Non-Israeli observers of the Israeli political scene can be forgiven for the ocassional twinge of befuddlement over the workings of our system. Any democracy has its unique foibles (think: electoral college), but the Israeli system, committed as it is to near-total adherence to representation for all minor sub-groups and splinter-groups within them, can be a bit challenging for outsiders.
One aspect of this is that election results aren't a particularly good indicator of what the government coalition will look like. Once the division of MKs according to the election results is known, the president chooses one of them--often, but not always, the leader of the party with the largest representation in the Knesset--and only then do the negotiations begin. The goal of the appointee is to cobble together a configuration of parties or parts of parties with a total of at least 61 of the 120 MKs to vote him or her into office. Usually this works, though as a general rule it happens only after exhausting the entire period granted by law, 42 days; sometime it doesn't. At different times, David Ben Gurion, Shimon Peres and Tzipi Livni all got the nod from the president, but failed to round up 61 votes.
The chief dynamic at the moment, as Binyamin Netanyahu tries to form a coalition from among the 12 lists which made it into the new Knesset (they are made of 15 parties, but let's not get into that), is that the second largest, Yesh Atid, and the fourth largest (Habayit Hayehudi)--with 31 MKs between them--have banded together as a negotiating bloc facing Netanyahu's Likud-Beiteinu, which also has 31. Effectively, even if not nominally, this means that no coalition is possible without both of them being in it, and the first bloc is apparently driving a hard bargain with the second.
This is not the first time this has happened. That would have been in 1961.
Back in August 1961, the election results were disappointing for Ben Gurion's Mapai party, which garnered only 42 MKs (a pipe dream for any party today), and along with 4 automatic Arab allies had 46. So four smaller parties, not all of them obvious allies, banded together, calling themselves the Club of Four, and they too had 46 votes. Deadlock. Ben Gurion looked at the situation and threw in his hat, so the president, Yitzhak Ben Zvi, appointed Levi Eshkol, also of Mapai, to give it a try. In those days, unlike today, the MK forming the coalition could choose not to be the prime minister. We've posted some of the documents from those high-wire-act days on our Hebrew website. Finally, more or less at the last moment, Eshkol returned to Ben Zvi with the announcement that he'd succeeded. With lots of patience and adroit negotiating, he had managed to break up the Club of Four, bring two of them into the coalition but on his own terms, and leaving two of them out in the opposition.
All of which just goes to show that positions staked with great confidence early on in the coalitional negotiations can end up unscathed, or modified, or totally abandoned. The problem is, you don't know in advance which it will be, nor do the negotiators.