Unilateralism and the plan to withdraw from the West Bank were the first and most prominent political casualties of the war. When Hizbullah breached the internationally sanctioned border to kidnap Israeli soldiers and when it became clear that it used the six years since Israel’s withdrawal to build its military force, the assessment of the unilateral withdrawal from Lebanon was overturned and no longer considered a success. Following the war, very few people in Israel are willing to turn over the West Bank to the Palestinians to what many believe would become a base for launching missile attacks against densely populated areas in the center of Israel. The collapse of unilateralism did not usher in a new era of negotiations. Now, there is merely a policy vacuum, given that no party, left, centre or right has realistic policy options to present on the Palestinian issue. The Right has been substantially strengthened. As the first anniversary of the Disengagement came to pass towards the end of the summer war, the Israeli Right felt vindicated in its dire predictions about the consequences of withdrawal.The weakness Israel showed in its summer campaign also brought again to the fore the ever-present Israeli sense of existential fear. Many outside Israel find it difficult to understand how a country that is nominally powerful can be so consumed by fear that the whole Zionist projectcould disappear overnight. But whether it is the burden of Jewish history or the constant threats spewed by Arab and Muslim leaders in the present, the existential fear is always there. Sometimes it is relegated to the back of the Israeli collective mind and sometimes it is propelled to its forefront. This sense of existential fear and the fragility of Israel’s existence have been brought to the fore by the war. When this fear is strong, so is the political right.The civilian and economic agenda has also taken a backseat, if not disappeared altogether. The high costs of the war, the reparations for the north, the future reconstruction costs, and the need to rebuild Israel’s military strength have made the 2007 budget into a security budget with almost no room for advancing social and economic issues. Even as the war exposed many of the social and economic problems in Israel and the gaps between those who could afford to flee the north and those who were left at the mercy of dysfunctional social services, it has robbed this agenda of its power. The civilian moment also disappeared. The phrase that “Israel is not Switzerland” is being heard again, meaning to imply that given Israel’s “neighborhood”, there is no room for an inexperienced civilian Minister of Defense. Amir Peretz initially embodied the rise of the civilian and social-economic agenda, but following coalition negotiations he chose to be Defense Minister, rather than taking a more socially oriented portfolio. Some suggested that his precedent setting nomination to the defense portfolio – despite his relatively scant military experience symbolized the new civilian moment of Israeli politics. But having presided over the war in a manner that was perceived as incompetent at best, Amir Peretz is today a diminished and embattled leader, and his political predicament, more than anything, symbolizes the end of the civilian moment.All this is taking place against a complete breakdown of faith in Israel’s leadership and its capability to assume the load of leading a nation that faces serious challenges, perhaps to its very existence. The crisis is so deep that at the same time that many Israelis are calling upon the Prime Minister and the Defense Minister to quit, they express no hope that their successors would be any better. The loss of faith in the leadership and the disappearance of a plan for action have led to political confusion that is manifested in political fragmentation. According to recent polls, if elections were to be held today, the Likkud would get 22 seats (up from 12 today), Lieberman’s party would get 20 (up from 11), Kadima 15 (down from 29) and Labor 15 (down from 19). The political system, always dominated by one or two large parties, numbering 30 to 50 seats, has never been this fragmented. Ehud Olmert’s government has been able to buy time and stave off the public protest by negotiatingLieberman’s entry into the coalition. The burying of the West Bank withdrawal plan has removed any real barrier to the entry of Lieberman’s “Israel Beiteinu” (Israel is our home) right wing party into the coalition government. It has also bought valuable political time for Olmert and helped Kadima position itself firmly in the center between Labor and Lieberman. However, this has not addressed the strong current of Israeli restlessness and dissatisfaction with Israel’s current leadership. The combination of a strong sense of the urgency and magnitude of the threats to Israel’s existence, together with the loss of faith in the competence of the leadership to lead Israel to safety, is responsible for much of the sense of despondency that is currently engulfing the country. Whether this dissatisfaction would be translated into an overthrow of the government remains to be seen, but with the situation in the Palestinian Authority in shambles and resistance rhetoric becoming stronger, Israel is under no pressure to produce any policies. Domestically, the existing leadership has lost the public’s trust, but the lack of any obvious alternatives is helping it stay in power. The present situation may appear unstable, but a force for change is yet to appear.Einat Wilf spoke at the Transatlantic Institute on the 30th October, 2006. This briefing is based on her comments. She is a Former Foreign Policy Advisor to Vice-Prime Minister Shimon Peres.