Israel heads into unknown as Netanyahu's election gamble fails

[JERUSALEM] Benjamin Netanyahu's gamble to hold elections for a second time this year backfired, as a deadlocked result left Israel convulsed by a new wave of political turmoil.

The inconclusive race against his centrist rival, former military chief Benny Gantz, dealt a tough blow to Israel's longest-serving prime minister. At best, he'll return to office badly weakened at a time when Israel's diplomatic and security challenges are mounting and the Trump administration prepares to present its Middle East peace plan. At worst, he'll be forced from power and rendered more vulnerable to prosecution on the corruption charges that have dogged him in recent years.

With most votes counted by midday Wednesday, Netanyahu's nationalist Likud slightly trailed former military chief Benny Gantz's centrist Blue and White. Neither party has the backing of 61 of parliament's 120 lawmakers, leaving each to reach out to other potential governing partners.

The political horsetrading will be feverish in coming days as Mr Netanyahu and Mr Gantz jockey to line up the most support. There's also pressure for their parties to join forces in a national unity government, a move that might require Mr Netanyahu to step aside or be forced out.

After a near-final tally is released Thursday, President Reuven Rivlin will consult with the various parties to see whom they recommend he ask to form the next government. Coalition talks could take as long as six weeks.

"Under the current situation, we expect coalition-building negotiations in Israel to prove difficult and protracted," said Kubilay Ozturk, analyst at Deutsche Bank, in an emailed response to questions. "The only consolation is President Rivlin's determination to avoid a third election, which would hopefully lead to formation of a government in the end. Rising tension and security risks in the region could also serve as an amplifier in the government-formation process."

BLOOMBERG