TEL AVIV— It was 10 p.m. and the rave beats were pumping at the Drive In Arena in north Tel Aviv. Recently built as the new home of the Hapoel Tel Aviv basketball club, on Tuesday it was the election night base camp of the center-left Zionist Union, led by Labor Party leader Isaac Herzog and Hatnua's Tzipi Livni. Young people pogoed to the music and waved Israeli flags. Parents held their children aloft as crane cameras swooped past. A movie screen behind the arena stage flashed with stylized portraits of Zionist Union leaders set amid animated fireworks.
But if you watched the people with the lanyards, the professionals, you could see they weren't smiling. "In about 15 minutes, everyone's gonna get real depressed," a journalist friend told me. He'd gotten the news: Herzog and Netanyahu were dead even in the vote count, a situation that, if it held, strongly favored Netanyahu, who would be able to assemble a governing coalition far more easily.
As the reality began to sink in, Labor Party activists tried to remain optimistic. "We should be proud that there are more minorities in the Knesset," said Jonathan, a young activist clad in a royal blue Labor Party t-shirt featuring a Shepard Fairey-style portrait of Herzog gazing thoughtfully into the distance. While assuring me—and himself—that "Nothing is a closed deal, we'll know the results tomorrow," he sounded like he was already approaching the acceptance stage. "The Israeli people deserve a leader who will make peace, who will go to an agreement [with the Palestinians], who will support social justice," he said. "Israel deserves a prime minister who cares about its people."
It turned out, though, that the close results didn't hold: Netanyahu swept to a decisive re-election victory. It's worth considering, as many will be over the coming days, what this means for U.S.-Israel relations. In short: It's going to be a bumpy next couple years. 
Some are already claiming that U.S. criticisms of Netanyahu's speech helped his re-election. This is unconvincing. The speech gave Netanyahu a small bump in the polls, but then his numbers continued to trend downward. While claims that Obama was "intervening" against Netanyahu in the election are also overblown, it was unclear to no one that he would prefer, quite reasonably, an Israeli government that was not diametrically opposed to two key U.S. goals in the region, a nuclear deal with Iran and a two-state solution, as Netanyahu is. Obama may be asking whether he should've intervened more forcefully to make clear the consequences to Israel of continuing with Netanyahu's policies.

As to how Netanyahu's re-election impacts U.S. calculations vis-a-vis ongoing P5+1 nuclear negotiations with Iran, I would say: not too much. Netanyahu's ability to impact the actual details of any deal remain fairly limited, though of course he can continue to incite Congress against the negotiations, which can in turn create problems for the talks.
The impact on the peace process with the Palestinians will be more serious. With Netanyahu withdrawing his already tenuous support for a Palestinian state in a desperate (and apparently successful) late bid for right-wing votes, it's safe to say that there isn't a peace process and there won't be one in the immediate future. We'll probably see a U.S. shift toward the United Nations, something they've been hinting at for a while, in an effort to re-affirm the strong international consensus in support of the two-state solution and the illegality of Israeli efforts to prevent that solution by building settlements. We'll also see less enthusiasm on the part of U.S. officials to expend valuable diplomatic capital in various international venues to protect Israel from the consequences of its own decisions, particularly with regard to European Union measures against settlements. 
Palestinian efforts at the ICC and U.N. will also have greater momentum, as will broader BDS (boycott, divestment, and sanctions) efforts in civil society in Europe and increasingly in the U.S. A main argument against these efforts has always been that Israel genuinely seeks peace, but under Netanyahu that argument is no longer operative. Netanyahu may try to walk back his rejection of a Palestinian state, but anyone who believes him should have her head examined. While a bilateral agreement between Palestine and Israel remains the ultimate goal, the U.S. and its partners should not waste time on a sham process so long as Netanyahu is prime minister. He has demonstrated time and time again that he intends to prevent a two-state outcome.
While no one should expect a dramatic shift in the strategic relationship any time soon—it's too deeply rooted—we should understand that Netanyahu has just been rewarded by Israeli voters for blatantly disrespecting the United States and its president, for rejecting the international consensus in support of a two-state solution, and for shamelessly race-baiting against Israel's Arab citizens. Many on the U.S. right will have no problem with this, as it reflects their own views, so the relationship between the Israeli and American right will continue to strengthen. On the American left, however, we can expect to see an even more intense debate over the nature of the U.S.-Israel relationship, one that elected Democrats will increasingly have to acknowledge and engage.
There's so much to be proud of in the democracy that Israelis have created. But the fact that the occupation was barely discussed in this campaign is extremely troubling. The reality, however, is this: Unless and until every single person under the authority of the Israeli government has the right to vote for that government, that democracy will be a tainted and illiberal one. Clearly many Israelis recognize this and continue to work diligently, under considerable pressure and increasingly ugly and threatening criticism, to change it. Israel's prime minister, and those who voted for him, however, have indicated that they're fine with it. Americans must consider whether they are.