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FACTBOX: Israel's coalition options

(Reuters) - President Shimon Peres began consultations with political party leaders on Wednesday on whom he should appoint to try to form Israel’s next government.

These are Israel’s options for a coalition government after voters in a February 10 election gave 28 seats in the 120-member parliament to Foreign Minister Tzipi Livni’s centrist Kadima party and 27 to the right-wing Likud of Benjamin Netanyahu:

* Livni could try to form a coalition with smaller parties, similar to Prime Minister Ehud Olmert’s outgoing cabinet.

Potential partners would be the religious Shas party (11) and United Torah Judaism (5) seats, and the Labour party (13). A former Olmert partner, the far-right Yisrael Beitenu (15), could also join in, giving her 72 seats in parliament. This option is seen as unlikely. Livni failed to forge a similar deal last fall when she was named to succeed Olmert, in a dispute with Shas over the future budget.

Another potential difficulty is Yisrael Beitenu’s objections to yielding land for peace with the Palestinians, which Livni favors. The party shares her goal of seeking electoral reform. Yisrael Beitenu is also at loggerheads with the religious parties over its demands for civil marriage, and easing the process of converting immigrants to Judaism.

* A grand coalition led by Livni, including Netanyahu’s Likud, in an arrangement similar to two previous unity governments in Israeli history. Such a coalition could include Livni and Netanyahu rotating as prime minister. It might be rounded out to a healthy majority with the addition of far-right Yisrael Beitenu, for a 70-seat coalition. The parties could agree on a policy of electoral reform that would squeeze out religious and splinter parties in the next national ballot.

This option is seen as possible, and seems to have Livni’s support, though such a coalition may prove tough to build. Likud and Yisrael Beitenu’s hardline stance could hamstring Livni’s efforts to continue U.S.-backed peace talks with Palestinians.

* Right-wing parties that won a total of 65 seats could prevail upon Israeli President Shimon Peres to ask Netanyahu to try to form a government. The law would allow Peres to break with a tradition of naming the candidate who wins the most votes, to name someone he thinks is more likely to succeed.

This option may be easiest for negotiating a policy platform and delegating cabinet jobs, but the slim majority could prove vulnerable to opposition attempts to topple it in parliament. Such a coalition would likely limit Israel’s ability to advance in Middle East peace diplomacy.

* A grand coalition led by Kadima, Likud and the left-wing Labour party of Defense Minister Ehud Barak (13 seats), for a total of 68. Such a government may be freer to pursue peace talks, but possibly limited by Netanyahu’s rightist leanings.

This option seems the most practicable, and the best possibility for peace talks, but fraught with power struggles among the three leaders whose jockeying for top jobs could make for a drawn-out process of coalition bargaining.

Yisrael Beitenu, the religious parties and left-wing Meretz (3 seats), may seek to join, complicating the negotiations though widening the coalition base. Such a government may effectively work for electoral reform, though diplomacy with Palestinians could be hemmed in by right-wing demands.

* Netanyahu, if tapped by Peres to put together a coalition, could seek a unity government with Kadima and Labour. Some in Labour are opposed, but Kadima could split on this option, with some joining Likud.

Writing by Allyn Fisher-Ilan; Editing by Giles Elgood

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