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Israel’s ruling coalition suffered a serious blow on Monday night after it failed to pass a bill on rules governing Israeli settlers in the occupied West Bank — a vote that had become a key test of its viability.

The defeat comes two months after the government lost its parliamentary majority and deepens the uncertainty over how long the coalition, which stretches across the political spectrum, can hold on to power.

The government, which includes both Jewish nationalists and, for the first time in Israeli political history, an Islamist Arab party, was formed a year ago by eight parties united mainly by a desire to end the premiership of Benjamin Netanyahu, who had dominated Israeli politics for a decade.

Given the deep differences between its members, the coalition sought to put aside contentious issues relating to the Israeli-Palestinian conflict and instead focus its energies on other topics.

But analysts said tensions over Israeli-Palestinian relations had still repeatedly sparked crises within the ruling camp. “Israel controls the Palestinians. But the conflict and occupation also control Israel,” said Dahlia Scheindlin, a political consultant and pollster.

“Even if we think we can ignore it, we cannot.”

The “emergency” laws under debate on Monday apply parts of Israeli law to some 500,000 Jewish settlers in the occupied West Bank, where Palestinians are subject to military law.

In force since 1967, the laws have been renewed every five years. However, the latest five-year period concludes at the end of the month and, if the laws are not renewed before then, they will expire.

Justice minister Gideon Sa’ar said on Monday that failure to extend the emergency laws would provoke “chaos”. His nationalist New Hope party has intimated in recent days that it could leave the government if the legislation is not extended.

“Any coalition member who does not support such a fundamental bill is actively working to dismantle the coalition,” Sa’ar said ahead of the vote.

However, in a sign of the deep fissures within the coalition, two of its MPs voted against the legislation, while several others were absent.

Given that the government controls just 60 of the 120 seats in Israel’s Knesset, that was enough for the coalition to be defeated, since nationalist opposition MPs led by Netanyahu’s Likud party put their traditional support for the settlers aside and voted en masse against the bill in an effort to torpedo the government.

Israeli governments can be ousted if opposition parties can muster a majority of votes in favour of either another government or dissolving parliament.

Scheindlin said that Monday’s vote did not mean that either of those possibilities would automatically happen and cautioned that, despite the coalition’s weakness, Netanyahu would still need to win over several defectors in order to be able to form a government of his own without new elections.

“[Losing Monday’s vote] is not just symbolic. It’s a serious blow . . . and could very well lead to a chain of events where either a party formally leaves the coalition, or there is a vote to dissolve the Knesset,” she said. “But they could also somehow muddle through. That is still an option”.

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