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.
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. Both held victory rallies, but without a clear majority neither can govern alone. Hard-line parties won a majority of the votes, meaning that Netanyahu has more natural allies and a better chance of forming a coalition.
The results set the stage for what could be weeks of coalition negotiations. The first meetings began Wednesday, with Netanyahu meeting the head of the ultra-Orthodox Shas faction and Livni meeting Avigdor Lieberman, whose ultranationalist party received 15 seats and emerged as the third-largest force in parliament.
Two of the more likely options would see a hard-line government led by Netanyahu, leaving Livni in the opposition, or some form of accommodation between the two in the form of a centrist coalition in which they would share power.
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.
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.
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 next week with party leaders to hear their recommendations and he expects to assign the task around Feb. 20, presidential spokeswoman Ayelet Frisch said.
However, the final word may be up to Lieberman, a former Netanyahu protege and perhaps Israel's most divisive politician.
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 kept his options open. "We want a right-wing government," Lieberman told party activists, but added that "we do not rule out anyone."
Meeting Lieberman in an attempt to woo him, Livni said Israelis have "chosen who they want to be prime minister."
"This is an opportunity for unity which can push forward the issues which are important to you as well," Livni said, according to a statement issued by her office.
Nearly everyone seemed to agree on one thing after Israel's fifth election in a decade — that the nation's fractious 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.
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, who governs the West Bank. 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.
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.
Arabs across the region saw somewhat better hopes for Arab-Israeli peace negotiations under Livni, although analysts feared any government she formed would be too weak to move decisively.
Under Livni "it will be possible to market the illusion of the existence of a peace process for another year or two," said Oraib al-Rentawi, head of the Al Quds Center for Political Studies, a private think tank based in Jordan. "But with Netanyahu's government, the mission will be far more difficult."
Others said the only reason for optimism in Arab-Israeli negotiations was that Obama put the issue at the top of his foreign policy agenda.
"Everybody knows that peace is in the hands of the Americans, and that the U.S. is capable of practicing pressures on any given government," said Saudi analyst Anwar Eshki, head of the Middle East Center for Strategic and Legal Studies in Jeddah.