REPORTER: Sophie McNeill
The protests began before Israel's new government even had the chance to be sworn in.
MAN: We are here to say in a very clear way this is not a unity government - this is an extreme right wing government.
But these few demonstrators are in the minority. Most Israelis voted for right-of-centre parties in February's elections.
MAN 2 (Translation): Shame on you! You are the minority. They should be in school or in the army.
Benjamin Netanyahu's government, is made up of a coalition of conservatives, and he's had to concede many top positions to the smaller parties, but it's the choice of the man to be both Foreign Minister and Deputy Prime Minister that has brought these demonstrators onto the street.
PROTESTERS (Translation): There’s cause to be concerned… Lieberman is Foreign Minister. There’s cause to be concerned.
At the formal handing over of power, the new Foreign Minister, Avigdor Lieberman, turned the event into a scathing attack on former foreign minister Tzipi Livni's peace process efforts under the previous government.
AVIGDOR LEIBERMAN, FOREIGN MINISTER (Translation): I’ve seen all of Ehud olmert’s proposals which he has so generously made. I have not seen any results. When did Israel enjoy its greatest popularity and most favourable public opinion? After the victory of the Six-Day War.
Lieberman dropped a bombshell, declaring that the new government would no longer abide by the Annapolis peace accord - the 2007 deal made between the previous government, the Palestinians and President Bush - that was intended to speed up the creation of a Palestinian state.
AVIGDOR LEIBERMAN (Translation): There is only one document that binds us and it is not the Annapolis Conference. That has no validity.
News services buzzed with the story.
NEWS READER (Translation): A controversial first outing for Israel's new Foreign Minister...
And soon the diplomatic fallout began. Egypt's Foreign Minister announced he would refuse to meet with Lieberman. And President Obama's new Middle East envoy, George Mitchell, was dispatched to the region, carrying the message that the US was deeply concerned about Israel's refusal to publicly pledge a commitment to the 2-state solution.
NITZAN HOROWITZ: He has extreme opinions about Arab citizens of Israel and so this kind of ideology and this kind of party doesn't have a place in a democratic society.
Knesset opposition member Nitzan Horowitz is also worried about the future of the peace process.
NITZAN HOROWITZ: The designated Prime Minister Netanyahu refuses to accept even the idea of a 2-state solution - a Palestinian state and a Jewish state - so with this kind of attitude there are no expectations that this government will do anything to push forward the peace process so I'm quite pessimistic about their impact of this new government.
So, who exactly is Avigdor Lieberman? And how did this former nightclub bouncer, who's being investigated for corruption, climb so high in the government?
AVIGDOR LEIBERMAN (Translation): It is important for me to stress that negotiation based on land for peace is a fatal mistake, an incomprehensible mistake.
Certainly, he has built a loyal following in Israel through hard-line statements like that, but he's gone further, even threatening to bomb Egypt, to drop a nuclear weapon on Gaza, and he's said that Egypt's President, Hosni Mubarak, can "go to hell". Even elected members of the Knesset, like this Arab-Israeli politician, have felt the lash of Lieberman's tongue.
AVIGDOR LEIBERMAN (Translation): You represent terrorist groups in this Parliament. Too bad Hamas doesn’t take care of you! They’d do it properly!
His Party 'Yisrael Beytenu' or 'Israel is our home' was once considered a far-right fringe party... ..but after February's elections, it's now the third largest party in Israel.
AVIGDOR LEIBERMAN (Translation): No to negotiations, either direct or indirect! No to ceasefire! It does not matter what government is formed, if we are to be members of the same government, our first goal is clear. Eliminating Hamas, overthrowing the Hamas government, no ceasefire with Hamas.
LARRY DERFNER, JERUSALEM POST COLUMNIST: He speaks to people's anger. He vents people's feelings - their desire for revenge.
Larry Derfner is a columnist with the 'Jerusalem Post' newspaper.
LARRY DERFNER: He spouts off. He talks about bombing this and bombing that and levelling this and turning this into dust. But it works. This is how he gets his votes. That's pure demagoguery.
Avigdor Lieberman spent the first 20 years of his life under harsh Soviet rule. His father was held for seven years in one of Stalin's Gulags. In 1978, the family moved to Israel. It was soon after, as a student, that Lieberman is alleged to have formed one of his most controversial associations with the now outlawed Kach Party.
LARRY DERFNER: It's an extreme racist, violent, fundamentalist Jewish party. They have been involved in many number of attempts on the lives, and in some cases, murders of Arabs and attempts on the lives of leftists as well. Their ideology is summed up in the chant 'Death to the Arabs'. They have all sorts of fancy religious ideas. But bottom line for them is hatred of Arabs.
