After weeks of haggling with potential political partners, Israeli Prime Minister Benjamin Netanyahu cobbled a governing coalition together Wednesday night. His narrow coalition, dominated by nationalists and religious parties, sets Netanyahu's government on a collision course on many fronts.

The following is a glance at the challenges ahead as Netanyahu returns to power for a fourth term:

PEACE PROSPECTS

Peace talks between Israel and the Palestinians aimed at resolving the conflict with a two-state solution collapsed last year. The U.S.-mediated talks broke down in part because of the issue of Israeli settlement construction in areas the Palestinians demand for a future state.

The Jewish Home party, one of Netanyahu's key coalition partners, is linked to the West Bank settler movement and adamantly opposes withdrawing from territory for the establishment of a Palestinian state. Many other members of his coalition share the same view, either on security or spiritual grounds.

Ending the conflict is one of Washington's main foreign policy goals. Remarks by Netanyahu ahead of the March election that a Palestinian state won't be established on his watch as long as regional violence continues angered the Obama administration and worsened already frayed relations.

DODGING THE DRAFT

It was just a few years ago that hundreds of thousands of Israelis took to the streets to protest the spiraling high cost of living and a whole host of other social issues, including exemptions from military service for ultra-Orthodox Jews who instead are permitted to study in religious seminaries.

As a reaction to that, Israel's struggling middle class voted the centrist Yesh Atid party to parliament as the second largest party in 2013. Led by the charismatic Yair Lapid, it promised to get religious males in uniform and heal other social issues.

But that government dissolved after serving about half of its term and has now been replaced with ultra-Orthodox and pro-settlement parties who will work to reverse gains made on the draft and other social issues.

Large chunks of the budget will likely now be allocated to religious causes or to settlements in the West Bank rather than to benefit the middle class in Israel. This risks triggering a public backlash.

INTERNAL DIFFERENCES

With just 61 seats, Netanyahu now has the slimmest of majorities in the 120-seat parliament. Such an arrangement leaves him vulnerable to the whims of his partners or even demands from any individual coalition lawmaker. It leaves little room for maneuver and makes it tough for reforms to pass like the economic initiatives championed by Kulanu, the one centrist party in the coalition.

Such a grouping doesn't bode well for the longevity of this government.