If Binyamin Netanyahu's Likud proves the polls right and emerges as the largest faction, heading a right-wing bloc with a Knesset majority, [President Shimon] Peres, who will consult with the various party leaders once the official results are in, will be spared much deliberation and the man who lost power a decade ago will be given the presidential nod.
Alternatively, if Tzipi Livni's Kadima maintains its final-days momentum, eases ahead of the Likud and, however improbably, Livni wins the prime ministerial recommendation of party leaders representing a Knesset majority, she will be given the president's authority to try to succeed where she failed just three months ago in building a governing coalition.
Given the most recent exit polling, it appears that Livni's party has won, as Israeli television stations are predicting between 29 and 30 seats for Kadima and either 27 or 28 for Likud. But it's not clear if she has the parliamentary support necessary to become Prime Minister, and Peres will now be responsible for determining who should be given the first chance to form a coalition. If Avigdor Lieberman's Yisrael Beiteinu party backs Likud, then it appears that Netanyahu would get the first opportunity to form a coalition government, even though Livni's party received more votes. The bickering between Kadima and Likud has already begun.
While the unclear election results will cause headaches in the near-term, they are also a manifestation of Israel's troubled political system. As Shmuel Rosner presciently noted six days ago, Israel's problem is that there are no longer any "big" parties, only four or five mid-size ones. This has led to a now-fractured government, and will, most likely, reward control of the government to the second-place finisher.