TEL AVIV: Benjamin Netanyahu's right-wing Likud-Beitenu list won a narrow victory in legislative elections Tuesday but was weakened by the unexpectedly strong showing by the centrist Yesh Atid, which campaigned on economic issues.
The result is likely to cramp Netanyahu's room for manoeuvre vis-à-vis his future coalition partners.
Television exit polls showed Netanyahu's Likud, which ran on a joint list with the hardline nationalist Yisrael Beitenu, suffering a serious setback, winning just 32-33 mandates in the 120-seat Knesset, down from 42 in the outgoing coalition.
And in an unexpected development, Yesh Atid, a secular centrist party launched just nine months ago, came in second place with 18-19, followed by the centre-left Labour with 16-17.
And Naftali Bennett's far-right nationalist religious Jewish Home party, which had been expected to come third, trailed with just 12.
As the exit polls flashed onto the screen, the 15 or so activists at Yesh Atid's small Tel Aviv campaign headquarters exploded into cries of victory, hugging each others, with some of the women in tears, an AFP correspondent said.
“We're going to change things; we're going to change things,” they sang, using the party slogan and chanting “Yesh Atid” – Hebrew for “there is a future”.
Near-final results were expected in the early hours of Wednesday, but the official results – which must include votes cast by Israeli troops and sailors – are not due out for another week.
In a victory speech Netanyahu said that he needed to form the “broadest possible coalition”.
Earlier on his Facebook page he said: “Based on the results in the exit polls, it's clear the citizens of Israel determined they want me to continue as prime minister, and that I form a government as wide as possible”.
He also called Yesh Atid founder Yair Lapid, telling him: “We have an opportunity to do great things for Israel. The election campaign is behind us, and we can now focus on action for the benefit of all of Israel.”
Surveys have consistently predicted Netanyahu's reelection, with pundits suggesting he would preside over a coalition leaning further to the right. But the exit poll indicated it was more likely to be a centre-right government.
“I call on political leaders to work with me, together, to form the widest possible government which will include moderate elements from the left and the right to bring about real change,” Lapid told supporters who had welcomed him with confetti and the popping of champagne corks.
Netanyahu said his new government's top priority would be to prevent Iran from obtaining nuclear weapons.
Other issues include a Middle East profoundly changed by the Arab uprisings and the thorny issue of the deadlocked peace process with the Palestinians.
Domestic challenges will be no less pressing, with a major budget crisis and austerity cuts on the horizon, even as Israelis express widespread discontent over spiralling prices.
Final figures put turnout at 66.6 per cent, slightly higher than the 65.2 per cent in the 2009 elections.
“Bibi failed to realise that Lapid is his main rival, and not Bennett.
Lapid campaigned under everybody's radar,” tweeted Aluf Benn, editor of the left-leaning Haaretz newspaper, using Netanyahu's nickname.
A popular former TV anchor with a polished look, Lapid ran a low-profile campaign focused on economic issues on a platform geared to attract secular Israelis without repelling the religiously-observant.
He supports the drafting of ultra-Orthodox into the military and insists that all Israelis should earn a living wage, tapping into economic discontent over the cost of living that sparked mass nationwide protests in 2011.
“This is the party of normality,” said Shai Piron, number two on Yesh Atid's list. “We have gathered all the components of society with the hope of changing things in Israel.”
The party's first mission would be “to push forward with a more equitable distribution of civic duty,” he said in reference to expanding the draft law.
Netanyahu is almost certain to be tasked with piecing together a coalition of at least 61 MPs – a task which is likely to take at least two weeks – with the results likely to reduce his room for manoeuvre.
“There is a very high chance that tomorrow morning Netanyahu won't be able to form a coalition,” said Labour's Shelly Yachimovich, describing it as “a great opportunity to form an alternative government to Netanyahu's”.
With the results, Lapid has suddenly become “the most important player in the political system”, wrote Haaretz analyst Yossi Verter.
“Since he doesn't see himself as prime minister…he has two choices: become head of the opposition or the most senior and influential minister in the third Netanyahu government.”
If the exit polls were correct, Netanyahu, Lapid and Bennett could have 62 seats between them, enough to form a government which could implement many urgent reforms, including changing the system of government, drafting the ultra-Orthodox and passing the budget, he wrote.