A new phase of campaigning is under way in Israel, following its parliamentary elections.
Hard-liner Benjamin Netanyahu and his moderate rival, Tzipi Livni, are courting potential coalition partners.
With only a few thousand votes still to be counted, Livni's Kadima party has one more seat in the Knesset than Netanyahu's Likud. But Netanyahu's natural allies on the right have a clear majority of 65 in the 120-seat parliament, giving him the edge in forming a coalition.
President Shimon Peres will consult all 12 parties in the new parliament next week before choosing either Netanyahu or Livni to try to form a government. It's a process likely to take weeks.
Israel entered a period of political uncertainty and turmoil following inconclusive elections Tuesday that saw the leaders of both the centrist Kadima party and the right-wing Likud bloc claiming victory and mandates to form the next government.
Kadima leader Livni met Wednesday in Jerusalem with Avigdor Lieberman, the head of the far-right Israel Beiteinu party, in an effort to start forming a new coalition. Lieberman rode a strident campaign, questioning the loyalty of Israel's Arab citizens, into a strong third-place election finish and is now a key power broker in what are sure to be weeks of political jockeying.
Outside her Tel Aviv home before the meeting Wednesday, Livni made a pitch for unity and pledged to try to forge a broad-based coalition.
"The people chose me in droves. I feel a great responsibility to translate the power that has been given to me into action, to advance the country and to unify the people," she said.
Newly elected Knesset member Nachman Shai of Kadima called the election a win for the vital center and an endorsement of peace talks and an ever-elusive two-state solution with the Palestinians.
"It's a great victory for Tzipi Livni and the Kadima party and also for the basic and core of our ideology which is calling for two states for two people and a Jewish democratic state in defensible borders. That's because many Israelis believe this is the right way to go," Shai said.
Kadima had trailed Likud in the polls throughout the race, and Kadima's victory marks a dramatic comeback for the 50-year-old foreign minister. Livni's frequent talk on the campaign trail of hope and change, and her slogan "Belivni" — morphing her last name and "believe" — were obvious nods to Barack Obama's successful presidential campaign.
"At the end of the day, hope won," said Kadima strategist Lior Horev. "She never let go. I would say she's the comeback lady of Israeli politics."
But Likud leader Netanyahu also is claiming a governing mandate, underscoring the enormous challenge ahead for Livni in forming a viable coalition.
With 99 percent of the votes counted, Kadima came in first with 28 seats in the Knesset to Likud's 27 seats. Israel Beiteinu got 15 seats, a strong third-place finish for the relatively new party. The Labor Party, led by Defense Minister Ehud Barak, got 13 seats, a fourth-place historic low for a party that helped found the Jewish state and dominated politics there for more than three decades. Labor officials say the party's leadership is now debating its direction and assessing whether to go into the opposition or join a new coalition.
Early Wednesday in Tel Aviv, Likud leader Netanyahu, who served as prime minister from 1996 to 1999, said the right-wing bloc — what he calls the national camp — won the right to form and lead a new coalition.
"God willing I will head the next government. I'm sure I would be able to form a good, broad and stable government that would be able to deal with the security crisis, the economic crisis, and will lead major reforms in education for Zionism and encourage excellence as we promised in the elections," the 59-year-old told supporters. "The strong rise of the national camp and the strong rise of the Likud mean only one thing: The people want a change."
Netanyahu said Likud would first turn "to our natural partners in the national camp ... to start discussions tomorrow for the forming of a new government in the state of Israel."
The leading Hebrew daily Yedioth Ahronoth today showed pictures of both Netanyahu and Livni with the banner headline "I won."
Netanyahu also was set to meet Wednesday with Lieberman following talks with Eli Yishai, the leader of the ultra-Orthodox Shas party, which got 11 Knesset seats and remains an influential broker in coalition talks.
"We committed ourselves before the election to recommend Benjamin Netanyahu to the president," Yishai told Israel Army Radio today. "The people's choice is a rightist government. This, of course, doesn't rule anything out."
Few parties in Israel's fractious political system are ruling anything out. Lieberman now becomes the potential kingmaker in coalition talks.
"We want a nationalist government. We want a rightist government ... and we are not hiding this," Lieberman said. But he also said the party hasn't dismissed any options.
Kadima's Livni last year tried and failed to form a coalition after Prime Minister and then-Kadima leader Ehud Olmert resigned in the face of corruption allegations. Olmert remains prime minister in a caretaker role.
"When you are a centrist party you can draw on people from both the left and the right," Kadima's Horev said optimistically early Wednesday. "We can form it with Labor, we can form it with Likud, we can form it with Lieberman, and we can also form it with the ultra-Orthodox," he said.
Many others aren't so sure. "This election has brought us into a stalemate —total stalemate," said Arik Carmon, president of the Israel Democracy Institute. He calls the inconclusive election results a recipe for political deadlock.
"It's very hard to see how we can get out of this Gordian knot," he said.
This is the fifth national election in Israel in 10 years. Thirty-four parties were on the ballot Tuesday. Carmon says the outcome underscores the urgent need to reform Israel's dysfunctional electoral system and to repair a political process marred by corruption, apathy and confusion.
"We need to reform the system in such a way that Israel will have no more than five to seven parties. We need stable government that could sustain for close to four years if not a full four years. And we need to rehabilitate the trust of the Israeli public in politics," Carmon said.
Israeli President Shimon Peres soon will meet with all party leaders to gauge who Knesset members think has the best chance to form a stable coalition. The chosen party then has a month and a half to form a new government.
The issues at stake for Israel are enormous, including fledgling peace talks with the West Bank Palestinian leadership and deep concerns over the Hamas-controlled Gaza Strip, as well as Iran's nuclear ambitions and the global economic crisis that has started to affect Israel's once robust high-tech economy.
Israeli and Hamas officials said indirect cease-fire talks, mediated by Egypt, will not stop despite the political limbo in the Jewish state. Civilians in Hamas-run Gaza are still reeling from Israel's recent 22-day military offensive, launched to stop militants there from launching rockets and mortar rounds into towns and cities in southern Israel. Some 1,300 Palestinians, according to Gaza doctors, were killed in the conflict. Thirteen Israelis were killed. A fragile cease-fire is in place, but sporadic rocket fire and Israeli airstrikes continue.
Livni has led peace talks with the West Bank leadership on a two-state solution to the conflict, negotiations President Obama has pledged to quickly help rejuvenate. But the election results could complicate that effort. Netanyahu has called the current talks improbable and instead wants financial incentives to improve the West Bank economy.
Palestinian President Mahmoud Abbas this week said he is ready to work with any new Israeli government, but he warned that settlement expansion must stop or else "violence and terrorism will be knocking on our doors." Other Palestinian officials have called Netanyahu's economic ideas inadequate and an effort to beautify Israel's 41-year-old occupation of the West Bank.
West Bank Palestinian Prime Minister Salam Fayyad called on Israel to live up to its international obligations. "We imagine that the expectations of the international community [toward Israel] will be the same as ours," Fayyad said.