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Going into the elections, the most critical issues to Israel were dealing with the Iranian nuclear threat and the conflict with the Palestinians. On the Iranian issue, there is a broad consensus among Israelis that if there were a choice between military action and Iran acquiring nuclear weapons, that the Israeli government should take action. On the Palestinian issue, there's far less agreement. The basic debate is over peace talks, which is quite relevant given President Obama's determination for the United States to play a more active role in negotiating peace between the Israelis and the Palestinians. While, in my view, a two-state solution is the best of all possible outcomes to the conflict, it isn't realistic to think that such an agreement can be reached at this time, with Hamas in control of Gaza, and Mahmoud Abbas's position as president of the Palestinian Authority unclear. Right now, there's simply nobody to negotiate a sustainable peace agreement with on the Palestinian side.

The danger to Israel of having Tzipi Livni's Kadima the helm, was that Livni was more likely to pursue peace talks even if there were no chance to achieve real peace, potentially placing Israel in a perilous position. Going into the election, Binyamin Netanyahu's Likud argued --correctly, from my perspective -- that peace talks at this time were futile. Likud is more likely to resist efforts by the Obama administration to pressure Israel into a peace agreement, as Netanyahu did when President Clinton was in office. It was Netanyahu's successor, Ehud Barak, who gave away the store to Yasser Arafat, at Clinton's urging, only to have Arafat reject the deal and launch a campaign of terrorism instead. So what do yesterday's election results mean in this context?

Right now, Kadima leads Likud by a single seat, but the right-wing parties have an 8-seat advantage overall 64-56, with 61 seats needed to form a government. Livni will have a tricky time putting together a coalition government, because she needs to bring in support from the right while maintaining support on the left. See the chart below, which I grabbed from the Jerusalem Post. 

Kadima is in talks with far-right Avigdor Lieberman of Yisreal Beitenu, whose late surge most assuredly siphoned off enough votes to deny Likud a plurality. Lieberman has already said he wanted a right-wing government, but even if Livni convinces him to join her, she risks losing the support of Arab parties that Lieberman unsuccessfully attempted to have banned from the Israeli Knesset for undermining the legitimacy of Israel. Lieberman's party controls 15 seats, while the Arab parties (United Arab List, Hadash, and Balad) have 12. The math doesn't work in Livni's favor. In fact, Livni tried to form a government back in October and failed, even though the left had far more seats than they do now.

So, without getting further into the weeds, there are two main possibilities. Either Livni fails to form a government, and Netanyahu becomes prime minister. Or, alternatively, she somehow manages to form a fragile coalition, but only after winning over support from right-wing parties that can collapse the government at any time if they are unhappy with the policies that she's pursuing. That will likely make her much more likely to govern from the right, and much less likely to sign agreements that endanger Israel. So, even if Israelis denied Netanyahu the type of mandate he was seeking and that seemed achievable a few months ago, they still showed a lot of skepticism about the so-called peace process.