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Will Livni, Netanyahu settle for rotation, sharing premiership?- 2 A.M.

Three hours after the polls closed Tuesday night, the campaign for prime minister abruptly began in earnest, with Benjamin Netanyahu and Tzipi Livni squaring off in a battle for the right to form the next government, and perhaps, an agreement to sharen the premiership in a rotation agreement.

First out of the gate was Benjamin Netanyahu [see following post]. Then Livni took the stage before a gathering of Kadima activists and candidates, declaring that her party had won the trust of the people, and would seek to head a unity government.

Netanyahu was clearly the object of her address, which could also be seen as an indirect plea for a rotation agreement, in which the Likud chief could serve for an initial period of perhaps a year or longer, with Livni then taking over.

Click here for exclusive Haaretz coverage of the elections in Israel

Saying that there had been a resurgence of division into camps, with a particular emphasis on the "national camp" of the right, she said "The Land of Israel does not belong to the right, just as peace does not belong to the left."

Livni said the people of Israel had made their determination and that they had chosen Kadima. "And now all that is left is to honor the people of Israel and to join a unity government headed by us, with parties to the right of kadima and to the left of Kadima."

Netanyahu finally launches PM bid in earnest - 3 hours after polls close. 1:00 A.M. Wednesday

Benjamin Netanyahu, a taut smile welcoming cheers hailing him as Israel's next leader, gave no ground. "With the help of the Almighty, I will stand at the head of the next government," Netanyahu told a crowd of Likud party activists at the Tel Aviv fairgrounds, the raucous home field of the center-right party.

Netanyahu, who had remained oddly quiet throught the campaign, vowed to begin Wednesday morning to put together a coalition that was both broad and stable, a hint at an attempt to court a hesitant Kadima and Labor into a coalition that might well be anchored by a large number of rightist factions.

A measure of the difficulty Netanyahu may face came early on, as he lauded the high voter turnout of a wide range of Israelis. At his mention of the left, the crowd booed loudly.

The Likud chief turned aside the predictions that Kadima rival [and onetime Likud colleague] Tzipi Livni had beaten him in the race for the largest number of Knesset seats.

"The people in Israel have spoken in a clear manner," he declared. "The camp of the right, with the Likud at its head, has scored a clear victory," and will enjoy a certain majority in the Knesset, he said,

In an oblique nod to Barack Obama, he concluded "The people want change."

"Our way has triumphed. Our way will lead the people."

A blow to Netanyahu, but right holds out hope for ruling bloc. 10:02

The exit poll predictions showing Tzipi Livni scoring an upset come-from-behind victory in Tuesday's election, represent a considerable blow to Likud leader Benjamin Netanyahu, the campaign-long frontrunner.

Nonetheless, the right is holding out hope that its strength as a bloc will grant it first chance at forming a ruling coalition, to take office in about a month.

The predicted results, if they stand up in the actual vote count and in the later tallies of soldiers' votes, would be a stunning mirror-echo of Netanyahu's triumphant 1996 run for the premiership, in which he overcame a 20 percentage point deficit in opinion polls to edge incumbent Shimon Peres.

It will fall to Peres, as president, to make the decision on whether to ask Livni or Netanyahu to try to form the government. Netanyahu's task would likely be numerically easier, as he could rely on right-leaning parties for 63-64 Knesset votes, clearing the 61 needed for approval.

But initial indications showed that Livni could field a broad coalition anchored by Kadima's 29-30 seats, the Likud's 27, and the 13 expected to be held by the center-left Labor. The coalition, which could stand with or without the votes of Avigdor Lieberman's Yisrael Beiteinu, could also reach out to a number of other parties, including the ultra-Orthodox Shas and United Torah Judaism.

The Israeli electorate appeared to indicate a leaning toward centrism, granting unexpected support to both Kadima and the center-right Likud. The high-profile momentum of Lieberman's Yisrael Beiteinu and its campaign of strident confrontation with Arab parties seems to have flagged somewhat at the finish. Lieberman had hoped to gain as many as 21 seats, but the predictions granted him 15.

Both the radical Arab Balad faction and the ultra-rightist National Union had relatively poor showings. Balad may not have enough votes to enter the Knesset at all, and the National Union may have only three seats.

Overall, the left, while not surprised by the results, seemed nonetheless stunned by its poor performance. Despite substantial public approval of Labor leader and Defense Minister Ehud Barak's handling of the recent war in Gaza, his party, once the unchallenged dominant force in Israeli politics, gained only 13 seats, by far an all-time low.

The leftist Meretz sank to just four seats, and is likely to undergo a major overhaul in the wake of the election. Environmental parties, which had splintered the green vote, were unable to win any seats.

Offsetting the 15 seats gained by Lieberman - and owing much to Lieberman's campaign against them - were the resurgent Arab parties, which had worried that their constituents would stay home in a protest vote over the war. Instead, they came out in substantial numbers, netting Arab parties from seven to as many as 10 seats.

Israel awaits its verdict: Extremism v. Centrism 8:40 P.M.

This election was supposed to be about leadership and good government, then it was supposed to be about the economy. After that it was supposed to be about Iran, then it was supposed to be about the war.

As it turned out, it's an election about extremism, Arab and Jewish. It is a referendum about Israel's future, and, no less, its troubled present.

Israelis by the millions are waiting tonight to hear their own verdict about themselves. In a battle between extremism and centrism, they are waiting to learn how polarized they are, how vexed, how disillusioned, how alienated, how furious.

The election may not change Israel's history, but it may change the ways Israelis see themselves.

The markers will be clear:

- How many Knesset seats go to Avigdor Lieberman's Yisrael Beiteinu party, with its thinly veiled message of racism and xenophobia.

- How many seats go to Balad, by far the most radical of the Arab parties.

Its founding leader, Azmi Bishara, is in exile abroad. Israeli police confirmed in 2007 that he is suspected treason and espionage, for allegedly having aided Hezbollah in its rocket attacks on Israel during the Second Lebanon War in July and August 2006.

- How many seats go to the National Union, in some ways the opposite number of Balad on the Israeli political spectrum. The National Union openly embraces disciples of the slain rightist radical Rabbi Meir Kahane.

The number three candidate on the National Union list, Michael Ben-Ari, was quoted recently as calling himself a Kahane disciple, declaring that Israeli Arabs should be expelled to places like Venezuela and Turkey. Ben-Ari was also quoted as saying that IDF soldiers were obligated to refuse orders to evacuate settlements.

- To what extent the public presses for a broad centrist coalition, incorporating as many moderate MKs as possible, rather than a bloc of the right.

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Previous blogs:

Israel Election Guide: Can Netanyahu be stopped? Can Lieberman?The Gaza War as reality televisionMr. Obama, grant Hamas the freedom to failIn Gaza's shadow: Obama's inaugural messageGaza War Diary IV - Can people die of ambivalence?A Jew's prayer for the children of Gaza Gaza War Diary III: If Mexico shelled Texas, like Hamas shells IsraelGaza 2009 - To win, all Israel has to do is survive Gaza War Diary II - Who speaks for the Gazans?