Israelis and Palestinians have been greeting the new coalition government in Israel with a mixture of trepidation and hope.After decades of violence and false dawns in the peace process it is easy to understand their uncertainty about the future. Most are keeping an open mind about the new government: basically right wing, the hawks softened by the Centrist Labour Party. One Tel Aviv resident said : “I hope that the new government will bring the peace. And I want to wish them good luck. It is not an easy job to control. To be here in Israel a government.” A Ramallah resident said. “I hope that the new government will bring peace to the Palestinian government, with President Mahmoud Abbas. I hope that they will sit down together and we have our state independent. Only last week violence flared at at Um Al Fahem an Israeli Arab town when Israeli extremists decided to stage a march. Yet another example of how tensions can suddenly erupt – especially since Israel’s attack on Gaza last month Both the Obama administration and the EU have been pressuring Israel to resume the peace process leading to the two state solution. Netanyahu’s new administration doesn’t believe that a negotiated Middle East peace settlement is possible with the Palestinians. They will try instead to contain the conflict while pushing forward Mr Netanyahu’s plan for an “economic peace”, which involves granting the Palestinians something less than a state. Palestinian Minister of Prisoner Affairs Asraf al Ajrami said: ““The peace process will remain frozen and we will enter into a phase of deterioration, especially since this government does not recognise the foundations of political process; does not recognise the two-state solution; continues settlement building and the occupation. Thus we only expect changes in the negative and deteriorating direction” There are plenty of other issues facing Israel’s new government: Israel’s Sgt Gilad Shalit held in Gaza since being kidnapped by Palestinian Hamas militants in 2006. His family are concerned right winger Netanyhu is less likely to do a deal to get him back. Meanwhile Isarel’s uneasy relationship with Iran casts a giant shadow over the Middle East. Isarel is convinced Iran is building an atom bomb and would use it. The current Iranian President has already said he wants to see Israel wiped off the map.