But while general opposition is clear, the effect this opposition will have on Israeli domestic politics is not. The Yisrael Beiteinu party has gotten exactly what it wanted from debate over the bill, but will likely demand more in the future. Kadima was split on the bill, and this disagreement has now exacerbated internal divisions within the party.
Despite some ambiguity, the biggest impact of the bill appears to be that it re-engages the Prime Minister on the settlements. The bill treats settlements as legally equivalent to Israel "proper." Also, the majority of Israeli BDS movements are focused on Israeli companies operating from the West Bank. Settlements continue to be the litmus test of where Netanyahu is aligned at any given moment. In 2008, Prime Minister Netanyahu fought the US on the issue of settlements in alignment with Yisrael Beiteinu. In 2009, he shifted and approved a partial settlement freeze to curb the degradation of ties with the US. In May, the Prime Minister took issue with President Obama's rhetoric on the "indefensible 1967 lines," an indirect show of support for settlements.
Unfortunately for the Prime Minister, settlements are about to become a hot issue on multiple fronts. The Palestinian statehood bid in September will undoubtedly invoke UN Resolution 242, which calls for a withdrawal from "territories occupied during the 1967 war." A poll out today identifies lack of progress on the Israeli-Palestinian conflict as a cause of Arab disapproval of the US, putting pressure on the Obama administration to create progress. Settlements may very well be involved in US initiatives on this front. Finally, the Quartet's vitality has also been called into question for failing to even come up with a joint statement on the conflict after a long dinner meeting at the State Department. Settlements are highly likely to play a role in future quartet discussions.
While the traditional American Jewish leadership will not call out the Prime Minister on settlements, their alienation over the anti-boycott bill is a matter of concern for Israelis. A Prime Minister who alienates the US and the US Jewish community will lose popularity for doing so. Netanyahu will have to provide assurances to the diaspora, even if these assurances are under the table, that he will defend basic civil rights in Israel.
On its own, the anti-boycott bill is not likely to lead to new elections. Kadima is too divided to call a vote of no-confidence and Yisrael Beiteinu is too satisfied to quit the coalition. However, the return of settlements as a key issue puts the Prime Minister in a difficult position. He will be balancing between an Israeli public ambivalent about settlements, a far-right coalition whose constituency is based in settlements, and a US government with a UNSC veto and experience from 2008 in dealing with the settlement issue. While the Prime Minister is not to be underestimated, the anti-boycott bill narrows significantly his margin of error.