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languages: Hebrew, Arabic Israeli president: Shimon Peres
State of Israel
religions: Judaism, Islam
The division of the former British mandate of Palestine and the creation of the state of Israel in the years after the end of World War II have been at the heart of Middle Eastern conflicts for the past half century.
The creation of Israel was the culmination of the Zionist movement, whose aim was a homeland for Jews scattered all over the world following the Diaspora. After the Nazi Holocaust, pressure grew for the international recognition of a Jewish state, and in 1948 Israel came into being.
Much of the history of the region since that time has been one of conflict between Israel on one side and Palestinians, represented by the Palestine Liberation Organisation, and Israel's Arab neighbours, on the other. Hundreds of thousands of Palestinians were displaced, and several wars were fought involving Egypt, Jordan, Syria and Lebanon.
Palestinians in the West Bank, including east Jerusalem, have lived under Israeli occupation since 1967. The settlements that Israel has built in the West Bank are home to around 400,000 people and are deemed to be illegal under international law, although Israel disputes this.
Israel evacuated its settlers from the Gaza Strip in 2005 and withdrew its forces, ending almost four decades of military occupation. However, after the militant Islamic group Hamas seized control of Gaza in June 2007, Israel intensified its economic blockade of the Strip.
In 1979 Egypt and Israel signed a peace agreement, but it wasn't until the early 1990s, after years of an uprising known as the intifada, that a peace process began with the Palestinians. Despite the handover of Gaza and parts of the West Bank to Palestinian control, a "final status" agreement has yet to be reached.
The main stumbling blocks include the status of Jerusalem and the fate of Palestinian refugees and Jewish settlements.
The Israeli president has a mainly ceremonial role; executive power is vested in the cabinet, headed by the prime minister.
Israel's elder statesman: Shimon Peres
On 13 June 2007, the Israeli parliament chose the veteran politician Shimon Peres to succeed Moshe Katsav, who had taken leave of absence from the presidency earlier in the year after being accused of various sexual offences.
Mr Katsav formally resigned on 29 June after agreeing to plead guilty to several of the offences as part of a plea bargain that removed two rape charges against him.
Though the post is largely ceremonial, the president has in the past been seen by many Israelis as the nation's moral compass, and many hoped that Mr Peres would restore dignity to what they saw as a tarnished office.
Mr Peres was a leading member of the Labour party for decades, but left in 2005 and later joined the centrist Kadima party.
He has twice been prime minister, and in 1994 was awarded the Nobel Peace Prize in recognition of his role in bringing about the signing of Israel's first interim peace accord with the Palestine Liberation Organisation in Oslo the previous year.
Israeli prime minister: Binyamin Netanyahu
Binyamin Netanyahu, the leader of the right-wing Likud party, became prime minister after an inconclusive early election in February 2009, a decade after holding the office once before.
Mr Netanyahu campaigned on a policy of toughness towards Palestinian militancy
The vote was called when his predecessor, Ehud Olmert, of the centrist Kadima party, resigned amid corruption allegations, and Mr Olmert's designated successor, Tzipi Livni, failed to put together a new centre-left coalition.
Mrs Livni and Kadima actually won one more seat in the Knesset (parliament) than Likud, but right-wing parties emerged stronger than the left overall.
Mr Netanyahu, widely seen as one of Israel's most right-wing leaders, formed a coalition with the nationalist Yisrael Beiteinu party, various religious parties, as well as the centre-left Labour party.
Despite Labour's inclusion, the coalition's composition sparked fears that it would be too hard-line on the peace process with the Palestinians.
During the election campaign, Mr Netanyahu stressed his longstanding opposition to handing back land occupied by Israel in return for peace.
The prime minister continued to resist pressure from US President Barack Obama's administration for a complete suspension of Israeli settlement activity - a key Palestinian condition for a return to stalled peace talks.
Several months after his election, however, Mr Netanyahu said he would accept the creation of Palestinian state, but only on the condition that it is completely demilitarised.
Palestinian leaders criticised the conditions set by Mr Netanyahu, and said the policy change was insincere.
Mr Netanyahu also promised to make the perceived threat of Iran's nuclear programme a priority in security policy.
