FP’s Situation Report: Israeli Prime Minister Benjamin Netanyahu wins; Republicans boost DoD’s budget; A U.S. drone is missing in Syria; Tone changes on guns in Ukraine, and much more from around the world.

By David Francis with Sabine Muscat

Israeli Prime Minister Benjamin Netanyahu surges to victory. The pollsters predicting a close race were wrong as Bibi sails to a win. His reelection could further complicate relations with Washington. FP’s David Kenner: “On the eve of the election, the prime minister promised that a Palestinian state would not be created on his watch, and bragged that he had approved settlement construction for the specific purpose of undermining the contiguity of a Palestinian state.”

More on Netanyahu’s victory below.

Never mind the law — House Republicans nearly double DoD’s budget. Lawmakers are legally obligated to trim billions from the Pentagon’s budget, but GOP members in the House have a different idea. FP’s Kate Brannen: “The Pentagon requested $51 billion in war funding for 2016, money that’s supposed to go toward overseas military operations, including in Afghanistan and Iraq. The House Budget Committee plan would boost that to $94 billion — but does not detail how the extra funds would be spent.”

Bonus from Brannen: The Pentagon said Tuesday it lost contact with a surveillance drone flying in the skies over Syria. Syrian President Bashar al-Assad says his air defense forces shot it down.

More on the Islamic State below.

Is U.S. tone shifting on arming Ukraine? For months, officials within the Obama administration have called on the president to consider arming Ukraine. Now, Lt. Gen. Ben Hodges, the top U.S. Army commander in Europe, is wondering whether weapons are a good idea, FP’s Yochi Dreazen reports. Meanwhile, the head of the international organization monitoring the war wants to publish photos to prove the cease-fire between Ukraine and pro-Russian separatists isn’t holding, FP’s John Hudson reports.

More on Ukraine below.

Breaking late Tuesday: CNN’s Alexandra Jaffe reports that a letter received Monday by the White House contains cyanide.

PRESS PACK: Bibi wins despite exit polls showing a dead heat.

The Wall Street Journal’s Joshua Mitnick: “With 99% of the ballots counted, Likud is slated to control 29 of parliament’s 120 seats to 24 for Isaac Herzog’s Zionist Union, Israel Radio reported early Wednesday. That advantage means Mr. Netanyahu, Israel’s longest serving premier after David Ben-Gurion, will have little difficulty in forming a majority coalition based on right-wing nationalist and religious parties.”

The Washington Post’s William Booth: “Israelis expected a possibly long and drawn-out struggle between Netanyahu and his challenger, with both men and their parties claiming the mantle of leadership and trying to form governing coalitions.”

The New York Times’ Isabel Kershner on Netanyahu’s proclamation there would be no Palestinian state: “From the capitals of Europe, to Washington, to the West Bank, to the streets of Israel, even while his critics said Mr. Netanyahu had reaffirmed his reputation as a cynical, calculating politician, it appeared that his approach succeeded in drawing votes from other right-leaning parties.”

Reuters’s Matt Spetalnick and Patricia Zengerle: “A better-than-expected showing by the Israeli prime minister in Tuesday’s closely fought election raises the prospect that he could remain a thorn in Obama’s side, with the two men increasingly at odds over Iran diplomacy and Middle East peacemaking.”

Welcome to Wednesday’s edition of the Situation Report, where we remain quite a bit skeptical about flying cars by 2017.

Contact me at david.francis@foreignpolicy.com and follow me @davidcfrancis, and spread the word about SitRep — your destination for global security news and Washington whatnot. Like what you see? Tell a friend. Tell your colleagues. Don’t like what you see? Tell me. Or holler with tips, reports, or anything else the world needs to know, and I’ll try to include it.

WHO’S WHERE WHEN TODAY

10:00 a.m. Defense Secretary Ashton Carter and Chairman of the Joint Chiefs General Martin Dempsey testify on the Islamic State before the House’s Armed Services Committee. 10:00 a.m. The Wilson Center hosts a teleconference on “Analyzing the Israeli Elections.” 2:30 p.m. Federal Reserve Chair Janet Yellen holds a much-anticipated press conference. 2:00 p.m. President Barack Obama gives a speech on the economy in Cleveland, Ohio.

WHAT’S MOVING MARKETS

USA Today’s David Carrig: “Stocks ended mostly lower Tuesday as the Federal Reserve kicked off its two-day meeting on interest rate policy and investors wait for clues on when the central bank may begin raising rates.”

The Hindu’s Lalatendu Mishra: “Emerging economies like India are faced with the risk of high market volatility and sudden flight of capital as the United States is gearing up to increase interest rates by the end of this year.”

ISLAMIC STATE: Tairod Nathan Webster Pugh is charged with trying to join the terror group as new chemical weapons accusations emerge against Syria.

FP’s David Francis: “Pugh, a 47-year-old mechanic, appears to be the first American military veteran charged with supporting the Islamic State.”

The New York Times’ Ben Hubbard: “Anti-government activists in Syria said Tuesday that a chlorine bomb attack by government forces on a northwestern village overnight had killed six people and filled clinics with choking victims.”

BOKO HARAM: The Nigerian military claims it has driven the terror group from Bama, a key town in the north.

The BBC: “A large number of militants were killed and a ‘mopping up’ operation is continuing in the second largest town in Borno state.”

