Prime Minister Shimon Peres and right-wing challenger Benjamin Netanyahu were virtually tied with nearly all of the votes from regular ballot boxes counted in a national election Wednesday that will determine the course of Israel's peace negotiations with its Arab neighbors.
By early today, late returns in the country's first direct vote for a prime minister gave Netanyahu the slightest edge over Peres. With 98.6% of the regular ballot boxes counted, Israel Radio reported that Netanyahu had 50.3% of the vote to 49.6% for Peres. This was after the Labor chief had held a lead throughout the night.
Officials said that in such a tight race, every vote would count and final results could be delayed for several days until the estimated 150,000 absentee votes of soldiers, diplomats, sailors and prisoners are counted.
Netanyahu's swing into the front seemed to confirm a trend that had been building for hours. The government's Channel 1 exit polls also projected Netanyahu would win by 50.4% to 49.6% for Peres.
The seesawing projections alternately sent supporters in each party into fits of jubilation and bouts of nervousness, and prompted speculation about a unity government.
With the first returns in favor of Peres, young Labor activists--the core of Peres' hard-fought campaign--erupted in cheers, waved flags and olive branches and, using the rival candidate's nickname, chanted, "Bibi's had it!" One banner read, "Bye, bye Bibi."
Netanyahu supporters started out glum, but soon were dancing on chairs and whooping with delight. "Go home, Peres!" they shouted.
No one expected the end of the count to be anything but a cliffhanger in this deeply divided country.
For Peres, even a narrow win would be a tremendous victory. The 73-year-old Nobel laureate has led his party to defeat in four previous elections. A victory not only would give him the personal seal of approval he has long sought, but it would allow him to move forward with his policy of trading land for peace with the Palestinians and possibly neighboring Syria.
Victory for Netanyahu would be a stunning upset by the 46-year-old politician. It probably would bring a halt or a major transformation to the peace process with the Palestinians that has been going on since 1993.
Neither candidate claimed victory, but some supporters did.
"A win is a win," Yossi Beilin, one of Peres' closest confidants and a member of his Cabinet, said early in the evening. "We will continue the peace process."
Netanyahu urged his supporters to be patient.
"The night is long. . . . Don't lose hope," Netanyahu said to cheers. "Whatever happens, it is clear that a large part of this nation supports our way."
Netanyahu has branded the government's peacemaking with the Palestinians a failure and insisted that he could achieve peace without further territorial concessions.
He played on Israeli fears of terrorism, while Peres put forth what he termed a vision of hope.
It will be up to the victor to conduct final negotiations with Palestinian leader Yasser Arafat over the next three years to determine the fundamental questions of Israel's borders, control over Jerusalem, the future of Jewish settlements in the West Bank and Palestinian statehood.
Negotiations with the Palestinians are to be completed in 1999 under the breakthrough peace agreement that Peres and former Prime Minister Yitzhak Rabin signed with Arafat in Washington in 1993.
Rabin was slain Nov. 4 by right-wing Jewish law student Yigal Amir, who opposed the accord.
Many Israelis visited Rabin's grave on election day, and his widow, Leah, disturbed by the apparent closeness of the vote, urged people to continue his legacy.
"I don't understand how half of this nation does not understand that there is only one way and none other, that we are on the road to peace," she told Channel 2 TV. "This embarrasses me."
Earlier, she had tearfully described voting for the first time without Rabin at her side. And she termed it "an unprecedented scandal" that Amir, who is in prison, was allowed to cast a ballot.
Voting took place without any major problems, but the legacy of violence was felt when Peres was forced to increase his security and change his schedule because of reported threats from Jewish extremists.
The Likud Party, which had closed its headquarters when it looked as if Netanyahu might lose, reopened it at 2 a.m. when a Netanyahu victory suddenly appeared possible.
In Washington, President Clinton kept a vigil in the White House, receiving a stream of partial election results relayed from the U.S. Embassy in Israel through National Security Advisor Anthony Lake.
White House officials were visibly crestfallen when the results began to turn against Peres, whom Clinton virtually endorsed as his preferred partner in the Middle East peace process.
A spokesman said Clinton planned to telephone the winner of the election as soon as the result was clear.
Israel Radio reported that Arafat also stayed up all night listening to results, and was shocked by the shift in Netanyahu's favor.
