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On February 10, 2009, 3.4 million Israelis went to the polls to elect the 18th Knesset. The results reflect and demonstrate Israel's complex reality: a vibrant and healthy democracy – the envy of many – coupled with a system of government that leads to inherent instability and an electorate that is almost evenly split regarding the key issues facing the country.

The elections themselves were a celebration of democracy, yet the results were quite confusing and even inconclusive. The voting went smoothly and voter turnout – a rainy and stormy election day notwithstanding – exceeded that of the previous election. Effective voter turnout was 72 percent – less than customary in most past elections but on par with other Western democracies. Within 45 hours after the polls closed, final uncontested results of the election were announced by the central election committee.

However the main and unfortunate conclusion from the results is that the elections did not produce a clear winner and instead left the Israeli public confused and frustrated. Israel's multi-party and proportional representation system comprise a situation where the task of forming a government will pose a serious challenge, and it is quite doubtful whether a viable and stable government can even be formed.

The incoming Knesset consists of no fewer than 12 parties – seven of which have five members or fewer (out of a total of 120 members). The major difficulty is that unlike the past (as was the case with Rabin in 1992 or Sharon in 2003), there is no major party having 40 or more seats – a party that could then form a coalition with one or two smaller parties. There are two medium size parties: Livni's Kadima with 28 members and Netanyahu's Likud with 27 members; three smaller double digit parties: Lieberman's Israel Beiteinu with 15 seats, Barak's Labor with 13 seats, and the ultra-Orthodox Shas with 11 seats; and seven small parties. This is a virtual nightmare for anyone who attempts to build a stable coalition that will be able to function effectively for four years.

The situation is so complicated that there is no clear cut answer as to who really won the election. Ms. Livni claims that she won, as her party is the largest party, albeit by one seat only, and that she is the public's preference for prime minister. Mr. Netanyahu claims that he won because he is the leader of the right-religious bloc, which has a clear majority in the Knesset (65 members compared to 55 members for the center-left bloc) and only he can form a viable coalition. It would seem that Ms. Livni is in a similar position to Al Gore's corner in 2000 – she may have won the vote, but due to the system (the US Electoral College and blocs that comprise a coalition government in Israel) she probably lost the election.

In terms of the actual results, several observations can be made. First, although the country remains divided, there is a definite shift to the right. In the outgoing Knesset, the right-religious bloc had 50 seats vs. 63 seats for the center-left bloc. The pensioners' party, with 7 seats, did not formerly identify with any bloc but was considered for the most part as leaning towards the center-left bloc. As a result of the election, the balance has now shifted in favor of the right-religious bloc. The shift to the right, probably reflects Israeli disillusionment with the peace process and the effects of unilateral withdrawals as well as frustration with the security situation in the south. The areas around the Gaza Strip, which suffered from Hamas mortar and rocket attacks, voted overwhelmingly for right wing parties. At the same time, the shift may also reflect a desire for change and dissatisfaction with the current government's overall performance. However, the difference between the two blocs is less than predicted by the polls and is certainly reversible. A mere shift by 5 percent of the electorate could change the picture.

Second, with one exception, all the parties on the right and left as well as the small parties suffered losses: Labor lost almost a third of its strength, Meretz – on the extreme left - was almost wiped out, and both the right wing religious Zionist parties and the ultra-Orthodox parties all lost seats (the extreme right National Union party dropped from six to four seats, i.e., down by one third). The real winners were the two leading center parties: Likud, which more than doubled its representation, rising from 12 seats to 27 seats and the ruling party Kadima, which essentially maintained its strength.

Third, the surprise of the election was Lieberman's Israel Beiteinu party, which increased its strength by one third and became the third largest party. While this is a significant development, it need not be exaggerated. Indeed, the media, both in Israel and abroad, has clearly overplayed this result. Lieberman's party remains to a large degree a sectoral party – close to two thirds of his support comes from the Russian immigrant community. Israel Beiteinu also received much of the protest vote, which may not necessarily repeat itself. In the final analysis, Lieberman received less than 12 percent of the vote.

Ms. Livni is unable to form a government without Likud, and Likud has no intention to serve in a Livni government. Therefore, one can assume that the next prime minister will indeed be Mr. Netanyahu. Netanyahu, however, faces a very difficult decision, namely, which coalition should he form. He has two options, both of which are risk-laden. He can form a narrow coalition (65 members), consisting of only the right-religious bloc parties, or he can form a wide based unity government with Kadima and Lieberman, with the possible addition of one or two religious parties (70-84 members). In the case of the former, he will find it very difficult to rule and will be almost powerless to function effectively on the diplomatic or the economic front. In the case of the latter, he will have to share power genuinely with Kadima. Each prospect represents a less than optimal result, but Mr. Netanyahu will clearly have to choose between one of these politically uncomfortable options.