It does not look like the Netanyahu led coalition will be able to sign a peace agreement with the inevitable Palestinian state leadership. If the borders are not handled very soon, how can the Labour government continue as a member of coalition? The basis of their inclusion was the belief in PM Netanyahu's commitment to bringing about the fruition of the two states side by side. Technically speaking, the Kadima party won the most seats for the Knesset (28 vs. 27) and this means the Israeli people in the majority support their peace initiative (albeit under PM Ehud Olmert) in achieving the closest discussions/ compromises of the borders between the two states. It looks like the decisive parties will be both Kadima and Labour, who indeed were the initial culprits to their exclusion by leading Netanyahu to the podium of political stalemate!
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Turkish soldier, 15 militants killed in clashes between security forces and Kurds (Reuters)
from the article: Clinton: Palestinian state achieved through negotiations is inevitable