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It also echoed the American Israel Public Affairs Committee's tendency to blame the failure to achieve peace on the Palestinians, although Palestinians at first welcomed Trump administration efforts to broker a peace deal, until President Donald Trump recognized Jerusalem as Israel's capital in December 2017.

A team led by Trump's adviser and son-in-law Jared Kushner has been working on an Israeli-Palestinian peace plan, but has not disclosed details.

The leader of the right-wing Likud party, dubbed "Bibi, the magician", won 35 seats in the 120-seat Knesset, the exact same number that his challenger and head of the Blue and White alliance, the pro-change centrist Benny Gantz did.

The president added an optimistic prediction for progress towards peace between Israel and the Palestinians. He has held power consecutively for the past decade, and also was prime minister from 1996-9, and would thus be starting his fifth term in office; by July, he would overtake David Ben-Gurion as Israel's longest serving prime minister.

"This is a night of great victory". Rivlin will then pick the candidate he believes has the best chance of assembling a parliamentary majority, and ask that leader to form a government within 42 days. But if the Palestinians are seen as rejecting the plan, he says, Netanyahu would seek a green light from Trump for annexation of select settlements as a "consequence".

"Thank you, I wish you a happy holiday".

Tel Aviv Stock Exchange main indexes were up almost 1 percent in late trading on Wednesday, displaying confidence in a veteran prime minister who has overseen a humming economy and blunted various security threats, including from Syria.

Netanyahu, speaking Tuesday night, declared it a "tremendous victory" for his party.

Israel's attorney general has announced his intention to charge him with bribery, fraud and breach of trust in three cases.

No political party in Israel's more than 70-year history has ever won a majority entirely alone and Netanyahu faces a choice between forming a new coalition of right-wing and religious parties, or a grand alliance with the centre. Accordingly Gantz, although an able and intelligent man, established no platform of his own which could swing enough voters from the right of Israel's political map.

Netanyahu's most immediate problem is to find a way to protect himself from the slew of criminal investigations and potential corruption charges that have been attached to his name in recent months.

The Palestinians demand a full return to the borders that existed before the 1967 war when Israel seized the West Bank, including East Jerusalem, and the Gaza Strip.

But even if he tries, it's unclear whether Netanyahu would have the votes to succeed.

Palestinian chief negotiator Saeb Erekat said that "Israelis have voted to preserve the status quo. They have said no to peace and yes to the occupation".