Israel's new coalition government — whether led by hard-line Benjamin Netanyahu or his moderate rival Tzipi Livni — is likely to take a tough line on two burning issues: Hamas and Iran.
As the two began courting potential coalition partners Wednesday, two scenarios took shape: a narrow alliance of hawks who would stall peacemaking with the Palestinians, or a broad power-sharing government that would give Israel a more moderate face and greater international support.
With only a few thousand votes by soldiers still to be counted, Livni's Kadima Party had one more seat in parliament 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 — a process likely to take weeks if not months.
The two offer vastly different approaches when it comes to peacemaking with the Palestinians: Livni supports giving up territory to make room for a Palestinian state, while Netanyahu has said he considers current U.S.-backed Mideast peace talks a waste of time.
However, they both take a hard line when it comes to the Islamic militants of Hamas, who overran the Gaza Strip in 2007, and the potential threat of Iran's nuclear program.
Both threaten harsh military action against Hamas if rocket fire from Gaza persists and reject negotiations with Hamas in the wake of a punishing Israeli offensive in Gaza last month. They also agree the Hamas regime should be toppled, though neither has spelled out how that should be done.
As for Iran, Israel considers it the nation's biggest threat and rejects Tehran's assertion that its nuclear program is to produce energy, not bombs. Both Livni and Netanyahu have hinted that military action might be necessary to prevent Iran from obtaining an atomic weapon.
These key areas of accord might nudge Netanyahu and Livni into a joint government, especially since neither is in a strong position as coalition maneuvering begins.
The results of Tuesday's vote were inconclusive. Likud has only 27 seats to Kadima's 28 — less than a quarter of the house each — which means that whoever forms the government will have to lead a fractious coalition. The key is held by Avigdor Lieberman, whose Yisrael Beitenu Party emerged as the third-largest with 15 seats. Though he is firmly in the hawk camp, he did not rule out serving under Livni.
"Political Tangle," read the headline on the front page of the Yediot Ahronot daily, flanked by smiling photos of the two would-be premiers.
Lieberman hopes to redraw Israel's borders to push areas with heavy concentrations of Arabs outside the Jewish state and under Palestinian jurisdiction. Those who remain would be forced to sign an oath of loyalty to Israel, and anyone who refused would lose the right to vote or run for office.
A Likud-Kadima national unity government could leave Lieberman, whose rise in Israeli politics is troubling to many in Israel and abroad, on the sidelines.
One possibility is a government based on Netanyahu's fellow hard-liners. Another is a broad "national unity" team under Netanyahu or Livni, with participation of the other, along with the centrist Labor and some small parties.
A third option is a power-sharing arrangement in which one would serve as prime minister for a set period, and then the other would take over — an arrangement called "rotation" when it was tried in the 1980s.
The outcome could prove critical to peace efforts.
Livni spent a year leading Israel's team in negotiations with the Palestinians and is committed to the idea of a Palestinian state. So, too, is Defense Minister Ehud Barak's Labor Party. Netanyahu, by contrast, has staked his political reputation on opposing the sweeping territorial concessions that would be required to clinch such an accord.
Besides broad agreement over Iran and Hamas, internal politics might push the two together.
Joining forces with Livni could allow Netanyahu to exclude from his government extreme nationalists whose presence could cause trouble with the Obama administration, which wants to move ahead quickly on an Israel-Palestinian peace deal.
It could also let him avoid costly capitulation to ultra-Othodox Jewish parties that traditionally have demanded large budgets for pet projects as the price for joining governments.
In Washington, White House spokesman Robert Gibbs said Obama "looks forward to working with whoever makes up that next Israeli government in a search for lasting and durable peace in the region."
In a speech early Wednesday in which he claimed victory, Netanyahu said he would push for a national unity government, but he would start with his natural allies. Livni, too, called for a national unity government but did not specify with whom.
Dan Meridor, a veteran politician who returns to parliament under the Likud banner, told The Associated Press Wednesday that a broad-based government is the best option.
"I've been in narrow governments and broad governments, and a broad government is much easier to handle," he said.
But nothing is certain. Netanyahu himself talked of going it alone as the votes were being counted.
"The Israeli people have expressed their opinion clearly and sharply," he said in his victory speech. "The national camp, led by the Likud has won a clear advantage. ... The people want a change. The people want to follow a different path. Our path has won, and it is the path that will lead the people."
Former Palestinian Information Minister Mustafa Barghouti said Wednesday the election showed an Israeli turn to the right.
"There is no difference between Livni, Netanyahu and Barak," he told The Associated Press in Washington. The election results show that "Israel is responding with negative change to Obama."
Meanwhile, Israel gave approval Wednesday for the export of 25,000 flowers from Gaza to Europe. The shipment of carnations, the first in more than a year, came at the request of the Dutch government, it said in a statement.
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