Netanyahu says coalition deal still possible as talk of new polls mounts

Israeli Prime Minister Benjamin Netanyahu faces a Wednesday deadline to form a coalition (AFP Photo/Ariel Schalit)

Jerusalem (AFP) - Israeli Prime Minister Benjamin Netanyahu said Sunday he believed a deal to form a new coalition government remained possible only days ahead of a deadline as speculation mounted over the possibility of fresh elections.

Netanyahu has been unable to reach a deal with potential coalition partners despite results from April 9 polls giving his Likud party and its right-wing and religious allies a majority in parliament.

Negotiations have broken down over legislation aimed at requiring ultra-Orthodox Jews to perform mandatory military service like other Jewish Israelis.

The deadline for Netanyahu to form a coalition is Wednesday.

Holding elections so close to one another would be unprecedented for Israel.

"I think that the problem can be solved with good will, if that's what people want," Netanyahu said at the start of a cabinet meeting.

"If there's not a desire, and things are being aimed in a certain direction, it's unfortunate. I don't think the country needs to be dragged to another election, but there might be someone who wants that," he added.

Avigdor Lieberman, who is likely to become defence minister under a coalition deal, has pushed for a guarantee that a bill he backs on ultra-Orthodox military conscription be passed.

The ultra-Orthodox parties have refused to support this reform.

Netanyahu needs both Lieberman's Yisrael Beitenu party and the ultra-Orthodox to form the coalition he is seeking.

Likud and its allies hold 65 seats in the 120-seat parliament, including Yisrael Beitenu's five and the ultra-Orthodox parties' 16.

A Likud spokesman said Sunday that "if Lieberman continues to insist on taking down the government, the Likud has begun preparations ahead of elections."

But he added: "at this stage there has been no decision on dissolving the Knesset (parliament)."

Netanyahu said later in a Twitter post that he had put together a last-ditch proposal on the conscription issue and was meeting individually with party heads to discuss it.

Both Lieberman and ultra-Orthodox leaders indicated they were not prepared to compromise.

Separately, thousands protested in Tel Aviv on Saturday night against Netanyahu's reported attempts to seek immunity from prosecution as part of coalition negotiations.

Netanyahu faces potential indictment for bribery, fraud and breach of trust in the months ahead.