A woman walks past a banner depicting Israeli Prime Minister Benjamin Netanyahu and the words ‘Crime Minister’ outside the Justice Ministry as pre-trial hearings in corruption cases against Netanyahu continue, in Jerusalem, Oct. 3, 2019. Photo: Reuters / Nir Elias / File.

Israel moved closer towards a new election on Wednesday after kingmaker Avigdor Lieberman declined to back either Prime Minister Benjamin Netanyahu or challenger Benny Gantz with a deadline on building a government about to expire.

Neither Netanyahu, who heads the right-wing Likud party, nor ex-general Gantz of the centrist Blue and White secured a ruling majority in parliament in elections in April and September.

The resulting deadlock is unprecedented for the country. It has shaken Israelis’ confidence as conflicts with Iran and Syria deepen, and vexed a usually friendly White House.

Netanyahu, in office for the past decade, failed to put together a coalition after the inconclusive September election. Gantz was handed the task by President Reuven Rivlin next but his 28 days to form a government expire at midnight (2200 GMT).

There was no sign of progress towards a Rivlin-proposed deal for a national unity government that would include Likud and Blue and White after weeks of talks. Among issues in dispute was the timeline of a proposed power-share between the two leaders.

While they are largely aligned on national security, Gantz has signaled more openness than Netanyahu to a resumption of long-stalled peace talks with the Palestinians. Netanyahu has sought to cast Gantz as a dovish novice who is not up to the task of running Israel‘s economy and statecraft alone.

Lieberman, who heads the secular-nationalist Yisrael Beitenu party told a news conference on Wednesday that “both (Netanyahu and Gantz) were guilty” in failing to agree on a Likud-Blue and White alliance, which he had strongly advocated.

With no unity government in sight, Lieberman said, he would deny both men the support of his party’s eight legislators, effectively meaning that neither Netanyahu nor Gantz would have sufficient backing to form more narrow administrations.

“As things stand now, we are on the way to another election,” Lieberman said.

Crisis no joke

Netanyahu issued a last-gasp appeal on Gantz to compromise, telling rightist factions that, even among its closest allies, Israel was “becoming a joke” due to its political deadlock.

A third election in a year would be “institutional insanity,” he said.

Lieberman, a former defense minister, has said he would not join any alternative to a Likud-Blue and White coalition.

He reiterated opposition to a Likud-led government that included ultra-Orthodox Jewish parties with religious influence over life in Israel, or to an administration headed by Blue and White that would be dependent on support from Arab parties he described as a “fifth column.”

Ahmed Tibi, a senior politician from Israel‘s 20-percent Arab minority, tweeted that Lieberman’s rhetoric constituted “incitement” and “straight-up racism and antisemitism.”

Rivlin had proposed a “rotation” agreement between Netanyahu and Gantz in which the Likud leader would take a leave of absence as prime minister should he be indicted on corruption charges. Netanyahu has denied wrongoing in the three cases.

Gantz has balked at ultra-Orthodox participation in a unity government, saying he wanted to establish a “liberal” administration more in tune with Israel‘s secular-Jewish majority.

Netanyahu had insisted on preserving what he has described as a right-wing bloc — whose support he would need should he seek parliamentary immunity from prosecution if he is indicted.

Israel‘s attorney general is widely expected to announce within days whether he will accept police recommendations to charge Netanyahu.

Netanyahu faces no legal requirement to leave government if indicted. He could face fraud and breach of trust charges in all three probes, and bribery charges in one.

Should Wednesday’s deadline expire without a coalition deal, a 21-day period will begin in which legislators can nominate any lawmaker, subject to the agreement of at least 61 of parliament’s 120 members and a formal mandate from Rivlin, to try to establish a coalition.

Failure to do so automatically triggers an election in 90 days.

Whoever emerges as Israel’s prime minister will need to rein in a growing budget deficit quickly, as Netanyahu’s caretaker cabinet has been unable to plug a gaping hole in government finances. The deficit has swelled over the past year as Netanyahu and Finance Minister Moshe Kahlon cut taxes while spending heavily on cost-of-living subsidies and pay rises.