Under Israel’s system of proportional representation, seats in the 120-member parliament are allocated according to the percentage of votes a party gets. As leader of the largest party, Netanyahu is in the best position to form a coalition and be prime minister.
The results were shocking, given the steady stream of recent opinion polls forecasting a solid victory by Netanyahu and his allies. Netanyahu appeared to suffer because of his close ties to the ultra-Orthodox and perhaps from complacency. Many voters chose smaller parties, believing a Netanyahu victory was inevitable.
Tensions with the United States, Israel’s most important ally, also may have factored into the thinking. President Barack Obama was quoted last week as saying that Netanyahu was undermining Israel’s own interests by continuing to build Jewish settlements on occupied lands.
Netanyahu has won praise at home for drawing the world’s attention to Iran’s suspect nuclear program and for keeping the economy on solid ground at a time of global turmoil. In his speech, Netanyahu said that preventing Iran from developing nuclear weapons would remain his top priority.
But internationally, he has repeatedly clashed with allies over his handling of the peace process.
Peace talks with the Palestinians have remained stalled throughout his term, in large part because of his continued construction of Jewish settlements in the West Bank and east Jerusalem. The Palestinians want a halt to settlement construction before talks begin. Netanyahu says talks must start without any preconditions.
Obama has had a turbulent relationship with Netanyahu, and the two leaders could find themselves on a collision course in their new terms. The Obama administration said that regardless of the results of the election, the U.S. approach to the conflict would not change.
‘‘We will continue to make clear that only through direct negotiations can the Palestinians and the Israelis ... achieve the peace they both deserve,’’ said White House spokesman Jay Carney.
In London, British Foreign Secretary William Hague urged Obama to make the Middle East peace process his top priority. ‘‘We are approaching the last chance to bring about such a solution,’’ Hague warned.
Netanyahu himself has only grudgingly voiced conditional support for a Palestinian state, and his own party is now dominated by hard-liners who oppose even that. A potential coalition partner, Naftali Bennett of the Jewish Home Party, which won 11 seats, has called for annexing large parts of the West Bank, the core of any future Palestinian state.
While Lapid advocates a softer line toward the Palestinians, his campaign focused on economic issues and it remains unclear how hard he will push Netanyahu on the issue.
Lapid’s positions also fall short of Palestinian demands. Most critically, he opposes any division of Jerusalem. The Palestinians seek the West Bank, Gaza Strip and east Jerusalem, territories captured by Israel in the 1967 Mideast war, for a future state.
The Palestinians viewed the election results grimly.
‘‘If he brings Lapid into his government, this would improve the image of the Netanyahu government in the eyes of the world. But it won’t make him stop building settlements, particularly in east Jerusalem,’’ said Mohammed Ishtayeh, a senior adviser to President Mahmoud Abbas.
In all, 32 parties contested the election, and 12 won enough votes to enter parliament, according to the exit polls. Netanyahu now has up to six weeks to form a government.
By early Wednesday, the official Election Commission had published results of about half the ballots. Full results were expected later in the day.
Aron Heller in Tel Aviv, Daniel Estrin and Ian Deitch in Jerusalem, and Mohammed Daraghmeh in Ramallah, West Bank, contributed to this report.