When Israel’s hawkish rightwing foreign minister, Avigdor Lieberman, addressed New York’s Russian-Jewish community last April, he focused on the political success of Russian immigrants like him in Israel.

“Only in Israel,” Lieberman ventured, “can a young Russian immigrant arrive and in 20 years become foreign minister. One day we will have a Russian-speaking minister of defence, a Russian-speaking president, and soon, we may have a Russian-speaking prime minister.” Few doubted that he meant himself.

Today, however, his political fortunes appear to be in sharp decline after his party, Yisrael Beiteinu, became embroiled in a far-reaching corruption investigation. The former nightclub bouncer from Moldova has also fallen out with his erstwhile ally, prime minister Binyamin Netanyahu, with whose Likud party he briefly merged Yisrael Beiteinu at the last elections. Running on a joint list in 2013, the two parties won 31 seats. These days polls suggest Lieberman’s party would be lucky to win more than a handful.

There is also evidence that the million-strong core of Russian-speaking voters in Israel are abandoning his party. Parties in Israel’s political system – particularly those closely identified with individuals – tend to come and go. But Lieberman’s woes threaten to affect the outcome of the snap elections called for 17 March .

Alongside Netanyahu, Lieberman has been one of the key faces of Israel’s international diplomacy. He derided efforts by the Palestinian president, Mahmoud Abbas, to win support for statehood at the UN as “diplomatic terrorism” and has called for Israel’s sizable Arab minority to be made to swear a loyalty oath to the state. Lieberman’s other big idea – his own variant of the two-state solution – is no less controversial: he envisages the transfer of Israeli-Arab towns into a new Palestinian state.

Israel’s prime minister, Binyamin Netanyahu, whose Likud party would benefit from a drift of votes away from Yisrael Beiteinu. Photograph: Amir Cohen/Reuters

Critics, such as former president Shimon Peres, have described that plan as discriminatory and impractical. “Israel cannot take away its citizens’ citizenship simply because they’re Arab,” Peres said.

Last year Lieberman was also criticised for urging Israelis, via his Facebook page, to boycott Israeli-Arab businesses that went on strike in sympathy with Gaza.

Lieberman’s fate matters because under Israel’s electoral system the president first invites the party with the largest number of seats to try to form a coalition. With Netanyahu’s rightwing Likud party polling neck and neck with – or a few seats behind – a new party representing a joint slate of Labour’s Isaac Herzog and former justice minister Tzipi Livni, votes lost by Lieberman would, most analysts believe, drift towards Likud.

At the centre of Lieberman’s problems is a police investigation into his party and its contacts in which 30 people have been arrested, including one of Lieberman’s close confidants, Moshe Lion, although Lieberman has not been personally implicated.

It is claimed that figures allegedly associated with Lieberman’s party – including some in government ministries, NGOs, local councils, clubs and state bodies – funnelled kickbacks for personal and political advantage. Lieberman, who has been investigated and cleared of corruption in the past, says the investigation is politically motivated.

Launching his election campaign last week in the occupied West Bank settlement of Ariel, Lieberman, who lives in the more southerly settlement of Nokdim, said: “Had the current affair broken the day before elections were called, or two days after the end of the election campaign, I’d have understood. But the fact that it was declared two weeks after the disbanding of the Knesset is strange to me – and that’s an understatement. And I would like to believe that this is not connected to the elections and is entirely coincidental. But how can I believe that when I have encountered this coincidence for the sixth time?”

That claim was denied forcefully last Thursday by Israel’s attorney general, Yehuda Weinstein, who insisted that the investigation had been in place long before the elections were announced.

Whatever the truth, it is clear that the allegations are damaging to Lieberman’s party at a time when it has been struggling to appeal to a younger generation of more integrated Russian-speaking voters. “The party is going through a massive earthquake,” Avraham Diskin, a political scientist at the Hebrew University of Jerusalem, said last week. “It’s clear that it is in very big danger.”

Gideon Rahat, a political scientist at the Hebrew University, points out that Lieberman’s party, which was founded in 1999, has struggled to prosper of late in an overcrowded Israeli right, where he has been seen as tacking in the wrong direction.

Rahat does not believe that the investigation is politically motivated, but argues that Lieberman has “survived” previous crises where he has personally come under investigation. He was forced to step down temporarily as foreign minister over claims (of which he was cleared) that he had tried to advance the career of a former diplomat who relayed information to him about a criminal investigation into his business dealings.

Rahat believes a more important issue for Lieberman is whether he will still be interested in staying in politics if his trajectory is stalled or in a sharp decline. “His party was small in 2003. He did well out of his alliance with Likud in 2013 and succeeded to win a lot of seats with them. He can survive if he is willing to relinquish some power.”

Avigdor Lieberman addresses the media in Jerusalem last month. Photograph: Xinhua News Agency/Rex

That appears to be the crucial question. Lieberman’s party, Rahat points out, is little more than a vehicle for his political personality, with key decisions made by him. “The question is whether he would be satisfied now leading a small- to medium-size party.”

Of late, it has appeared that Lieberman had been trying to reposition himself and his party away from the further reaches of the right. This would allow him, say some commentators, to join a coalition with whatever bloc came top in the elections. That may be damaging Lieberman the most in his constituency.

Nadav Haetzni, writing in the Maariv daily newspaper, said: “Even before the troubles brought upon [Yisrael Beiteinu] by the police investigation, it had lost most of the Russian electorate that created and upheld it. At the same time, the rightwing idealist voter, who had once voted for Lieberman, has become clever and wised-up and gone to [Naftali] Bennett’s [Jewish Home]. Now under investigation, this party is also on the way to collapse, as the Russian sectarianism will fade together with it as well.”