When the two-state solution was first proposed in the Middle East in the early 1970s it was envisaged as a deal between a Labor Party-led government on the Israeli side and the PLO led by Fatah on the other. Even as it was first being proposed in 1973 it was almost too late. On December 31, 1973 elections demonstrated that the brand new Likud was a competitive challenger to the ruling Labor Party. In May 1977 Menahem Begin, the leader of the 1940s Irgun Zvai Leumi (National Military Organization) or Etzel was elected prime minister at the head of the Likud. He simultaneously went about negotiating peace with Egypt and colonizing the West Bank and Gaza with Jewish settlements. A Labor-led government without the Likud would not return to power for fifteen years.
Labor coalitions were in power for six years out of that decade. But starting in 1996 both Labor and its more dovish coalition partner Meretz began losing seats. By 2009 they had lost three-fourths of the seats they had when Rabin formed a government in 1992. That year--1992--was the only year since 1977 that the Center-Left had more seats than the Right and the religious parties. Barak in 1999 decided to build a broad coalition with the religious parties. These parties deserted his coalition as soon as he departed for Camp David in July 2000--even before he made his radical concessions on Jerusalem and borders.
In December 1987 Hamas was formed as an Islamic resistance organization from the Palestinian branch of the Muslim Brotherhood. For the first time since the mid-1930s the Palestinians had a real ideological choice between two separate organizations. A year later the PLO finally met Washington's conditions for a dialogue. Yasir Arafat publicly accepted UN Resolution 242 as the basis for peace negotiations and rejected terrorism (or maybe it was tourism--Arafat's accent was rather heavy). Because Hamas relied on the Hezbollah formula of providing badly-needed social services in order to win public support and Arafat's Fatah relied on Western economic aid to buy loyalty, Hamas began to gradually surpass Fatah in popularity. Hamas and Palestinian Islamic Jihad, an Iranian-supported organization, conducted a much more effective armed struggle than the PLO ever had. And the Oslo process failed to either end Israeli settlement in the Palestinian territories or improve the economic situation of most Palestinians. This forced Arafat to return to terrorism in order to maintain his political legitimacy. This return ended the Oslo process and resulted in an Israeli reconquest of the West Bank in 2002.
In 2004 as a result of Israeli targeted killings of the Hamas leadership, Hamas opted for a mainly political approach supplemented by terrorism--the strategy of the IRA in Northern Ireland in the 1980s and early 1990s. Hamas enjoyed a number of election successes culminating in the January 2006 victory in the Palestinian legislative elections. Unlike the PLO, Hamas refuses to recognize Israel's right to exist but it is willing to conclude a long-term truce with Israel on the same basic terms that the PLO was offering for a peace treaty.
Kadima, the political party founded by Sharon in November 2005, moved from the Right under Sharon to the Center under Ehud Olmert and Tzipi Livni. But Kadima, the last argument of two-state peace process optimists, began to disintegrate in 2012. It will be lucky to pass the 2% entry barrier to the Knesset next month. Its voters will drift to a new party founded by former leader Livni, HaTnua (the movement), to a new party founded by Israeli television personality Yair Lapid, Yesh Atid (there's a future), and to the Israeli Labor Party.
The Likud has replaced the National Religious Party/Jewish Home, National Union, and Israel is Our Home as the main settler's party. The Likud primaries were dominated by the settlers led by Moshe Feiglen. And the Likud is running a joint list with Avigdor Leiberman's Israel is Our Home--the Likud is Our Home.
Since 1996 and the experiment with the double vote system, the two largest parties have been losing ground to the smaller parties. Now there are about four main parties: the Likud, Kadima, Israel is Our Home, and the Labor Party. Israel is in the same situation politically as France was before the French army made a coup d'etat and made Charles de Gaulle prime minister. De Gaulle rewrote the constitution and made France a semi-presidential system and then made peace with the Algerian nationalists. At this point part of the French army turned against De Gaulle and carried out a ruthless terrorist campaign against ordinary Algerians in an attempt to scupper the peace. How much longer will we wait until the IDF carries out a coup against the government? Probably a long time as Israel lacks a De Gaulle figure--the closest thing to him is Sharon who is incapacitated by a massive stroke. The real Israeli equivalent of De Gaulle is David Ben Gurion, Israel's first and third prime minister, who has been dead for almost four decades.