During his previous term as prime minister, from 1996, Mr Netanyahu was hostile towards the Palestinian Authority created by the peace process, but also revealed flexibility: In 1997, he agreed to cede most of the West Bank town of Hebron.
Defeated by Labour leader Ehud Barak in 1999, he later went to serve as finance minister under Likud Prime Minister Ariel Sharon, pushing through a series of market-oriented reforms before resigning in 2005 in protest at Mr Sharon's decision to pull out from Gaza.
Mr Netanyahu was born in 1949 in Tel Aviv, spending part of his childhood in the United States. During his five years in Israel's army, he served as captain of an elite commando unit.
A fluent English-speaker, Mr Netanyahu has been a prominent advocate for Israel in the international media.
Palestinian leader: Mahmoud Abbas
Former Palestinian Prime Minister Mahmoud Abbas, the candidate of the Fatah faction, won the January 2005 poll to replace the late Palestinian leader Yasser Arafat.
Palestinian leader Mahmoud Abbas
Mr Abbas, also known as Abu Mazen, had already succeeded Yasser Arafat as leader of the Palestinian Liberation Organisation (PLO), having been Mr Arafat's deputy since 1969.
The surprise victory of the militant Islamic movement Hamas in parliamentary polls in January 2006 led to heightened tension between the Palestinian factions. There were recurring bouts of violence between Hamas and Mr Abbas's Fatah faction, raising fears of civil war. In February 2007, Hamas and Fatah agreed to form a government of national unity.
However, in June 2007 Hamas took control of the Gaza strip, seriously challenging the concept of a coalition, which Abbas subsequently dissolved.
Mr Abbas's current term was set to have ended in January 2009, but in 2008 announced he was extending his term by another year, in order to allow presidential and parliamentary elections to be held at the same time. The move was denounced by Hamas.
In November 2009, Mr Abbas said he would not stand again in elections scheduled for 24 January 2010, in protest against the continuing impasse in attempts to resurrect peace talks with Israel.
Many analysts regard Mahmoud Abbas as a moderate. He has condemned the armed Palestinian uprising and favours the resumption of negotiations with Israel. But he faces the challenge of persuading armed groups to stop their campaign of anti-Israeli attacks.
Mahmoud Abbas was born in 1935 in Safed, a town in present-day northern Israel. He co-founded Fatah - the main political grouping within the PLO - with Yasser Arafat in the late 1950s.
He established contacts with left-wing Israelis in the 1970s and was the main Palestinian architect of the 1993 Oslo accords, which led to the foundation of the Palestinian Authority.
His brief stint as premier was plagued by power struggles with Mr Arafat over the control of the Palestinian security apparatus and over planned reforms. Mr Abbas resigned in September 2003.
The former Palestinian leader Yasser Arafat died in a French hospital on 11 November 2004, aged 75.
The Israel Broadcasting Authority (IBA), set up along the lines of the BBC, operates public radio and TV services and is funded mainly by licence fees on TV sets.
Channel 2 and Israel 10 are the main commercial TV networks. Most Israeli households subscribe to cable or satellite packages.
Commercial radio arrived in 1995, but faces competition from unlicensed radio stations, some of which carry ultra-Orthodox programming.
All Israeli newspapers are privately-owned; many are available on the internet.
In its 2007 report, media rights watchdog Reporters Without Borders said Israel's journalists "enjoy a freedom not found elsewhere in the region" but added that Palestinian journalists "faced many restrictions by the Israeli authorities".
Official broadcasting is run by the Palestinian Broadcasting Corporation (PBC) which operates Voice of Palestine radio and Palestine TV. These outlets came under the jurisdiction of the Palestinian president in early 2006; the move was seen as an attempt to prevent the new Hamas-dominated government from exerting control over the official media.
There are dozens of private TV and radio stations. Jordanian TV is widely-watched in the West Bank. Pan-Arab satellite broadcasters, including Qatar's Al-Jazeera TV, are popular.
International watchdogs regard the media as being generally more independent than in much of the rest of the Arab world. However, journalists risk harassment, attack or arrest by the security services, armed activists or militant groups. Self-censorship is widespread.
Media rights watchdog Reporters Without Borders said in 2007 that Palestinian and foreign journalists were "victims of fierce clashes" between Hamas and Fatah.