Just before the February elections, an Israeli journalist interviewed former Kach leaders who claimed Lieberman was a member of their movement for a short period in 1979.
LARRY DERFNER: Lieberman denies that. He hasn't been willing to say anything beyond 'I deny it completely'. But there are three prominent figures in Kach all of whom say they knew him, one of them says that he made out a membership card in Kach for Lieberman with his picture and his name and the Kach symbol on the card.
Avigdor Lieberman has come under intense scrutiny by the media. Now he's very reticent to even answer journalists' questions, let alone grant an interview - and he refused Dateline's requests. Inside the Palestinian territory of the West Bank, south of Bethlehem, is the Israeli settlement of Noqdim - one of many established by Zionists as part of their claim to this land. Like all West Bank Israeli settlements, it's considered by the United Nations to be illegal, and it has an armed guard at the gate. This is where Avigdor Lieberman has lived for the last 20 years.
RABBI YARON DURRANI (Translation): He was amongst the first to come and settle in this area in temporary dwellings, in tents, in caravans, in very difficult conditions. He is indeed a unique man, it is a unique family. He has three nice kids and a wonderful wife. I really hope that all these absurd notions of giving up parts of the homeland in exchange for an imaginary peace will be perceived as unrealistic and not viable.
Rabbi Yaron Durrani has known Lieberman for over 10 years. With Lieberman now in such a powerful position, Rabbi Durrani hopes that the new government will help settlements like Noqdim expand and grow.
Susie and Isaac Cohen have lived in Noqdim with their three children for over 10 years. They take me to see Avigdor Lieberman's house.
REPORTER: So which one does he live in?
SUSIE COHEN: Over there.
Susie explains why she thinks so many Israelis like him.
SUSIE COHEN: He has his ideas and he really says them and it's not like most of the people in politics - they never really say what they think. He's not afraid of anybody.
ISAAC COHEN: I think that's what was missing in the last years that nobody was really proud enough to say "We're Israeli, that's how we are. We don't have to be nice all the time to all the people. We are here because we have the right to be here."
Meanwhile, those who stand to be most affected by some of Lieberman's policies are left pondering what it will all mean for them.
EYAD MAHAMEED: This is Um al-Fahm and these are Palestinian villages. Jenin is just over there.
Eyad Mahameed is from the Arab village of Um al-Fahm in northern Israel. As a means of reducing the number of Arabs who hold Israeli citizenship, Avigdor Lieberman wants to move Um al-Fahm and its 40,000 Arab residents out of the boundaries of Israel and into the West bank.
EYAD MAHAMEED: And we are against this idea. We don't want to have to prove to someone who emigrated from Russia just 30 years ago that we are a good citizen in a country of the masters.
But perhaps Lieberman won't even get the chance to leave his desired mark on Israeli politics. Lieberman spent his first day as minister being questioned inside this police station, in relation to the ongoing bribery and fraud allegations against him.
DANIEL KYROS, MOVEMENT FOR QUALITY GOVERNMENT: This is situation which is a direct and imminent threat to the Israeli democracy.
Daniel Kyros is an attorney with the Movement for Quality Government in Israel.
DANIEL KYROS: The head of a political party that has been elected to the parliament is under investigation for some of the most serious crimes in the book, in terms of corruption.
Kyros is seriously concerned about the transparency of this investigation. Lieberman's party colleague, Yitzhak Aharonovitch, has just been appointed head of the ministry in charge of the investigation against Lieberman.
DANIEL KYROS: The fact that you know that the people who are above you, and those who are above those who are above you, want things to go a certain way, can have a very deleterious effect on the proper running of this sensitive criminal investigation.
Should the police indict Avigdor Lieberman, he would have to resign from his position as minister - a huge embarrassment to Israel's new government. But no matter what happens to Avigdor Lieberman, his politics seems to be only gaining more support in Israel, as a resolution to this conflict looks further away than ever.
RABBI YARON DURRANI (Translation): I hope there will be peace talks but on an entirely different basis where the Arabs will clearly see that this is a Jewish State. All you see here is the State of Israel, the heritage of our forefathers. The fathers of the nation have dwelt here. This is ours, Jerusalem is the capital of the Jewish nation.
Reporter/Camera
SOPHIE McNEILL
Fixer
ALON TUVAL
Editor
NICK O’BRIEN
Producer
ASHLEY SMITH
Translations / Subtitling
RUTH MOSS
Original Music composed by
VICKI HANSEN