Prime Minister Benjamin Netanyahu and Avigdor Liberman signed a coalition deal Wednesday bringing Liberman’s Yisrael Beytenu party into the coalition. At a signing ceremony in the Knesset, Netanyahu pledged to pursue new “opportunities” for a peace deal with the Palestinians.

“Israel needs governmental stability if it is to cope with the challenges that await us and also in order to take advantage of the opportunities that await us,” Netanyahu, flanked by a jocular Liberman, told reporters at the ceremony. “Alongside the threats and dangers, there are also opportunities. I am committed to advancing the peace process. I’m committed to making every effort to reach an agreement.”

At one point in the press conference, Netanyahu switched to English, saying: “My government remains committed to pursuing peace with the Palestinians and with all our neighbors. My policy has not changed. We will pursue every avenue for peace while ensuring the safety and security of our citizens.”

Liberman hailed the coalition agreement, and dismissed doubts about his qualifications for the role of defense minister, which the agreement guarantees him.

Prime Minister Benjamin Netanyahu and Yisrael Beytenu party leader Avigdor Liberman shake hands after signing a coalition agreement in the Knesset on Wednesday, May 25, 2016 (Yonatan Sindel/FLASH90)

Prime Minister Benjamin Netanyahu and Yisrael Beytenu party leader Avigdor Liberman shake hands after signing a coalition agreement in the Knesset on Wednesday, May 25, 2016 (Yonatan Sindel/FLASH90)

“I’m committed to a balanced policy that will bring stability to the region and to our country,” he said.

He also switched to English briefly to pledge his commitment to “peace and to a final status agreement, and to understanding between us and our neighbors.” Those remarks were plainly directed at critics, at home and abroad, of the coalition’s hawkish nature.

Negotiators for the Likud and Yisrael Beytenu parties reached agreement overnight Tuesday to bring Yisrael Beytenu into the coalition and name Liberman defense minister. He is expected to be sworn in next Monday, pending a Knesset vote.

A Yisrael Beytenu source said the party’s demands were met, including a minimum increase of NIS 1.4 billion ($360 million) for pensions — a sticking point in the negotiations earlier this week — as well as another NIS 150 million toward public housing, the Haaretz newspaper reported.

Along with Liberman’s appointment as defense minister, Beytenu party member MK Sofa Landver will resume the role of immigrant absorption minister, which she previously filled between 2009 and 2015.

Prime Minister Benjamin Netanyahu, right, and leader of the Yisrael Beytenu political party Avigdor Liberman sign an agreement bringing Liberman's party into the government, May 25, 2016. (Yonatan Sindel/FLASH90)

Prime Minister Benjamin Netanyahu, right, and leader of the Yisrael Beytenu political party Avigdor Liberman sign an agreement bringing Liberman’s party into the government, May 25, 2016. (Yonatan Sindel/FLASH90)

During Wednesday’s press conference, Liberman lightheartedly touched on his notoriously testy relationship with Netanyahu, and thanked the prime minister for burying the hatchet and “overcoming all of the fallout between between us.”

Liberman in the past has called Netanyahu a liar, inconsistent, and incapable of defending Israel. “I must admit, I’ve had surgery to have my short fuse extended,” he quipped.

In his remarks, Netanyahu praised the expanding coalition — now numbering 66 of the Knesset’s 120 members — as a way to bring about much-needed government stability and to better serve Israel’s security needs.

“Ever since this government was formed last year, I have emphasized the need to expand it,” he said. “This is why today I welcome Liberman and the members of his party as important partners. We’ve come a long way together, working for the benefit of Israel’s citizens. Its no secret we’ve had our political differences, it’s a part of politics. But now we are joining hands and look toward the future.”

Yisrael Beytenu chief negotiator Moshe Lion said earlier in the day that Liberman’s “achievements” in the negotiations were significant in relation to the size of his party, which will be bolstering the coalition’s 61-seat, razor-thin Knesset majority with five seats, while shrinking the opposition to 54.

Lion told Army Radio that some of the finer details of pension funding were yet to be finalized. He said the party hoped to secure an increase of several hundred shekels a month for immigrant retirees who hadn’t been able to work long enough in Israel to accrue reasonably sized pension funds. The pension increase will be applied to all elderly immigrants — not only those who hailed from the former Soviet Union, as Yisrael Beytenu had initially demanded.

Prime Minister Benjamin Netanyahu and Yisrael Beytenu party leader Avigdor Liberman sign a coalition agreement in the Knesset on Wednesday, May 25, 2016 (Yonatan Sindel/FLASH90)

Prime Minister Benjamin Netanyahu and Yisrael Beytenu party leader Avigdor Liberman sign a coalition agreement in the Knesset on Wednesday, May 25, 2016 (Yonatan Sindel/FLASH90)

Netanyahu, Liberman, Finance Minister Moshe Kahlon (Kulanu) and Tourism Minister Yariv Levin — Likud’s chief negotiator — met late Tuesday night and into Wednesday along with other negotiators to resolve the sticking points.

A Likud source told Israeli media late Tuesday that Liberman “wanted to close the deal and showed flexibility toward Kahlon’s demands on the pension reform issue.”

The Kahlon-led Finance Ministry had initially balked at Liberman’s demand for pension infusions, noting the high price tag and the legal and ethical problems that arise when welfare benefits are applied based on place of birth.

The issue is critical for Yisrael Beytenu, for which elderly Russian-speaking Israelis are a core constituency. Most of the approximately 78,000 elderly immigrant poor in the country hail from the FSU, in part because many of those immigrants arrived in Israel without pensions and were too old to save up for new pensions in Israel.

Liberman’s presumptive move into the Defense Ministry shook the Israeli political arena when it was announced last week, as the then-incumbent defense minister Moshe Ya’alon from the Likud party was effectively ousted from his post.

Ya’alon promptly resigned from politics, citing a “lack of trust” in the prime minister.

Times of Israel staff contributed to this report.