Josef Federman and Dan Perry

JERUSALEM: In a political development with global implications, Prime Minister Benjamin Netanyahu on Sunday signaled he might call early elections — a decision that could put Mideast peace efforts on hold for months and cast more uncertainty on Israel’s deliberations over whether to attack Iran’s nuclear program.

Netanyahu has presided over an awkwardly diverse yet unusually resilient coalition for three years and is suddenly beset by challenges. But while he is increasingly under fire for his handling of Iran and the Palestinians, it is more mundane domestic complications that appear to be driving the coalition unrest.

The Supreme Court has ordered the government to dismantle illegal West Bank settlement outposts — a move that faces tough opposition from hard-line coalition allies who have a history of toppling even right-leaning governments like Netanyahu’s over such issues.

A Supreme Court-ordered Aug. 1 deadline to scrap draft exemptions for tens of thousands of religious seminary students — an issue dividing the country’s Jews into increasingly antagonistic camps — also threatens the coalition.

Mass protests also are expected for the second summer in a row over Israel’s high cost of living.

If balloting is held soon, Netanyahu’s chances of re-election seem good — a remarkable situation given the sour national mood, the threat of regional war, and the forces arrayed against him. Israel’s own elites and the world community seem largely united in preferring his demise.

The government’s term can last through October 2013 — but Israeli governments rarely serve a full term. An Israeli official said Netanyahu would consult with coalition partners in the next week before deciding on a new date.

The official said Netanyahu’s main concern was that his partners would make excessive budget demands for 2013 and quoted him as saying he wouldn’t cave in to “extortion.” The official spoke on condition of anonymity.

Netanyahu also told leading members of his Likud Party that he was weighing the possibility, and early elections were the focus of media reports and talk shows all day.

With the budget season months away, Netanyahu faces more immediate threats. The Supreme Court has ordered the government to dismantle an illegally built West Bank settlement outpost by Tuesday.

Even if Netanyahu weathers that crisis, he faces a far larger battle over the religious draft exemptions. The exemptions have long enraged Israel’s secular majority, whose young men and women serve years of mandatory military service while ultra-Orthodox men participate instead in government-subsidized religious studies.