Israeli election close; two parties claim win

JERUSALEM -- Foreign Minister Tzipi Livni and rival Benjamin Netanyahu both claimed victory Tuesday in Israel's parliamentary election, but official results showed a race so close it could be decided by a third candidate -- a rising power among the hawks.

Right-wing parties -- including Netanyahu's Likud Party -- appear to have won a clear majority of 65 seats in the 120-seat parliament, which would give Netanyahu the upper hand in forming the next government.

However, with 99 percent of the votes counted, Livni's centrist Kadima Party had 28 seats, while Likud had 27. Those results could change by a seat or two -- enough to alter the outcome -- when soldiers' votes are tallied Thursday evening.

The winner of the election wasn't clear in part because Livni could try to form a coalition with hawkish parties. It appeared Avigdor Lieberman, who based his campaign on denying citizenship to Israeli Arabs he considers disloyal, could determine the country's next leader with his decision of whom to join.

He declared after the vote that he has spoken to both Livni and Netanyahu and told them he could be persuaded to join either one, but he added that he wanted a "nationalist right-wing government."

Whoever comes out on top, the political wrangling was likely to drag on for weeks, and with it the fate of international Mideast peace efforts.

A win by Livni, who favors giving up land to make room for a Palestinian state, would boost President Obama's goal of pursuing an Israeli-Palestinian peace deal.

A government led by Netanyahu, who opposes concessions to the Palestinians, could put Israel and the U.S. on a collision course. Netanyahu says he would allow West Bank settlements to expand and is seen as likely to contemplate military action against Iran.

"With God's help, I will lead the next government," Netanyahu told a raucous crowd of cheering supporters chanting his nickname, Bibi. "The national camp, led by the Likud, has won a clear advantage."

Soon after, Livni took the stage before a crowd of flag-waving supporters and flashed a V for victory sign. "Today the people chose Kadima. ... We will form the next government led by Kadima."

Even if Livni could overcome the obstacles and become Israel's second female prime minister after Golda Meir, she would be hindered by right-wing coalition partners opposed to her vision of giving up land in exchange for a peace deal with the Palestinians.

The election was called after she failed to put together a ruling coalition when Prime Minister Ehud Olmert announced he was stepping down last fall.

Nevertheless, applause, cheers and whistling erupted at Kadima headquarters in Tel Aviv as television stations began reporting their exit polls, with supporters jumping up and down and giving each other high-fives and hugs.

In his speech, Netanyahu told his supporters that he was proud of the gains by his hard-line party. He called for a broad-based coalition, but said he would first turn to his "natural partners in the national camp," a reference to other hard-liners opposed to peace concessions.

The partial results marked a dramatic slide for Netanyahu, who had held a solid lead in opinion polls heading into the election.

Israelis vote for parties, not individuals. Since no party won a parliamentary majority, the leader of one of the major parties must try to put together a coalition with other factions -- a process that can take up to six weeks.

In coming days, President Shimon Peres will ask a candidate to try to put together a government. Peres, who hails from Kadima and served for decades in the dovish Labor Party, could lean toward Livni as opposed to Netanyahu -- who once defeated Peres in the 1996 election -- as the candidate most capable of forming a government. But if a parliamentary majority tells him it favors Netanyahu, he will have to pick the Likud leader.

If Livni's projected victory holds, it is likely due to a strong showing by Lieberman, who appears to have taken a sizable chunk of votes that would have otherwise gone to Netanyahu.

The partial results gave Lieberman's Yisrael Beitenu Party 16 seats, placing it in third place behind Kadima and Likud -- and ahead of Labor, the party that ruled Israel for decades. That gives Lieberman a key role in coalition building.

Lieberman said his party's strong showing means he holds the key to forming the new Israeli government. Lieberman could serve in a Livni government because he is not a classic hawk who rejects any compromise with the Palestinians. Like Livni, he favors giving up parts of the West Bank. Lieberman and Livni converge on other issues that could for a basis for cooperation.

"It is up to Lieberman who will form the next coalition," said Menachem Hofnung, a professor of political science at Hebrew University. "Lieberman has emerged as the kingmaker. He is the winner of these elections, and it depends on who he sides with over the next few weeks as to who will be prime minister."

Netanyahu, who was prime minister a decade ago, portrayed himself as the candidate best equipped to deal with the threats Israel faces -- Hamas militants in Gaza, Hezbollah guerrillas in Lebanon and behind them an Iranian regime that Israel believes is developing nuclear weapons.

He has derided the outgoing government's peace talks as a waste of time, and said relations with the Palestinians should be limited to developing their battered economy.

Livni, who has led Israel's peace talks the past year, has pledged to continue the negotiations with the moderate Palestinian government in the West Bank. At the same time, she advocates a tough line against the Hamas regime in the Gaza Strip, and was one of the architects against a bruising Israeli military offensive in Gaza last month.

At Likud headquarters, activists dismissed Kadima's edge and predicted Netanyahu would be tapped to form the next government.

"I am certain that Netanyahu will be the next prime minister," said Likud lawmaker Gilad Erdan. "Netanyahu has a clear advantage because the right-wing parties have a larger bloc. The test is not which party gets the most votes, but which candidate has the best chance to form a coalition, and that person is Benjamin Netanyahu."

Kadima lawmaker Haim Ramon predicted the party would lead the next government.

"We are the only party that can approach both the right wing and the left," he told Channel 2 TV. But he acknowledged the results would make it difficult for anyone to govern.

Israel's Palestinian peace partners in the West Bank said the next Israeli government would have to stop building settlements in the West Bank before talks could resume.

"We now have clear conditions for whoever heads the Israeli government," said Rafiq Husseini, a senior aide to Palestinian President Mahmoud Abbas. "The conditions for negotiations to resume begin with the immediate halt of settlement activities."

Peace talks have not included the Gaza Strip's Hamas rulers, who do not recognize Israel's right to exist and recently were the target of a devastating Israeli military offensive.

In Gaza, Hamas spokesman Fawzi Barhoum said the election results don't make a difference in the lives of Palestinians because Israel "is still working to eliminate the Palestinian existence.

"Anyone who thinks that new faces might bring change is mistaken," Barhoum said, before the exit polls were released.

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Associated Press writers Aron Heller and Karen Zolka in Tel Aviv, and Josef Federman and Dalia Nammari in Jerusalem contributed to this report.