UKRAINE: A Putin opponent says no to U.S. arms in Ukraine as Europe eyes more sanctions.

The Washington Post’s Michael Birnbaum: “As Washington debates whether to send lethal weaponry to the Ukrainian army, one of the Kremlin’s biggest critics, Alexei Navalny, says it would be a mistake.”

Military Times’ Richard Sisk: “The U.S. Army has delayed sending U.S. troops to western Ukraine on a training exercise to avoid giving Russian President Vladimir Putin an excuse to have Moscow-backed rebels violate a tentative ceasefire, the U.S. Army commander in Europe said Tuesday.”

RUSSIA: Who will lead opposition to Putin?

The Washington Post’s Karoun Demirjian: “Boris Nemtsov’s killing means that for the first time, the Russian opposition must carry on without the man who was its chief organizer and arbiter.”

IRAN: Opinions differ on the status of the nuclear talks as a key Republican puts the use of force on the table. Meanwhile, U.S. and European lawmakers warn of the potential consequences of a bad deal.

The New York Times’ Michael R. Gordon: “Iran and the United States issued contrasting assessments Tuesday on their progress toward an agreement to limit Iran’s nuclear program as Energy Secretary Ernest J. Moniz met here with his Iranian counterpart.”

Bloomberg’s Tony Capaccio and John Hughes: “Sen. Tom Cotton tells Bloomberg News if there’s a failure to reach agreement with Iran, the potential use of military force must be a credible option and ‘not just words the president mouths.’”

Al Monitor’s Julian Pecquet: “U.S. and European lawmakers are circulating an unprecedented joint letter warning their respective heads of state that a bad deal with Iran will ‘without fail’ result in more sanctions.”

SOUTHEAST ASIA: The Philippines says the United States screwed up a mission against militants.

The Washington Post’s Craig Whitlock: “At least six Americans were present at a Philippine command post during the ill-fated January raid and supplied Philippine forces with surveillance data collected by U.S. aircraft.”

AFGHANISTAN: Afghan officials are thrilled the United States is revisiting plans to withdraw troops.

Voice of America: “Afghan representative to the United Nations Zahir Tanin told reporters in New York there is a need for the United States to better assess ground realities within the framework of its strategic partnership with Afghanistan to re-examine and readjust the details of the military withdrawal.”

YEMEN: Hundreds of millions of U.S. dollars go missing.

The Washington Post’s Craig Whitlock: “The Pentagon is unable to account for more than $500 million in U.S. military aid given to Yemen, amid fears that the weaponry, aircraft and equipment is at risk of being seized by Iranian-backed rebels or al Qaeda.”

CUBA: Talks between D.C. and Havana end abruptly.

Reuters’s Daniel Trotta: “The latest talks between Cuba and the United States on restoring diplomatic relations concluded after one day, Cuba said on Tuesday without disclosing what may have been agreed.”

EAST ASIA: South Korea and China square off over U.S. missiles as Seoul attributes a cyber breach to Pyongyang’s hackers.

The New York Times’ Choe Sang-Hun: “Tension between Seoul and Beijing over Washington’s desire to deploy a ballistic missile defense system in South Korea intensified on Tuesday as South Korea made an unusual public retort to China, asking it not to meddle in its defense policy.”

Reuters’s Ju-min Park and Meeyoung Cho: “South Korea on Tuesday blamed North Korea for cyberattacks against the country’s nuclear reactor operator last December, based upon investigations into Internet addresses used in the hacking, but Pyongyang denied any involvement.”

UNITED NATIONS: U.N. investigators begin to share information on possible war criminals in Syria with European authorities.

Reuters’s Stephanie Nebehay: “The move could pave the way for perpetrators of killings, torture and atrocities on all sides to be brought to account.”

SECRET SERVICE: Lawmakers slam the new Secret Service chief for agents’ misbehavior as he asks for an expensive model of the White House.

FP’s David Francis: “After a month on the job, Clancy was forced to admit decades-old institutional problems within the agency that resurfaced nearly two weeks ago.”

The Washington Post’s Brian Murphy reports Clancy wants to build an $8 million replica of the White House in Beltsville for training purposes.

EBOLA: A U.S. victim’s treatment exceeds that of an African coworker at the charity Partners in Health.

Reuters: “The return of the four U.S. healthcare workers brings to 16 the number of Americans who have returned to the United States from Sierra Leone since Friday, the CDC said.”

The New York Times’ Sheri Fink: “The paths taken by the Americans and their Sierra Leonean colleague have raised questions about whether the charity has been acting in concert with its stated values.”

CYBER: Congress wants to get serious on combating cyber threats — but competing bills are getting in the way.

The Hill’s Cory Bennett: “House Homeland Security Committee Chairman Michael McCaul (R-Texas) said Tuesday he would release this week a draft of a bill to make the Department of Homeland Security the point agency on public-private cyber threat data sharing.”

THINK TANKS

Ahead of President Ashraf Ghani’s visit to the United States next week, the Center for American Progress issued a brief on needed security reforms in Afghanistan.

AND FINALLY, FP’s Kate Brannen on Illinois Rep. Aaron Schock’s Downtonian fall from grace: “It’s no dead Turkish diplomat in your bed, or secret love child with your newspaper mogul boyfriend who disappeared in Germany, but by Washington standards, it’s enough to bring you down.”