Netanyahu handed reins of a jittery Israel

By Dan Williams

JERUSALEM (Reuters) - Bibi's back.

A decade after being ousted by Israelis entranced by his then rival's pledges of peace accords and modest governance, Benjamin Netanyahu has won a new lease on power over a country now more given to disaffection and fears of war.

President Shimon Peres on Friday handed him a mandate to form Israel's next government, and the right-wing Likud leader now has 42 days to put together a coalition. He should manage that with like-minded allies, even if his appeal to centrist and left-wing rivals for a unity government falls on deaf ears.

Hamas in Gaza, Hezbollah in Lebanon, Iran's nuclear designs and Israel's economic ills provided all the grist Netanyahu needed to end ideological drift in his hawkish Likud party and more than double its seats in an election 10 days ago.

With 27 seats, he was still one short of the centrist Kadima party of Tzipi Livni. But the rightward drift of the electorate gave him a better chance of forming a majority coalition.

The U.S.-educated son of an noted Zionist historian, Netanyahu, 59, cast his comeback as vindication of the Likud's long view -- that ceding occupied Arab land unilaterally had backfired by encouraging Islamist foes of the Jewish state.

A former finance minister who had championed welfare cuts and free-market practices, he also presented himself as the man to keep Israel afloat above swelling global budget crises.

Yet stability has often eluded the career of the telegenic Netanyahu, who is known by his boyhood nickname "Bibi."