Inconclusive election results sent Israel into political limbo Wednesday with both Foreign Minister Tzipi Livni and hard-line leader Benjamin Netanyahu claiming victory and leaving the kingmaker role to a rising political hawk with an anti-Arab platform, AP reported.
Livni's Kadima Party won 28 seats, just one more than Netanyahu's Likud, in Tuesday's election for the 120-member parliament, according to nearly complete results. With neither party winning a clear majority, neither can govern alone. Gains by right-wing parties give Netanyahu a better chance of forming a coalition with his natural allies.
The results set the stage for what could be weeks of coalition negotiations. Israeli media reported the first meetings were scheduled for Wednesday.
Such paralysis could dampen prospects for Egyptian-led attempts to broker a truce between Israel and Gaza's Hamas rulers after Israel's devastating offensive in Gaza last month. Hamas might be reluctant to sign a deal at the risk of having it overturned by the incoming coalition.
Whatever government is forged, it is unlikely to move quickly toward peace talks with the Palestinians and instead could find itself on a collision course with President Barack Obama, who has said he's making a Mideast peace deal a priority.
It's up to Israeli President Shimon Peres to decide whether Livni or Netanyahu should have the first shot at forming a government. Peres will meet with party leaders to hear their recommendations, and then has a week to make up his mind.
However, the final word may be up to ultranationalist Avigdor Lieberman, a former Netanyahu protege and perhaps Israel's most divisive politician, whose rightist Yisrael Beiteinu gained four seats in the election to hold 15.
Lieberman kept his options open, saying he spoke both to Livni and Netanyahu after the polls closed. "We want a right-wing government," Lieberman told party activists, but added that "we do not rule out anyone."
Several hours after polls closed, Livni and Netanyahu staged rival victory rallies.
"With God's help, I will lead the next government," Netanyahu told cheering Likud activists early Wednesday.
An hour later, Livni told her supporters that "the people have spoken, and they have chosen Kadima."
Nearly everyone seemed to agree on one thing after Israel's fifth election in a decade - that the nation's election system isn't working. Livni, Lieberman, and Defense Minister Ehud Barak of the Labor Party said in post-election speeches that the system, in which votes are splintered among a proliferation of parties, must be changed to allow more stability.
With all of the civilian votes counted, Kadima won 28 seats, Likud 27 and Yisrael Beiteinu 15. Labor, for decades Israel's ruling party, won just 13 seats. Overall, right-wing and religious parties won a total of 65 seats, compared to 55 for center-left and Arab parties.
The tally did not include thousands of votes by soldiers, to be counted by Thursday evening. They could shift the final results by a seat or two.
Lieberman says he wants to redraw Israel's borders in order to push out heavily Arab areas and require those who remain to sign a loyalty oath or lose the right to vote or run for office.
Some 20 percent of Israel's 7 million citizens are Arabs, and about a dozen serve in parliament.
Lieberman's party draws strong support from immigrants from the former Soviet Union, many of whom are secular and feel stifled by Israel's ultra-Orthodox religious establishment. Netanyahu has strong ties to Jewish religious parties, particularly the ultra-Orthodox Shas, whose spiritual leader has said a vote for Lieberman is a vote for Satan.
During Netanyahu's three-year term as prime minister a decade ago, he largely froze the interim peace deals his predecessors negotiated with the Palestinians.
Netanyahu has derided the past year of peace talks under Kadima as a waste of time, and said he wants to focus on reviving the Palestinian economy. He has also called to crush Hamas, the Islamic militant movement that seized the Gaza Strip by force in June 2007, and remove it from power.
Livni has said she would continue peace talks with moderate Palestinian President Mahmoud Abbas. But she also advocates a tough line against Hamas and was one of the architects of Israel's three-week Gaza war, which ended with a temporary cease-fire on Jan. 18.
Abbas will restart talks only if Israel commits to a settlement freeze, his aides said Tuesday, posing such a condition for the first time.
"We now have clear conditions for whoever heads the Israeli government," said Rafiq Husseini, an Abbas adviser. "The conditions begin with the halt of settlement activities immediately."
Netanyahu wants to expand settlements, and even under the outgoing Kadima-led government, in which Livni served as chief negotiator, construction accelerated.
The Palestinians want all of the West Bank for a future state, along with Gaza and east Jerusalem. They say the West Bank settlements, home to nearly 300,000 Jews, will make that impossible.
It was not immediately clear whether the prospect of weeks of political paralysis would lessen chances for a long-term Gaza truce and a prisoner swap between Israel and Hamas.
Under the proposed exchange, Israel would free hundreds of Palestinians for an Israeli soldier held since June 2006 by Hamas-allied militants.
Prime Minister Ehud Olmert, freed from concerns about political fallout, could approve a deal before the new government is sworn in. A swap is linked to efforts to reach a permanent truce on the Gaza-Israel border. Hamas wants Israel and Egypt to lift their blockade of Gaza, while Israel wants a halt to arms smuggling into Gaza.