"There is one caveat, and that is the looming threat of the publication of the final report from the Winograd Committee investigating last summer's war. The schedule for publication is towards year's end (unless a court appeal procedure that is being used by army officers threatened by the report's findings causes a long delay). The Winograd's findings will be harsh and could set in motion a political unraveling, if Barak makes good on his commitment to take Labor out of the coalition. The current assessment is that this is unlikely. Olmert appears to have a parliamentary majority for a far-reaching deal with the Palestinians. Even if Avigdor Lieberman's right wing 'Our Homeland Party' quits over progress with the Palestinians, Olmert can still have a majority and may even be strengthened by demonstrating resolve. It is also worth noting that Olmert is considered by many inside Israel, and among the Palestinian Ramallah leadership, to be the best option available for a peace process right now, given that the alternatives are Benjamin Netanyahu and Ehud Barak."
As I've said before, if Lieberman's party bolts, that will leave Olmert with 67 of the 120 Knesseteers in his coalition, which is still a majority. The question is whether all 29 Kadima members will stay put, or whether some will head back to Likud, either because they see it as a better political bet or because they feel Olmert's concessions are too far-ranging. (Anyone who heads back to Labor will, of course, still be in the coalition.) Things could get chancy at that point. If there was a serious chance of a final status agreement, Meretz would probably prop up the government, and Olmert might even consider including Arab parties, but if things fall apart and an intermediate stage, the majority could easily be lost.
That said, you should definitely read Levy's entire post. He's absolutely right that this is a critical moment, and a high-profile failure could put the two-state solution beyond reach as Israeli settlement and land seizures continue unabated. For the Bush administration not to be more engaged with this process is incredibly negligent.
One final note: I won't be able to enter the West Bank to see what's happening there. A little-noticed provision in my fellowship banned travel there, and when the program found out I'd been going there, they threatened to revoke my funding if I went back. This is the way of university bureaucracy.
(Crossposted to American Footprints)