Former Israeli Prime Minister Benjamin Netanyahu, whose party came in second in national elections last week, is in line to return to power. 

President Shimon Peres nominated Likud party leader Benjamin Netanyahu to be Israel's next prime minister and gave him six weeks to form a coalition government.   Foreign Minister Tzipi Livni narrowly won the popular vote, but the right-wing bloc that controls the Knesset, or parliament, backs Mr. Netanyahu.

In his acceptance speech, Mr. Netanyahu said Iran's development of nuclear weapons is the greatest threat facing the State of Israel.

He said the major strategic and economic challenges obligate Israel to form a national unity government. He urged Livni to bring her centrist Kadima party into the coalition, but she flatly refused.

Livni said a Netanyahu government would bring a stalemate to the peace process and that she would not be fig leaf for his hard-line policies.

That may leave Mr. Netanyahu with no choice but to form a right-wing government that would support the expansion of settlements in the West Bank and oppose the creation of a Palestinian state with Jerusalem as its capital. Since the two-state solution is a cornerstone of American policy in the Middle East, the U.S. and Israel could be on a collision course.