Less than two days after calling an early general election for September 4th, Prime Minister Benyamin Netanyahu announced that he had instead brought the opposition Kadima party into his coalition.

This gives Netanyahu 94 seats in the 120 member Knesset, an unprecedented majority. It prepares the political ground for a possible military assault on Iran and a guaranteed social and economic offensive against the Israeli working class.

Kadima leader Shaul Mofaz is to become deputy prime minister and join the Cabinet’s Security Committee and Netanyahu’s inner circle. Kadima members will chair four of the Knesset’s committees, including Defence and Foreign Affairs.

In announcing the national unity government, Netanyahu said that the basis of his agreement with Mofaz was a commitment to change the Tal Law allowing ultra-Orthodox Jews to defer military conscription indefinitely if they are enrolled in religious seminaries. The law, recently outlawed as unconstitutional, is set to expire in July.

The new government would reform the electoral system and restart talks with Palestinians, he said—an empty gesture since he flatly refused to call a halt to settlement construction in the Occupied West Bank and East Jerusalem.

Kadima, which has advanced itself as a more centre-ground opponent of Likud, has abandoned this pretence. Electoral expediency was a significant factor in its decision to do so. According to the polls, Netanyahu’s Likud party was expected to increase its seats to 30 in the elections at the expense of the main opposition parties, Kadima and Labour. On this front, Netanyahu could be said to have thrown a lifeline to Mofaz and Kadima, which although currently the largest party in the Knesset with 28 seats, was set to lose more than half of its seats.

However, politically Netanyahu is the beneficiary—particularly on the central issue of a possible military strike against Iran. Despite winning the most seats (28) in the 2009 elections, Tzipi Livni, who succeeded former Prime Minister Ehud Olmert after he was forced to resign over corruption allegations, was unable to form a government. Six weeks ago, Livni lost the Kadima leadership contest to Mofaz.

She used the occasion to reiterate her key disagreements with Netanyahu, citing the “urgent need to reach a permanent agreement with the Palestinians as well as with the Arab world.”

“The real danger is a politics that buries its head in the sand,” she said, and it did not take “a Shin Bet chief to know that”.

Livni was solidarising herself with Yuval Diskin, a former head of Israel's internal security agency, who, echoing former Mossad director Meir Dagan, warned against Israeli action against Iran’s nuclear facilities and professed his lack of confidence in Netanyahu and his Defense Minister Ehud Barak.

Livni’s ouster has paved the way for Mofaz and Kadima to return to the Likud fold.

Mofaz is a more malleable figure, as far as Netanyahu is concerned. He is a former chief of staff who served under both Netanyahu and Barak. He held office under a previous Likud-led government and stood in a Likud leadership contest in 2005, before jumping ship and joining Kadima and serving under both Ariel Sharon and Olmert.

Reputedly in favour of some form of deal with Palestinians and against a unilateral strike on Iran, which he called “premature” and “disastrous”, he was only days ago trading insults with Netanyahu—calling him a liar and attacking him for whipping up hysteria over Iran and jeopardising international support for Israel because of his deference to the ultra-nationalists and settler movement.

Mofaz had pledged repeatedly never to join the coalition, saying said that it represented “all that is wrong with Israel”. Now he has jumped into bed with Netanyahu.

Barak has been rescued by the coalition agreement. He split from Labour and formed his own breakaway party, Independence, to enable him to remain with other Labour legislators in government and shore up Netanyahu’s coalition on a reduced majority of 66. Polls had predicted that he would lose his seat in any new election.

Netanyahu also hopes that by bringing Kadima on board he will sideline his religious and ultra-nationalist coalition partners and limit their ability to bully him into making budgetary concessions on behalf of their social constituencies.

Israel has had two previous national unity governments. The first from 1967-70 was established in the run up to the 1967 preemptive attack on Egypt and Israel’s other Arab neighbours. The second, from 1984-92, was set up when, in the face of an enormous economic crisis and runaway inflation, Prime Minister Menachem Begin hitched his Likud party to Labour, the main opposition party.

Netanyahu differs from his predecessors only in that he is laying the political foundations for war both abroad and at home.

Ha’aretz has said that a government that includes Mofaz is less likely to attack Iran, based on his expressed stance. But there is no reason to endorse such an assertion.

Reuven Pedatzur, a Tel Aviv University academic and senior military affairs analyst for Ha’aretz, drew the opposite conclusion. He said that Netanyahu can now do “whatever he wants” because there is no real opposition. “He just has to convince Mofaz to agree with him,” he added.

The defence weekly magazine Jane’s said that “there will be many observers who will view the reconstituted government as preparing the ground for an attack on Iran—a decision that some members of the government, including Netanyahu, think may need to be made in the second half of 2012”.

One of Netanyahu’s colleagues, Environmental Protection Minister Gilad Erdan, told a party meeting that unity would “ease decision-making even on the Iran issue”.

By including Iranian-born Mofaz, a military man who has opposed a unilateral strike against Iran, Netanyahu hopes to silence his more credible and very vocal military and intelligence critics.

This is crucial in part because Netanyahu is at odds with President Barack Obama, at least over the timing of such an attack, with Obama anxious to delay any action until after the presidential elections in November. More importantly, however, polls have consistently shown that Israelis are opposed to an independent strike on Iran. Mofaz will now be used to help sell whatever decision the government makes.

Equally, the task of the new national unity government will be to face down widespread social unrest. There is enormous anger as wages have fallen in real terms for more than a decade, resulting in 1.7 million of Israel’s 7.8 million population living in poverty and 837,000 children going hungry every night.

Last summer saw the largest ever protests over housing costs and social inequality which the government has done nothing to address. Now Netanyahu has won Kadima’s agreement to pass a “balanced budget”, a euphemism for massive cuts in what little remains of public services and the social safety net.

There were several demonstrations in Israel’s cities to protest the new unity government under the banner of “The entire nation is the opposition—the entire country takes to the streets”. Their anger was directed chiefly against Mofaz. The rally in Tel Aviv was attended by Livni and Labour leader Shelly Lacimovich, who are seeking to put themselves at the head of such opposition in order to control it.