Israel exit polls show division, with neither bloc close to majority

Israeli assets were sold off on Wednesday as elections in the country produced no clear winner.

Partial results show that Prime Minister Benjamin Netanyahu’s bloc is likely to win 56 seats and that of his challenger Gadi Eizenkot will win 48 of the 120 seats in the Knesset, with more than 66% of ballots counted. Arab parties, which do not belong to either camp, are expected to obtain 16 seats.

Eisenkot, a former military chief of staff, had earlier in the day declared victory and said the preliminary result – which gave his bloc a slight lead – should give him first right to try to form a government. “Early poll results indicate a complete lack of confidence in Netanyahu and his October 7 government,” he said in a statement on X.

Exit polls are not the official results, which are released on November 4. About 77.7 percent of eligible voters turned out to vote, the highest rate in a Knesset election in 27 years, according to the Central Election Commission.

THE Israeli shekel fell 1% against the US dollar while the Tel Aviv 35 stock index traded down 2.7%.

Meanwhile, Israeli government bonds have been under pressure, with yields rising across the curve. The yield on the 2-year bond rose 6 basis points, while the yield on the benchmark 10-year government bond rose 4 basis points. Yields on longer-dated 30-year bonds gained 2 basis points.

Bond yields and prices move in opposite directions.

The vote is Israel’s first national election since the October 7, 2023 Hamas attack and subsequent wars in Gaza, Lebanon and Iran, and was widely seen as a referendum on Netanyahu’s dominance of Israeli politics since 2009.

Since absolute majorities are rare, parties generally form coalitions. The president asks a member of the Knesset – usually the leader best placed to muster a 61-seat majority – to form a government. If these attempts fail, new elections may be called.

Netanyahu’s supporters credit him with guiding Israel through the war and resisting international pressure, while critics point to his lengthy corruption trial, controversial judicial reform efforts and handling of the Gaza war as evidence of his unfitness for office. Netanyahu faces an arrest warrant from the International Criminal Court over the Gaza campaign, which he has rejected.

The historic result of the Arab party is a factor to watch in the coalition negotiations. Raam leader Mansour Abbas said “our vote will change the government.” Joint List Chairman Ahmad Tibi previously outlined a plan to prevent Netanyahu from remaining in power after the elections, according to the Jerusalem Post.

The Arab parties’ pro-Palestinian stance puts them closer to Eisenkot than Netanyahu, said Amin Saikal, an assistant professor at the S. Rajaratnam School of International Studies in Singapore, although neither man has said he would adopt them.

“Even if Eisenkot’s alliance wins more seats, it is less likely that it will be able to form a governing majority without including Arab and left-wing parties,” said Michael Feller, chief strategist for geopolitical strategy. “Otherwise, the next government’s policies regarding Iran, Palestine and security may remain the same.”

However, Yisrael Beytenu leader Avigdor Liberman, whose party is projected between seven and nine seats and is currently in the opposition bloc with Eisenkot, refused during the campaign to rely on Arab parties.

Earlier Tuesday, Netanyahu and his far-right coalition partners warned of high Arab turnout in the vote, drawing accusations of racism from their opponents.

“If we don’t wake up now, we will end up with a government of Mansour Abbas and Ahmed Tibi,” he said after a series of posts highlighting the long queues at polling stations in Arab communities.

Even if Eisenkot wins more seats, Netanyahu could use the coming weeks or months to his advantage by seeking to block the formation of the new government, said Amin Saikal, an assistant research fellow at the S. Rajaratnam School of International Studies in Singapore.

The prime minister “will fight for his political survival,” Saikal said.

Netanyahu became the country’s longest-serving prime minister after past election deadlocks kept him in power and other parties failed to form a governing coalition before deadlines expired. Israel held five elections between 2019 and 2022.

PR Kumaraswamy, professor emeritus of Middle East studies specializing in Israeli politics at Jawaharlal Nehru University, expects a prolonged negotiation process after the final results are announced.

“It’s too early to rule him out,” he said of Netanyahu.