Israeli Prime Minister Benjamin Netanyahu edged ahead of opposition leader Gadi Eisenkot in the country’s tightly fought election, though a surge in the Arab vote ensured neither has a clear path toward forming a government.

Netanyahu’s right-wing religious alliance was projected to win 53 seats in the 120-member parliament as of Wednesday afternoon, compared with a below-expected 48 for Eisenkot’s bloc. That was after almost 93% of votes had been counted. The two Israeli Arab parties almost doubled their projected number of seats to 19, making them the potential kingmakers during negotiations to secure a majority.

Netanyahu and Eisenkot both expressed confidence they would be the next leader, though it will be days before President Isaac Herzog chooses who gets the opportunity to cobble together a new ruling coalition. Should neither succeed, another election could take place in several months.

Israeli assets slid across the board amid the election uncertainty. The shekel depreciated about 2% against the dollar, the most since June, having risen sharply on election day. The benchmark stock index in Tel Aviv was down 5%. Israel’s dollar bonds underperformed emerging-market peers.

Israeli Arab parties are prepared to use their improved results to help Eisenkot form a government, but not Netanyahu, Ahmed Tibi, leader of the Ta’al party, told Nas Radio.

Eisenkot “has an opportunity to form a minority government with the support of the Arab parties, despite the complexities,” he said. “We want to use the current results to create real political change.”

However, two of Eisenkot’s fellow bloc leaders have said they’d refuse to serve in a government with the Arab parties, especially if they decline to declare Hamas a terrorist organization and Israel a Jewish state. Netanyahu’s Likud party ruled out any negotiations with them after the polls closed on Tuesday.

Netanyahu, 77, appeared on stage around 3:15 a.m. local time, saying his rightist bloc has “a clear, decisive majority.” He appeared jubilant and finished his speech in Jerusalem by calling officials from his Likud party on to the stage to sing the national anthem.

He talked up his relationship with U.S. President Donald Trump and said the two of them would “remove this threat” of Iran, again suggesting another round of bombing against the Islamic Republic could be close.

Eisenkot, a 66-year-old former general, spoke beforehand and described Netanyahu’s current far-right government as “the coalition of failure” that had “lost the people’s trust.”

“We have made history,” he said. “The public has voted for change,” adding that it would be a mistake to go to a second round of voting.

Netanyahu’s Likud looks set to be the biggest single party — even though it likely won fewer seats than in the last election in 2022 — with Eisenkot’s Yashar in second place.

Traders on prediction markets had consistently given Eisenkot a higher chance of becoming the next leader since mid-July. But that changed in the early hours of Wednesday, with Polymarket suggesting Netanyahu’s odds had climbed to 48% and Eisenkot’s had dropped to 32%.

Voter turnout was close to record highs throughout the day, reaching about 78% shortly before 10 p.m., when voting ended, according to the central elections committee.

Should Netanyahu retain power, it would come in spite of intense pressure from opponents and large swaths of the international community after three years dominated by war.

Many Israelis blame him for failing to prevent, and subsequently take responsibility for, the Hamas assault on Israel in October 2023, the deadliest day in the Jewish state’s history. Netanyahu has since waged military campaigns in Gaza, Lebanon, Syria and against Iran, which he and his supporters say have made the country safer.

Given the likely time it will take to form a new government under either potential leader, Netanyahu will remain prime minister in the meantime. That would enable him to join Trump in renewed strikes on Iran after the U.S. midterms next week, as both have repeatedly threatened.

Trump had endorsed Netanyahu, saying the incumbent had what it takes to “finish the job” in the eight-month war with the Islamic Republic. In a social media post, he took credit for pushing Netanyahu out ahead.

Eisenkot pitched himself as a more modest alternative to Netanyahu, while still emphasizing a commitment to resolving Israel’s myriad security challenges. On Iran, he has said the country’s nuclear program must be curbed, militarily if necessary, but that regime change in Tehran is “not an achievable goal.”

Beyond national security, voters cast ballots on a set of domestic issues — including whether to draft more ultra-Orthodox young men into the army, as Eisenkot has pledged. The power of the Supreme Court and judicial system, which Netanyahu has sought to undermine, transparency and corruption are also on the agenda.

For Palestinians in Gaza and the occupied West Bank, where violence by Jewish settlers on Arabs has soared since the Hamas incursion, the election is unlikely to lead to any immediate changes. Like Netanyahu, Eisenkot has ruled out a two-state solution, saying it would threaten Israel’s security, though he’s condemned the government for supporting Israelis who have attacked Palestinians.

The economy has mostly taken a back seat. Israel has proved resilient in the face of multiple wars, with the shekel and the stock market outperforming most rich-world peers this year. Still, whoever leads the next government will have to deal with issues ranging from a soaring defense budget to rising sovereign debt levels and one of the world’s highest costs of living.

—With assistance from Yasufumi Saito, Tom Fevrier, Vivien Ngo, Carla Canivete, Marissa Newman, Alisa Odenheimer and Fadwa Hodali.

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