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Avigdor Lieberman has come a long way since immigrating to Israel from the former Soviet Union. He used to haul suitcases at Israel’s Ben Gurion Airport and he is now the guy who could kill President Bush’s efforts for a two-state solution.

He rose up in Israel’s political structure as a hard-core, right-wing politician, ultimately forming his own radical Yisrael Beytenu (Israel is our home) party.

Prime Minister Ehud Olmert was badly weakened by critical reviews and an unsatisfactory outcome from the second Lebanon war. Although Olmert’s Kadima party was formed for the Gaza withdrawal, politics makes for strange bedfellows. Olmert was already partnered with the ultra-right Shas party but he needed to make his majority solid. Yisrael Beytenu was welcomed into the coalition.

Now, Lieberman has gone on the record saying, if Israel starts negotiating with Palestinians over core issues, such as control or division of Jerusalem, final borders or the rights of Palestinian refugees, he will leave the coalition and take the Shas party with him. Their combined 23 seats in Parliament will strip Olmert down to 55 out of 120 seats. Without a majority in Parliament, Olmert will be forced to join the long line of Israeli prime ministers whose governments were toppled and sent to early elections.

Former Prime Minister Benjamin Netanyahu is encouraging Lieberman to jump ship. Polls show Netanyahu will win a new round of elections — but citing the bloodshed, rocket fire and Hamas takeover in the aftermath of the Gaza pullout, he is dead set against a Palestinian state in the West Bank.

On Monday, Olmert’s government called Lieberman’s bluff. Foreign Minister Tzippi Livni began talks with Palestinian Chief Negotiator Ahmed Qurie on the core issues. If Lieberman quits the coalition now, the likely outcome is the death of President Bush’s plan for a two-state solution. Sources from Beytenu have said he’s going to quit. Lieberman is planning a press conference for Wednesday.

What’s keeping him?

Ironically, Mahmoud Ahmadinejad is the primary actor delaying a swift departure of Lieberman and his party. When Lieberman joined the coalition he and Olmert formed a new cabinet post: minister of Strategic Affairs. That post was created to deal with the threat from Iran. While the Iranian president calls to wipe Israel off the map, pursues long range missiles and nuclear capability, it seems poor form for the new minister of the Iranian threat to quit.

It’s all in the timing.

If Lieberman quits now, it’s hard to imagine the Annapolis effort will survive. If he waits until negotiators have an agreement on paper, then quits, it sends the government to new elections. However, at that time, Olmert would be able to campaign with a peace agreement in his hand. He doesn’t even need action on the ground. The election becomes democracy in its purest form; a referendum on a two-state solution. If Olmert wins, it’s a mandate for the peace deal and he returns to office stronger than he’s ever been. If he loses, it’s like re-booting the computer. They start over with a blank screen.

What about the Palestinians?

The mega-difficulty in dealing with the Palestinians is that they’re divided. Hamas controls Gaza and Fatah has loose control over the West Bank with a weak President Mahmoud Abbas at the helm. That’s why U.S. Secretary of State, Condoleezza Rice, has been talking about showing the Palestinians “a political horizon.”

Hamas has lost popularity since life in the Gaza Strip has digressed from miserable to worse with the Islamic radicals in charge. If negotiators can take the deal far enough to arrive at an agreement on paper, Palestinians can also go to new elections. Hamas will likely boycott the elections. But this process is gambling on the hope that Palestinians will see a real chance at statehood and turn their backs on Hamas.

It’s a long shot, at best, on both sides. But those spearheading the effort believe there is peace to be gained and not much to lose.

E-mail Mike Tobin

Mike Tobin is a Jerusalem-based reporter for FOX News Channel. Click over to read more of his bio.

Michael Tobin joined FOX News Channel (FNC) in 2001 and currently serves as a Chicago-based correspondent.