Badly weakened by criticism of his conduct of this summer's inconclusive war in Lebanon, Israel's prime minister, Ehud Olmert, has chosen to make an unwise and damaging trade-off. Bringing the pro-settler Israel Beiteinu party into his governing coalition reinforces his vulnerable parliamentary majority. But it makes it virtually impossible for Olmert to carry out the partial West Bank withdrawal program he ran on just seven months ago.  Israel Beiteinu is the political vehicle of Avigdor Lieberman, who advocates annexing West Bank settlements and reassigning Arab Israeli citizens to a rump Palestinian state. Lieberman, who is set to become a deputy prime minister, has criticized other right-wing leaders, like Ariel Sharon, for evicting settlers from occupied regions.  American and European diplomats have been arguing that the one positive result of the Lebanon war could be new momentum toward a wider Middle East peace. The idea was that a new awareness of the limits of Israeli military power and growing Arab fears of Shiite radicalism would push both sides toward the necessary compromises.  That now seems less likely than ever. The chief Palestinian party, Hamas, refuses to take the most minimal steps required for diplomatic credibility - a clear rejection of terrorism, acceptance of prior agreements and acknowledgment of Israel's legitimacy. Efforts by the Palestinian president, Mahmoud Abbas, to bring Hamas around have not gotten as much support as they should from Israel. With Israel Beiteinu joining Olmert's coalition, they are likely to get even less.  Creating new obstacles to peace with the Palestinians is the last thing Israel needs after the Lebanon fiasco.