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Netanyahu set for inauguration as Israel's leader

JERUSALEM (Reuters) - Benjamin Netanyahu was to be sworn in as Israel’s prime minister Tuesday, returning to a post he held a decade ago and with no explicit commitment to the internationally-backed goal of Palestinian statehood.

Israel's prime minister-designate Benjamin Netanyahu speaks during a special session of the Knesset, the Israeli parliament, marking the 30th anniversary of the Israel-Egypt peace treaty, in Jerusalem March 30, 2009. REUTERS/Ronen Zvulun

Netanyahu, 59, planned to ask parliament to ratify his right-leaning coalition government at a session starting at 5 p.m. (1400 GMT), officials said. Debate could last for hours.

After it votes its approval, he will take the oath of office and replace Ehud Olmert, whose three-year tenure was marked by a reopening of land-for-peace talks with the Palestinians, wars against Islamist militants in Lebanon and the Gaza Strip -- and the corruption scandal that led to his resignation.

“The government I am forming will do its utmost to achieve a just and lasting peace with all our neighbors and the Arab world in general,” Netanyahu told parliament Monday.

But in that address, Netanyahu again made no mention of the establishment of a Palestinian state alongside Israel, the main goal of peace efforts backed by its ally the United States.

His coalition’s guidelines, however, contain a pledge to respect all of Israel’s international agreements -- a formula that includes 1990s accords envisaging a Palestinian state.

Anything less than an explicit commitment to what is called the two-state solution to the Israeli-Palestinian conflict could put Netanyahu on a collision course with Washington and the European Union, which has already voiced concern on the matter.

Palestinian officials say Netanyahu must clearly endorse statehood for peace talks, currently frozen, to succeed.

He has said he wants to focus negotiations on shoring up the Palestinian economy in the West Bank rather than on territorial issues that have blocked progress toward a settlement.

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Israeli officials, diplomats and analysts have predicted Netanyahu would sidestep isolation by easing slowly into talks on statehood and opening a separate peace track with Syria.

They said Netanyahu, who served as prime minister from 1996 to 1999, was likely to make clear to world powers that he -- and not ultranationalist Avigdor Lieberman, who will serve as his foreign minister -- makes the decisions on diplomacy.

World powers also await Netanyahu’s moves on Jewish settlement expansion in the occupied West Bank, which he has long promoted. He defends expanding existing settlements.

The administration of U.S. President Barack Obama wants Israel to freeze such construction, and is considering cutting U.S. loan guarantees to penalize Israel and to show Netanyahu’s government that Washington is serious about the issue this time, Western diplomats familiar with the deliberations said.

Iran’s nuclear program and its threat to Israel, Netanyahu said, would be high on his government’s agenda. Israel, widely believed to be the Middle East’s only nuclear power, and the United States assert that Iran is trying to develop an atomic bomb, an allegation Tehran denies.

In a speech Monday, Olmert urged Netanyahu to embrace clearly a two-state formula to ensure that Israel maintains its Jewish population majority -- an alternative, annexing the West Bank and Gaza to Israel, could mean an Arab majority in time.

Olmert resigned in September in a corruption scandal in which police alleged he pocketed cash-filled envelopes from an American Jewish businessman.

The veteran politician, who stayed on as caretaker prime minister, awaiting formation of a new government after the February 10 election, has denied any wrongdoing.

On paper, Netanyahu commands up to 69 seats -- 13 of them held by Labor -- in the 120-member Knesset, although the margin could be cut by desertions by left-wing Labor lawmakers opposed to its coalition deal with Likud. Labor chief Ehud Barak stays on as defense minister but faces revolt in Labor’s ranks.

Netanyahu has put together one of the largest cabinets in Israeli history -- 30 ministers -- in forging partnerships with Labor and right-wing and Jewish Orthodox religious parties.

(Additional reporting by Adam Entous, Editing by Alastair Macdonald)

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