The leaders of both of Likud’s largest potential coalition partners have said that talks have ground to a virtual standstill.
Meanwhile, Prime Minister Benjamin Netanyahu faces his own problems as his effective number two, Avigdor Lieberman, starts a lengthy fraud trial.
On Monday, Habayit Hayehudi leader Naftali Bennett told his party members that “there haven’t been any significant negotiations for a week now”, while the leader of Yesh Atid, Yair Lapid, admitted to his colleagues that “this is the weekly meeting where I tell you that I have nothing to tell.” Members of both parties have voiced their frustration at what they have described as “Bibi’s spins.”
The only success story so far has been Mr Netanyahu’s deal with Hatnuah leader Tzipi Livni. On Tuesday, the prime minister announced that Ms Livni would be justice minister and chief diplomatic negotiator with the Palestinian Authority in the next government. But the new coalition still requires 24 more MKs to form a Knesset majority.
Following the surprising success of Yesh Atid in the elections, Mr Netanyahu swiftly courted its leader, meeting Mr Lapid twice and committing his next government to many of the policies championed by Yesh Atid throughout its campaigns.
Since then, however, talks between the two parties’ negotiating teams have gone awry, particularly over Yesh Atid’s insistence on a new universal national service law and the formation of a small government with a maximum of 18 ministers.
Both of these demands will make it very difficult for Likud-Beiteinu to keep its strictly-Orthodox allies, Shas and United Torah Judaism, in the coalition.
Likud’s strategy now seems focused on trying to form a coalition without Yesh Atid. In order to make this happen, however, Mr Netanyahu will either have to make a deal with Mr Bennett, with whom he has an acrimonious personal relationship, or with the Labour party, which is opposed to Likud’s economic programme.
Senior Habayit Hayehudi figures made it clear this week that their leader is currently co-ordinating his moves with Mr Lapid and that both parties favour entering the coalition together or not at all.
The prime minister invited Labour leader, Shelly Yachimovich, to a meeting last Friday, in which he reportedly offered her a leading role in formulating the next government’s fiscal policies, but Ms Yachimovich said afterwards that her determination to remain in opposition remained unshaken.
Mr Netanyahu’s efforts are now centered on trying to break the Lapid-Bennett alliance. He has sent messages to both rabbis and settler leaders saying that if they do not pressure Mr Bennett, the chances of forming a “national government” are in jeopardy.
Likud sources have warned that if none of the leaders of the potential coalition partners are prepared to show some flexibility, the prime minister may have no choice but to call for new elections. This threat, however, sounds hollow, not least because Mr Netanyahu is about to host American President Barack Obama and to do so as head of a transitional government will be humiliating. Currently, he has another week to form a government, after which he can ask President Shimon Peres for an extension of two weeks.
Another headache for Mr Netanyahu is the ongoing legal saga of former foreign minister Avigdor Lieberman.
On Sunday, Mr Lieberman pleaded not guilty to charges of fraud and breach of trust over allegations that he had put pressure on senior Foreign Ministry officials to appoint a diplomat who had leaked Mr Lieberman confidential information.
Mr Lieberman controls 11 MKs, a third of Likud-Beiteinu’s parliamentary force, and the prime minister has promised to keep the foreign minister position free for him until the trial is over — assuming he is not found guilty.
The Jerusalem Magistrates Court decided on Sunday that the Lieberman case would last at least until June, which will make it increasingly difficult for the prime minister to keep his commitment.