Jan. 22 (Bloomberg) -- Prime Minister Benjamin Netanyahu was weakened in Israel’s election as his Likud-Beitenu ticket fell short of projections and voters flocked to an upstart party led by ex-TV host Yair Lapid, according to exit polls.
Netanyahu, 63, said on his Facebook page he expects to remain Israel’s leader for a third term by creating the “widest possible coalition.” Likud-Beitenu probably won 31 seats in Israel’s 120-member Knesset, compared with 42 now, according to the polls by all three of Israel’s main television stations. Yesh Atid, Hebrew for “There is a Future,” came second with about 19.
Lapid, 49, attracted support by stressing the need to trim housing costs and draft ultra-Orthodox Jews into the army. Pre-election polls had projected Netanyahu’s ticket, a joint slate between the Likud party and the Yisrael Beitenu party founded by Soviet immigrants, would get between 32 and 37 seats.
“Netanyahu ran a poor campaign,” said Gerald Steinberg, a political science professor at Bar Ilan University outside Tel Aviv. “His weaker position may force him to form a more centrist and broader government with the Yesh Atid party as his main partner.”
Israel’s Labor Party came in third place with 17 seats, followed by the Jewish Home party, which opposes Palestinian statehood, and the ultra-Orthodox Shas Party, with 12 seats, according to Channel 2. A new party headed by former Foreign Minister Tzipi Livni, the only major candidate to stress renewing peace talks with the Palestinians, gained seven seats, according to the exit poll.
“We are assuming that peace-making won’t be high up on the agenda,” said Hanan Ashrawi, a member of the Palestinian negotiating team since 1992.
Voter turnout rose to about 67 percent, the highest since 2003, the Central Elections Committee said. The paper ballots, cast at 10,133 sites across Israel, are being counted overnight with vote tallies expected during the morning.
The coalition’s makeup may determine outcomes ranging from managing inflation to whether Israel bombs Iran. Parties in the current coalition, including Jewish Home, gained support by opposing a Palestinian state. Reviving the peace process is a U.S. priority.
Alternative partners including the Labor Party and ultra-Orthodox Shas party have objected to parts of the premier’s economic plan, including spending cuts to reduce the budget deficit.
The premier would also need support from his Cabinet for any decision on bombing Iran’s nuclear facilities, an Israeli threat that has led to tensions with President Barack Obama. Netanyahu says it’s necessary to stop Iran from gaining atomic weapons that would endanger Israel. He regularly says the world should be more worried about an Iranian bomb than Israeli settlements.
Investors have shown their approval for Netanyahu’s handling of the economy. Since his second term began in March 2009, Israel’s benchmark stock index has climbed 64 percent and the shekel has surged 13 percent versus the dollar.
Netanyahu says the deficit needs to be narrowed to 3 percent of economic output this year from 4.2 percent in 2012, requiring 14 billion shekels ($3.7 billion) in spending cuts. He called the election a year ahead of schedule after failing to get coalition partners to agree on the measures.
Netanyahu had aimed to strengthen his hand on the Palestinian and budget issues by running on a combined ticket with Yisrael Beitenu. The move backfired when party chairman Avigdor Liberman was indicted on a fraud charge and quit as foreign minister.
The process starts with President Shimon Peres formally asking the head of the winning party to open negotiations with smaller parties to create a ruling coalition. If he or she can’t do that in six weeks, the second-place party gets a chance.
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