Whatever the outcome of the prime minister's race, both Labor and Likud took heavy losses in parliament, where the religious parties were the big winners, apparently with an unprecedented 24 seats in the Knesset, or parliament, up from 16.
Partial results showed Labor winning 35 seats, compared to 44 in the last Knesset, and the Likud coalition with 32, down from 40. The leftist Meretz Party lost three of its seats, keeping nine.
Meanwhile, Russians, Arab Israelis and the centrist Third Way parties won surprising backing.
Former Russian dissident Natan Sharansky's new immigrant party, Yisrael Ba-Aliya, apparently took six seats, and the two predominantly Arab parties increased their seats from five to nine. Third Way won three seats.
The prime minister-elect has 45 days to present a government to the Knesset for a vote of approval.
Given the new makeup of the Knesset, even if Peres wins he will no longer be able to form a government with only left-of-center parties: Labor, Meretz and the Arab parties.
But there was little doubt that Peres or Netanyahu would be able to form a government with minority parties.
Early today, the Likud party campaign chief, Tzachi Hanegbi, said he believed Netanyahu would win but that the country was so divided the only logical conclusion seemed to be a unity government with both Labor and Likud.
"In any case, the people are split. A unity government, if it finds some kind of mechanism of cooperation and agreement on common guidelines . . . any solution but this seems to be problematic."
The last unity government served for two years beginning in 1988 with Likud's Yitzhak Shamir as prime minister and Peres as finance minister. Peres also served as prime minister at the head of a unity government from 1984 to 1986.
The Central Elections Committee announced that 79.7% of the 3.9 million registered voters turned out to cast ballots on the sunny election day--up from about 77.4% in 1992, when Rabin was voted into office to end 15 years of Likud rule.
The turnout of Arab Israeli voters also rose significantly to 77%, from 68% in 1992.
The overwhelming majority of Israeli Arabs is believed to have voted for Peres, despite anger over his recent military offensive in Lebanon and a three-month closure of the Palestinian territories after bus bombings earlier this year. Arab leaders withheld their endorsements until the last minute.
The high Arab turnout drew thanks from Labor Party leaders and criticism from the right-wing opposition, who pointed out that Netanyahu had the majority of Jewish support in the election--implying that Peres' Arab support would make any victory of his illegitimate.
Israel has nearly a million Arab citizens, and 440,000 of them were registered to vote. To win their support, Peres said he would consider appointing the Jewish state's first Arab minister.
"There is one state of Israel with Jewish, Arab, Druze, Christian citizens and they all have the right to vote," Finance Minister Avraham Shohat said.
Netanyahu had a much greater lead among Jewish voters. In the last days of the campaign, some of his religious supporters issued signs and bumper stickers saying, "Only Netanyahu. This is good for the Jews," drawing charges of racism.
"We heard that it is a shame to say that Bibi is good for the Jews," campaign chief Hanegbi said. "But now we hear that in the Jewish sector the absolute majority of Jews believe Netanyahu is good for the Jews and I believe the absolute majority of Jews are not racist."
Ultra-Orthodox voters were believed to have voted for Netanyahu. Newspapers on election day carried front-page photographs of the Likud candidate kissing the Western Wall on one of his final campaign stops. There are about 200,000 registered voters in the ultra-Orthodox community, and several of their leading rabbis endorsed Netanyahu in the last days of the campaign.
On election day, Israeli troops sealed off the West Bank and Gaza Strip, fearing terrorist attacks, and about 25,000 soldiers and police were deployed across the country to protect voters.
Each of the country's approximately 6,700 polling places had security forces standing guard at the entrance against Islamic and Jewish extremists.
Although a national holiday had been declared, city streets were bustling with activists from Labor, Likud and many of the 19 other parties.
Under the Israeli-Palestinian peace agreement, Israel already has withdrawn its troops from the Gaza Strip and West Bank cities, except for Hebron, that it occupied for almost 28 years. It also pulled out of about 400 West Bank villages but retained the right to return.
Peres' negotiators have said that in a final agreement they would seek the annexation of the largest Jewish settlements in the West Bank but would consider giving Palestinians control over more of the land that Israel captured in the 1967 Middle East War.
During the campaign, Netanyahu insisted that Peres would give up East Jerusalem in final negotiations, and that he would not.
Times staff writers John Daniszewski and Rebecca Trounson in Jerusalem and Doyle McManus in Washington, and researcher Batsheva Sobelman in Tel Aviv contributed to this report.