Israel President Reuvin Rivlin on Thursday has given Parliament three weeks to agree on a leader or send the country to vote in its fourth election in just over a year.
Mr Rivlin's prime minister-designate, former military chief Benny Gantz, and Prime Minister Benjamin Netanyahu failed to reach a power-sharing deal by the start of Thursday.
The bitter rivals pledged to form an “emergency” government to steer the country through the coronavirus crisis, which has ravaged the economy and sent unemployment to record highs.
But after weeks of talks and a final 48-hour extension granted by Mr Rivlin, he said he had lost confidence in their chances of striking a deal.
“I am informing you that I do not see the possibility of forming a government and I entrust the formation of a government to the Knesset,” he wrote to parliament.
“I hope that the Knesset members will be able to form a majority in such a way that a government can be formed as soon as possible and prevent a fourth round of elections.”
The decision by Mr Rivlin, who holds a figurehead position that oversees post-election coalition talks, does not rule out a deal between Mr Netanyahu and Mr Gantz.
After the deadline passed, negotiators from Mr Netanyahu’s Likud and Mr Gantz’s Blue and White coalition met again on Thursday to continue talks.
The incumbent prime minister said he had also invited Mr Gantz to another meeting in the evening.
They now have a final three-week deadline to wrap up a deal before the Knesset dissolves and another election is set, for no later than August 4.
Mr Gantz told party members he would “preside over a fully operational Knesset beginning next week”, and Israel’s Channel 12 reported that he threatened to advance anti-Netanyahu legislation if talks with Likud broke down.
But Mr Netanyahu appears to have gained some influence.
With Mr Gantz no longer holding the presidential “mandate” to put together a coalition, Mr Netanyahu could search for other options.
Fifty-nine politicians have endorsed him, leaving him just shy of a majority in the 120-seat Knesset.
While continuing to talk to Mr Gantz, he may also try to lure two MPs from his opposition in hopes of putting together a narrow government.
The Knesset could choose a third candidate as prime minister but there does not seem to be any viable alternatives who could muster the support of 61 endorsements.
A deal between Mr Gantz and Mr Netanyahu would require major compromise by both men.
During three bitter campaigns over the past year, Mr Gantz vowed never to serve in a government under Mr Netanyahu, who has been indicted on corruption charges.
The long-serving incumbent, meanwhile, would probably be forced to step aside halfway through the term and allow Mr Gantz to serve as prime minister in a power-sharing deal.
Last month’s election, just like campaigns last September and April, ended with no clear winner.
But with a slight majority of backers, Mr Gantz was given the first turn to build a coalition.
Although his backers are deeply divided, they are united in their animosity toward Mr Netanyahu.
Mr Gantz began to proceed with legislation that would have disqualified rival from ever holding the position again.
But with the virus crisis worsening and his own alliance fraying, he late last month accepted an offer from Mr Netanyahu for a joint government to deal with the pandemic.
The move drew heavy criticism from his supporters and caused his Blue and White alliance to collapse, leaving him with a faction of only about half its original size.
Israel has reported over 12,500 cases of coronavirus infection and at least 130 deaths from the outbreak.
Mr Netanyahu and Mr Gantz seemed to be close to a rotation deal last week.
But negotiations stalled, reportedly over a demand by Mr Netanyahu to have more influence over judicial appointments.
He is awaiting trial on charges of bribery, breach of trust and fraud. He has denied any wrongdoing and says he is a victim of a media and judicial witch hunt.
After three nasty campaigns, distrust and bad blood remain.
Despite his calls for unity, Mr Netanyahu may be looking towards another election to capitalise on what has generally been regarded as capable handling of the coronavirus crisis.
A poll published late Monday on Channel 12 TV showed a surge in support for Likud that was large enough to easily secure his re-election.
It would also allow him to remain as prime minister for at least several more months to fight his impending trial.
Mr Netanyahu’s hand-picked justice minister has already delayed the trial by closing most of the court system, ostensibly to curb the risk of coronavirus infection.
