Observations from the final Israeli election results:
So I’m willing to predict a Kadima-Likud unity government. I’m less sure on who’ll be PM, but if I had to bet I’d say Livni will stay on as Foreign Minister and Netanyahu will get the top gig. This is not ideal, certainly, but I can also see a situation where it leads to peace.
First, assume the necessary preconditions for a peace deal: a Palestinian unity government, a lifting of the blockade on Gaza, and ongoing negotiations between the PA and Tel Aviv. These are big assumptions, of course, but they would be necessary for a deal regardless of election results. Now, suppose Tzipi Livni, as FM, works out a deal with Abbas (or his successor) along the familiar Arab Intiative/Geneva lines. Presumably, this will involve things – giving East Jerusalem to the Palestinians, compensation to refugees, settlement evacuation – that Netanyahu won’t abide by. However, Livni holds a trump card. She can withdraw from the government, endangering Netanyahu’s hold on the premiership. He could conceivably keep it through the conservative coalition outlined above, sure, but he’s rather not go through the trouble. So he agrees to back Livni’s deal to keep the government together. Now, you have a peace deal with the backing of the nation’s most prominent conservative, whose clout would be invaluable in selling the deal to the Israeli public. In short, you get a good deal with widespread popular support.
Now, this is probably just a crazy scenario that will never come to pass, but it seems at least possible. And possible is a lot better than what I was assuming we’d have: a strong Likud/Yisrael government with no intention of even starting negotiations.