In a statement, Netanyahu said he had worked "tirelessly" to establish a unity government with his chief rival, former military chief Benny Gantz, but been repeatedly rebuffed. Facing a Wednesday deadline, Netanyahu said he was returning the "mandate" to President Reuven Rivlin, who will now ask Gantz to try to form a coalition. Gantz, however, could face an equally difficult task.
While Netanyahu remains at the helm of his Likud party, his announcement marked the second time this year that he has been unable to form a government. With Israel's attorney general set to decide in the coming weeks on whether to indict Netanyahu in a series of corruption cases, the longtime Israeli leader could come under heavy pressure to step aside. One party rival, Gideon Saar, has already indicated he would challenge Netanyahu if Likud holds a primary.
In last month's national election, Netanyahu fell short of securing a 61-seat parliamentary majority. But Rivlin gave Netanyahu the first opportunity to form a government because he had more support - 55 lawmakers - than Gantz, who was supported by only 54.
Netanyahu had hoped to form a broad "unity" government with Gantz, who heads the centrist Blue and White party. But Netanyahu insisted that his coalition include his traditional allies, a collection of hardline and religious parties, drawing accusations from Gantz that he was not negotiating in good faith.
"Since I received the mandate, I have worked tirelessly both in public and behind the scenes to establish a broad, national unity government. That's what the people want," Netanyahu said in a statement.
"During the past few weeks, I made every effort to bring Benny Gantz to the negotiating table. Every effort to establish a broad national unity government, every effort to prevent another election," he said. "To my regret, time after time he declined. He simply refused."
For Netanyahu, who marked his 70th birthday on Monday, it was another painful setback. In an earlier election in April, Netanyahu also failed to win a parliamentary majority and was forced to call the indecisive Sept. 17 election. Now, for the first time since Netanyahu was elected in early 2009, the country faces the possibility of choosing a different leader.
In a short statement, Gantz's Blue and White party said that "now is the time of action."
"Blue and White is determined to form the liberal unity government, led by Benny Gantz, that the people of Israel voted for a month ago," it said.
Gantz has vowed to unify the country and restore national institutions after Netanyahu's decade-long rule, which has deepened Israel's religious and political divides and been roiled by corruption allegations.
In contrast to Netanyahu, whose political career spans three decades, the 60-year-old Gantz is a newcomer who only burst onto the scene over the last year. The towering former general's party, Blue and White, is a newly formed centrist coalition that includes the popular secular politician Yair Lapid as well as other former senior military officers and some of Netanyahu's fiercest critics.
At times, Gantz has criticized Netanyahu's handling of security issues, particularly in the Gaza Strip, and has touted his time as army chief, when he oversaw a devastating 2014 war in Gaza. He also has hinted at reviving the peace process with the Palestinians. But Gantz has been vague, apparently wary of alienating potential coalition partners, and focused most of his efforts at portraying himself as a fresh alternative to Netanyahu.
There is no guarantee, however, that Gantz will succeed.
He has expressed willingness to form a partnership with Likud, but not if Netanyahu continues to lead while he faces such serious legal problems. For the time being, Likud has remained steadfastly behind its leader.
Without Likud, Gantz will have a hard time securing a majority in parliament. The opposition to Netanyahu includes a diverse group of parties, ranging from Arab parties to the secular ultranationalist party Yisrael Beitenu, that are unlikely to sit together in partnership.
If Gantz fails during his 28-day window, a majority of lawmakers could try to endorse a third candidate, something that has never happened before. And if that fails, the country would be forced into the unprecedented scenario of a third election in under a year.
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