Israel Prime Minister Banjamin Netanyahu. Photo: wiki commons.

Cancelling plans for early elections in Israel, the country’s two largest political parties Likud and Kadima approved a deal to form a national unity government shorty after 3:oo am local time.

The deal which faced opposition from within the Prime Minister’s party, came along with a host of promises from Netanyahu including a solution to the ‘Tal Law issue,’ passing a “responsible” budget and even electoral reform.

For Israelis, this maneuver came as a complete surprise. “People are sleeping, those who aren’t are confused, this is a complete shock,” said an Algemeiner columnist based in Israel.

According to the agreement, new Kadima head, Shaul Mofaz, will assume the role of Vice Premier, and will govern when Netanyahu is abroad, his party has agreed not to topple the government until the full length of its term expires in October 2013.

Mofaz has come under criticism from other Knesset parties for the move, as a firm promise never to join the Netanyahu government was among his central campaign promises.

Among the key issues that the coalition government will be faced with is the prospect of a nuclear Iran, and earlier this week media punditry led to a denial from the Prime Minister’s office that he had called for new elections over the Iranian issue. With the new arrangement, some inside Israel suspect that the new unity agreement is tied to the handling of the Iranian issue as well. An Israeli political operative told the Algemeiner that, “it is entirely possible that Netanyahu decided to buy his (Mofaz’s) voice for the solution he has in mind (for Iran)- without the mess of elections,” and Israel’s largest daily Yediot Ahronot  carries the following sub header in tomorrow’s paper, “Estimate: unity government will find it easier to act against Iran”.