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(Bloomberg) — Israel’s election do-over looked set to produce a dramatic deadlock, exit polls showed, with neither Prime Minister Benjamin Netanyahu nor former military chief Benny Gantz winning enough votes to easily form a government.The lack of a decisive victory would be a stunning setback for Israel’s longest-serving leader, who gambled on a revote to strengthen his political hand — and possibly keep himself out of jail — after a poor result in April. It may thrust Israel into further political turmoil and drag out policy paralysis at a time when diplomatic and regional security challenges are mounting.Netanyahu’s nationalist Likud and Gantz’s centrist Blue and White are running neck and neck, the exit polls indicated. They also show a close race between competing blocs aligned with the two big parties, with neither securing a majority of 61 of parliament’s 120 seats.While the exit surveys suggest the legally embattled Netanyahu, popularly known as Bibi, may lose his grip on power, it’s too early to say Gantz won.“The results here are less good for him than in April; and in April he didn’t make a government,” Simon Davies, a pollster and political consultant for Number 10 Strategies, said of Netanyahu. “Whichever way you look at it — if the exit polls are right — Bibi is not in a great position. Bibi is a consummate politician, though, and you’d never put it past him to get out of any situation.”The exit polls position former Defense Minister Avigdor Liberman, a onetime Netanyahu ally, to become this election’s kingmaker. Liberman’s objection to military draft exemptions for ultra-Orthodox Jewish men led to the collapse of coalition talks after the April 9 election, propelling Netanyahu to engineer a revote rather than let a rival try to put together a government.In other worrisome news for Netanyahu, the Joint List of Arab parties is poised to become parliament’s third-largest faction, increasing its representation and eating into the bloc allied with the prime minister.The Central Elections Committee said it won’t begin publishing meaningful results for hours. After a near-final tally is released on Thursday, President Reuven Rivlin will consult with the various parties to see who they recommend be tapped to form the next government.Gamble BackfiredWith his political survival at stake, Netanyahu launched a nasty campaign in which he appealed to his nationalist base by making pledges dear to their hearts, such as vowing to annex West Bank territory claimed by Palestinians, and painting the liberal left and non-Zionist, Israeli Arab leaders as bogeymen. That continued on voting day, when he convened what was billed as an emergency party meeting amid reports of high turnout in Arab and leftist areas of the country.“Voters of the right, have you lost your minds?” Netanyahu said on Twitter. “Go out now and vote Likud in order to stop a left-wing government with the Arab parties.”The prime minister entered the race badly weakened by what he says are baseless graft allegations cooked up by left-wing opponents. Before coalition talks collapsed in May, he was promoting new legislation that would grant him immunity from prosecution as long as he’s in office.In early October, he’s scheduled to plead his case before Attorney General Avihai Mandelblit, who will then decide whether to go ahead with planned bribery and fraud charges. Netanyahu is accused of accepting about $200,000 in gifts from wealthy friends and trying to win sympathetic press coverage by shaping rules to benefit media moguls.The political uncertainty dovetails with renewed confrontations with Iran and its proxies in Syria, Lebanon and the Hamas-run Gaza Strip, and serious questions over the fate of the Trump administration’s Middle East peace plan. Israel’s political paralysis has already held up its presentation.U.S. President Donald Trump has been one of Netanyahu’s most fervent allies. In the run-up to the April election, he presented Netanyahu with political gifts that included moving the U.S. embassy to Jerusalem, withholding funds from the Palestinians, recognizing Jerusalem as Israel’s capital and declaring that Israel had sovereignty over disputed land in the Golan Heights. That still wasn’t enough to help Netanyahu over the top this time.Political newcomer Gantz ran a clean-hands campaign that while lackluster, resonated with voters desperate for an alternative to Israel’s longest-serving leader.Exit polls show a surge in support for Liberman, whose tough stand against sweeping military draft exemptions for ultra-Orthodox Jewish men resonated among voters on both left and right in a country where the military draft is compulsory and many resent the concession. After the exit polls were revealed on Tuesday, he repeated his call for a national unity government that would include his party, Blue and White and Likud, while freezing out the ultra-Orthodox.Blue and White has said it won’t join a coalition with Netanyahu, so such a secular, broad-based coalition plan might not come to pass unless Likud pushes the prime minister out.“Assuming the numbers are correct, we are witnessing quite a dramatic outcome for a first time after a decade. There is a very high likelihood that Mr. Netanyahu will not serve as prime minister of Israel,” said Yohanan Plesner, president of the Israel Democracy Institute research center.“It looks like Mr. Netanyahu’s path to 61 is blocked, while Mr. Gantz has greater options,” Plesner said. “We might also see change within the Likud, where a new chairman of the Likud might be able to form a new unity government with Blue and White.”Netanyahu has led Israel for a total of 13 years in which he scored unprecedented diplomatic achievements for his country, including the transfer of the U.S. Embassy to Jerusalem, while seeing prospects for peacemaking with the Palestinians retreat.He also dismantled much of the socialist legacy of the country’s founders, with the broad economy and trade links flourishing even as a large income inequality gap makes it difficult for many to make ends meet.(Updates with Arab party eating into Netanyahu bloc in seventh paragraph.)\–With assistance from Yaacov Benmeleh.To contact the reporter on this story: Amy Teibel in Jerusalem at firstname.lastname@example.orgTo contact the editors responsible for this story: Lin Noueihed at email@example.com, Amy Teibel, Benjamin HarveyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.