Israel's Netanyahu shrugs off surprise losses
Hawkish Prime Minister Benjamin Netanyahu claimed victory in Israel's parliamentary election, shrugging off surprise losses to center-left challengers and vowing to stop Iran from acquiring nuclear weapons.
Exit polls showed the Israeli leader's right-wing Likud and the ultra-nationalist Yisrael Beitenu would remain the biggest bloc in the 120-member assembly, but with only 31 seats. The two parties previously held 42 seats.
If the exit polls compiled by three local broadcasters prove correct ? and they normally do in Israel ? Netanyahu would be on course for a third term in office, perhaps leading a hardline coalition that would promote Jewish settlement on occupied land.
But his weakened showing in Tuesday's election, which he had called nine months early in the hope of a strong new mandate for his confrontation with Iran, could complicate his struggle to forge an alliance with a stable majority in parliament.
"I am proud to be your prime minister, and I thank you for giving me the opportunity, for the third time, to lead the state of Israel," the 63-year-old leader told a cheering crowd in the early hours of Wednesday at his campaign headquarters.
Netanyahu said he planned to form as broad a governing coalition as possible, suggesting he would seek partners beyond his traditional ultra-nationalist and religious allies. His first call may be to Yair Lapid, a former television anchorman whose centrist, secular party came from nowhere to second place.
"The first challenge was and remains preventing Iran from obtaining nuclear weapons," Netanyahu said.
Iran denies it is planning to build an atomic bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.
Netanyahu views Tehran's nuclear program as a threat to Israel's existence and has stoked international concern by hinting at possible Israeli military action to thwart it.
He has shunted Palestinian peacemaking well down the agenda despite Western concern to keep the quest for a solution alive.
The surprise star of Israel's election was a former television news anchor whose centrist party soared to second place in the ballot only months after he took up active politics.
As leader of the new party Yesh Atid (There's a Future), Yair Lapid, 49, has pressed on with a fight, once championed by his late cabinet minister father, against the influence a growing Orthodox community has on many aspects of life in the Jewish state.
Lapid won support among middle-class, secular voters by promising to resolve a growing housing shortage, abolish military draft exemptions for Jewish seminary students and seek an overhaul of the failing education system.
Some in Netanyahu's party acknowledged that the election had gone somewhat awry. "We anticipated we would lose some votes to Lapid, but not to this extent," Likud campaign adviser Ronen Moshe told Reuters.
Lapid?s party should have 18 or 19 seats, exit polls showed - a stunning result for a newcomer to politics in a field of 32 contending parties.?
Supporters broke out in dance at his Tel Aviv headquarters after the exit polls: "I'm excited," a beaming Lapid told reporters. "Few people expected we would go this far."?
Western anxiety
Whatever permutation finally emerges, a Netanyahu-led government is likely to resist any push for a peace deal with the Palestinians that would come anywhere near satisfying the moderates who seek a viable independent state alongside Israel.
Britain warned Israel on Tuesday it was losing international support, saying Jewish settlement expansion had almost killed off prospects for a two-state solution.
Netanyahu's relations with U.S. President Barack Obama have been notably tense and Martin Indyk, former U.S. ambassador to Israel, told the BBC that the election was unlikely to change that.
"President Obama doesn't have high expectations that there's going to be a government in Israel committed to making peace and is capable of the kind of very difficult and painful concessions that would be needed to achieve a two-state solution," he said.
Tuesday's vote was the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.
--Reporting by Reuters' Jerusalem bureau
Related: Avast! Israel's Pirate Party aims for 2 percent of electoral booty
Related: Israel expected to move to right after election
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