Israel's election too close to call, Netanyahu falls short of parliamentary majority

After failing to secure a clear election victory for the second time this year, Israeli Prime Minister Benjamin Netanyahu must wait days — or more likely weeks — to learn if he can stay in office, or whether he must step aside.

With Israeli media reporting more than 90 per cent of votes counted in Tuesday's election, the bloc led by Netanyahu's right-wing Likud party was almost neck and neck with the centrist grouping led by his chief rival, the former general Benny Gantz.

Netanyahu's bloc looked poised to control 55 of Parliament's 120 seats, with 56 going to Gantz's Blue and White Party, and his partners. Both fall short of a majority government of 61 lawmakers.

No single Israeli party has ever won an outright majority, and that is not going to change in a year of unprecedented electoral instability which has already seen two elections.

Gantz said Wednesday it appeared from the exit polls that Israel's longest-serving leader was defeated but that only official results would tell.

In his own speech to right-wing Likud party faithful, Netanyahu, sipping water frequently and speaking in a hoarse voice, made no claim of victory or concession of defeat, saying he was awaiting a vote tally.

Netanyahu's appearance in the dead of night at Likud's election headquarters was a far cry from his triumphant declaration five months ago that he had won a close election. His failure to form a government after the April ballot led to the new election on Tuesday.

Gantz, a former armed forces chief, beamed with confidence as he told a rally of his Blue and White Party that it appeared "we fulfilled our mission," and he pledged to work toward formation of a unity government.

"We will await the actual results," said Gantz, 60.

Possible kingmaker emerges

Neither had enough support for a governing coalition, and Netanyahu's ally-turned-rival, former defence minister Avigdor Lieberman, emerged as a likely kingmaker as head of the far-right Yisrael Beitenu party.

Lieberman, head of the Yisrael Beitenu party, is fiercely secular and hawkish on issues relating to security and the Israeli-Palestinian conflict.

He has said the only option he would support is a "national unity government" that would include both his party, Likud and Blue and White. According to preliminary results, Lieberman's party is set to almost double its current number of five parliamentary seats. However, Lieberman is something of a wild card and has made unpredictable moves in the past.

Netanyahu, who highlighted his close relationship with U.S. President Donald Trump during the campaign, said in his 3 a.m. speech at Likud election headquarters in Tel Aviv that he intended to establish a "strong Zionist government" that would reflect the views of "many of the nation's people."

Unless that miraculous turnabout between the exit polls and the actual results happens — the Netanyahu magic has been broken.- Anshel Pfeffer, author of a Netanyahu biography

His description of a future administration appeared to open the way for Jewish parties not part of his current government to join.

It also seemed to be a swipe at Gantz, and the possibility that Netanyahu's rival might try for a governing coalition with the tacit support of an Arab party, which many right-wingers see as disloyal to Israel.

Coalition building could be complicated: Lieberman has said he would not join an alliance that included ultra-Orthodox parties, Netanyahu's traditional allies. Lieberman ran on a platform largely focused on weakening the influence that religious parties have on everyday life in Israel.

Gantz has ruled out participating in an administration with Netanyahu, if the Israeli leader is indicted on looming corruption charges.

Arab coalition gains

Israel's Arab coalition, Joint List, appears poised to emerge as the main opposition bloc following Tuesday's election, a historic first that would grant a new platform to a long-marginalized minority.

The group expected to win about a dozen seats in the 120-member assembly. In absolute terms, the Arab bloc appears to have repeated its performance in 2015, when it won 13 seats.

But this time around, due to the shifting constellation of Israeli politics, it would be well-placed to lead the opposition if a national unity government of the two largest parties is formed, as seems likely.

That would put a representative of Israel's Arab citizens closer to the centre of power than ever before and strengthen their ability to influence the national agenda.

Corruption charges plague Netanyahu

Dubbed King Bibi by his supporters, Netanyahu, 69, had already been stung by the April poll.

Three corruption investigations and the Israeli attorney general's announced intention to charge him with fraud and bribery have also chipped away at Netanyahu's seeming invincibility, 10 years into consecutive terms as prime minister marked by a sharp focus on security that resonated with voters.

Netanyahu, who can argue at a pretrial hearing in October against indictment, has denied any wrongdoing.

An election loss could leave him more at risk of prosecution in the graft cases, without the shield of parliamentary immunity that his current political allies had promised to seek for him.

"Unless that miraculous turnabout between the exit polls and the actual results happens — the Netanyahu magic has been broken," Anshel Pfeffer, author of a Netanyahu biography, wrote in the left-wing Haaretz daily.

Campaigns run by Likud and Blue and White pointed to only narrow differences on many important issues: the regional struggle against Iran, the Palestinian conflict, relations with the United States and the economy.

Significant policy change unlikely

An end to the Netanyahu era would be unlikely to bring about a significant change in policy on hotly disputed issues in the peace process with the Palestinians that collapsed five years ago.

Before the last election, Trump gave Netanyahu a lift with U.S. recognition of Israeli sovereignty over the Golan Heights, captured from Syria in the 1967 Middle East war. This time, the White House seems more preoccupied with Iran.

The Trump administration plans soon to release an Israeli-Palestinian peace plan that may prove a dead letter: The Palestinians have rejected it in advance as biased.

In what was widely seen as a bid to draw votes away from ultranationalist parties, Netanyahu last week announced his intention to annex the Jordan Valley in the occupied West Bank, where the Palestinians seek statehood.

But Blue and White, while vowing to pursue peace, has also said it would strengthen Israeli settlement blocs in the West Bank, with the Jordan Valley as Israel's "eastern security border."

In Gaza, Palestinians awaited the results of the vote.