Israel’s formal commitments are a fact – something both the White House and nervous Arab leaders were quick to point out. Netanyahu is first of all a pragmatist. And any attempt to reverse course on dealings with the Palestinians would immediately put him up against the powerful forces both within Israel and abroad that have driven the peace process as far as it is. There is a new Mideast reality, and that includes a place at the table for Yasir Arafat and the Palestinian majority he represents. But Arafat is said to be deeply anguished by Shimon Peres’s loss, and with reason. Even if Netanyahu wanted to push the peace process ahead, he would have to bow to the new power of splinter parties in Israeli politics. Israel’s Orthodox were the big winners. ““People forget that this is a Jewish country,’’ said Shlomo Aminov, one of the swing voters who gave Netanyahu the narrow win. The emergent right wing could bedevil his decisions on such hot-button issues as settlements, terrorism and the Palestinians’ place in Jerusalem.

Whatever Netanyahu really intends, Israel’s new voting system has sapped the government’s power. Designed by a group of Tel Aviv university professors to strengthen both major parties, it instead spread authority to narrow interests. For the first time Israelis voted separately for the prime minister and for the Knesset. The result was that Likud enters government with just over a quarter of the Knesset’s seats. Nearly half of the seats went to small parties, including the new, pro-immigrant Yisrael B’Aliya movement of former Soviet dissident Natan Sharansky (graphic). Conservative religious parties hold an unprecedented 20 percent of the seats.

On the peace issue, it won’t be easy for Netanyahu to please this powerful camp while not alienating the entire Middle East – and Israel’s protector, Washington. ““Our minimum expectation is that agreements made will be honored,’’ said one White House aide. As soon as the result became official, Netanyahu and his aides went into what one White House source called ““reassurance mode.’’ The new prime minister is ““deeply committed to continuing the peace process with the Palestinians and all of Israel’s neighbors,’’ he said through a spokesman. That seemed aimed partly at quieting markets fearful that a new, hard-line policy could end an economic boom brought about by the apparent end of Israel’s isolation. And Clinton, who had all but campaigned openly for Peres, hurried to reciprocate. As soon as the result was official, he invited the new prime minister to the White House – while teasingly congratulating him on his ““Israeli landslide’’ – less than 30,000 votes out of 3 million.

Soon, though, Netanyahu must begin to show his hand. He is unlikely to break much new ground in his first official declarations, but his cabinet choices will send a signal of moderation; hard-liners won’t get the defense or foreign-affairs portfolios. As a professed peacemaker, Netanyahu so far has mainly said what he will not do. He won’t give up the Golan Heights to win a peace treaty with Syria. That disappoints a White House that has invested heavily in the Syria talks – and would love to stage a ceremony on the South Lawn before Election Day. But the Syria talks were bogged down anyway. ““Assad is hopeless,’’ said Peter Rodman, a former National Security Council adviser to President Ronald Reagan. ““He had a chance with Labor and he wasn’t willing to pay the price.’’ Netanyahu also rules out considering a Palestinian state and negotiating over the status of Jerusalem – and says he would prefer not to meet with Arafat at all. That doesn’t leave much hope for progress on a final agreement with the Palestinians.

The settlement issue puts the newly empowered religious right squarely in conflict with U.S. policy. To authorize new settlements would put the government right back where Likud was during the Bush administration, when the White House threatened to withhold loan guarantees. Likud was bruised in that debate – especially when Secretary of State James Baker declared that Israelis must abandon the claim of a greater Israel. Baker actually barred Netanyahu, then a deputy foreign minister, from entering the State Department after Netanyahu accused the U.S. government of ““building its policy on a foundation of distortions and lies.’’ Netanyahu doesn’t want a replay. But a moderate increase in support for settlements won’t necessarily court that kind of censure. Quietly, some West Bank settlements have continued to grow slightly under the outgoing Labor government.

That’s why many Palestinians were cynical about the election result. For Arafat, the challenge now will be to contain the frustration of Palestinians who expected him to widen the agreement that gave the Palestinian Authority the right to govern Gaza and Palestinian towns on the West Bank. Netanyahu rejects any effort to limit Israel’s right to seek out its enemies wherever they might hide, raising the specter of a return to the days when Israeli soldiers with tear gas and rubber bullets confronted groups of stone-throwing Palestinian kids. Israel’s foes were quick to point out that the last Likud prime minister, Yitzhak Shamir, admitted after leaving office that he signed on to the peace process mainly in order to stall it. ““This is the same agenda,’’ said Sheik Sayed Abu Mesameh, a spiritual leader of the Islamic Resistance Movement (Hamas), which rejoiced in the election result. Netanyahu likely will acknowledge Palestinian frustration with a short-term fix: relaxing the border controls, put in place this year to protect against terrorism, which have impoverished the West Bank and Gaza.

The West Bank’s hottest flash point, Hebron, poses the same kind of threat. The Oslo deal calls for the withdrawal of all Israeli forces, but that has been delayed since March because of security concerns. If Netanyahu moves forward with the withdrawal, Orthodox settlers who revere the city as Abraham’s burial place will revolt. Another trigger could be Orient House, Arafat’s headquarters in East Jerusalem. Netanyahu’s supporters want it closed.

Even those who know Netanyahu well can’t completely explain his philosophy or predict what course he’ll take. Most expect a moderate path – a continuation of the peace process but at a slower, more complicated pace. ““The goal should be to preserve what has been achieved,’’ said Richard Haass, Mideast adviser to George Bush. That may not sound like much, but only recently an interim solution to the Palestinian question seemed like the best hope for taming the conflict. And Netanyahu seems far too nimble a politician to be trapped into fighting reality.

Although the margin of victory in the race for prime minister was paper thin, new electoral rules led to dramatic parliamentary gains for religious and single-issue parties.

New Knesset Left Right Wing: 52 Wing: 34 Religious: 23 New parties: 11 Labor Likud Shas Yisrael B’Aliya Meretz Moledet Nat’l Religious party Third Way Hadash United Torah Judaism United Arab List Old Knesset Left Right Wing: 61 Wing: 43 Religious: 16

Palestinian state: Ruled out. Israel will never cede authority over foreigh affairs and security; Jerusalem is nonnegotiable.

The West Bank: Settlements will be permitted to expand. Israeli troops will be sent into Palestinian-run towns to root out guerrillas.

Relations with Syria: In theory talks could go forward, but Israel won’t discuss returning the Golan Heights.

Relations with Jordan: Ties would be strengthened to build on a “strategic convergence” between the two nations.