Nov. 5 (Bloomberg) -- Israeli leaders have become accustomed to President George W. Bush's reticence to push them into making tough decisions. In Barack Obama, they are bracing for a president who may not be so accommodating.

Obama's plan to engage Iran in direct negotiations over the Shiite Muslim state's drive to enrich uranium to produce nuclear weapons could limit Israel's option to use military force to block the program. And his pledge to be actively involved in peace talks between Israel and the Palestinians could lead him to exert pressure against settlement-building and travel restrictions on the Palestinians in the West Bank.

``There could be more pressure on Israel to take more risks, like removing security checkpoints in the West Bank,'' said Efraim Inbar, director of the Begin-Sadat Center for Strategic Studies at Bar-Ilan University near Tel Aviv. ``The Iranians will exploit Obama's willingness to talk to them to play for time.''

As Obama prepares his transition, Israeli politics are in a state of limbo brought on by Foreign Minister and Kadima leader Tzipi Livni's inability to form a governing coalition. The move sparked national elections, which will be held in February 2009.

Opinion polls show Livni and Likud opposition leader Benjamin Netanyahu in a tight race. A poll in the Haaretz newspaper on Oct. 31 showed Likud and Kadima winning 31 seats each in the 120-seat parliament.

Gaza Withdrawal

Obama's dealings with Netanyahu probably would be frostier than with Livni. The Likud leader, informally known as Bibi, opposed Israel's withdrawal from Gaza in 2005 and is against talking to the Palestinians about Jerusalem, which both sides claim as their capital.

``There's a good chance that relations between Obama and Bibi will not be healthy,'' said Roni Bart, a research fellow at the Tel Aviv-based Institute for National Security Studies. Livni would enjoy a smoother rapport because of her ``more moderate'' views, he said.

Through spokesman Yossi Levy, Netanyahu said of Obama that ``I am certain that we will work together to bring about peace, security and prosperity to the region.''

Livni strongly supported Israel's exit from Gaza in August 2005 and as foreign minister has been responsible for negotiations with the Palestinians over a comprehensive peace agreement.

Reaction

Livni said today that Israel hoped for ``close ongoing strategic consideration with the new administration.'' Speaking of Obama's July visit, she said in an emailed statement: ``The Israeli people were impressed with his commitment to the peace and security of Israel.''

When Obama visited Israel in July, he said he would not wait ``until a few years into my term or my second term'' to get the Israeli-Palestinian peace process moving.

He has also said that Israel will have to make concessions if it wants to reach an agreement with the Palestinians over the status of Jerusalem, the fate of Palestinian refugees and the borders of an independent Palestinian state. ``Israel will have some heavy stones to carry,'' Obama said in remarks to the American Israel Public Affairs Committee in Washington in May.

In addition to Israel's political stalemate, Obama will have to decide how to deal with the Islamic Hamas movement, which seized control of Gaza in June last year, routing the forces of Palestinian Authority President Mahmoud Abbas. Hamas, which had won parliamentary elections in January 2006, refuses to recognize Israel and has said it will not abide by previous Israeli-Palestinian agreements.

Internal Disputes

``With a new administration this is a very suitable time for the Palestinians to solve their internal disputes,'' said Ziad Abu Zayyad, a former minister in the Palestinian Authority. ``If we are not unified, Obama will put the blame on the shoulders of the Palestinians.''

While Israel sees its relationship with the U.S. as its greatest strategic asset, relations haven't always been harmonious. When Netanyahu was prime minister between 1996 and 1999, he argued with then-President Bill Clinton over peace moves with the Palestinians. He also tried to galvanize Republicans in Congress to undercut Clinton's demands.

There has been more unanimity among Israeli leaders on Iran than on the Israeli-Palestinian conflict or talks with Syria.

Successive Israeli leaders have supported tough sanctions against Iran as a means of halting its nuclear program, while never ruling out the possibility of a military strike. The option of sending war planes to bomb nuclear reactors in Natanz and Bushehr may recede if Obama begins talking to Iran.

``Israel should initiate discussions with the Americans to ensure its interests are safeguarded when the U.S. does engage Iran,'' said Shlomo Ben-Ami, who served as foreign minister in the government of Ehud Barak from 2000 to 2001.

Up at Night

Obama has raised concerns in Israel that he will be more sympathetic to the Palestinians than was Bush.

``To be honest, Obama doesn't make us sleep well at night,'' Eitan Haber, who was a senior aide and negotiator for former Prime Minister Yitzhak Rabin, wrote in the Yediot Ahronot newspaper last month. ``We are about to see a president who has nothing to do with Judaism, Jews, and the State of Israel.''

Alon Pinkas, a former Israeli consul general in New York, is comforted by Obama's choice of advisers, who he says are sympathetic to Israel's needs. One example is Dennis Ross, who served as a top Mideast peace negotiator under Clinton. ``Obama is surrounded by Jewish advisers,'' Pinkas said.

Ben-Ami says he is confident Obama will not make decisions that undercut Israel's strategic interests.

``America knows very well, including Obama, that Israel can't accept Palestinian refugees,'' he said, referring to a key Palestinian demand that refugees who left in 1948 and 1967 be allowed back into Israel. ``No one is going to push Israel to make unreasonable concessions.''

To contact the reporter on this story: Peter Hirschberg in Jerusalem at phirschberg@bloomberg.net

Last Updated: November 5, 2008 06:47 EST