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By Jeffrey Heller
JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu looks set to form a new governing coalition after next week's election, polls show, with the only question being whether he wants to soften its hardline contours.
No one party has ever won a majority in parliament in a parliamentary election in Israel, and Tuesday's ballot could be followed by weeks of coalition-building negotiations.
The latest surveys predict Netanyahu's right-wing Likud, running with the ultra-nationalist Yisrael Beitenu party, will take between 32 and 37 of the legislature's 120 seats, outstripping the nearest rival, centre-left Labour, which is forecast to win between 15 to 18 seats.
According to the polls, Likud-Yisrael Beitenu, along with other right-wing and religious parties - Netanyahu's traditional coalition partners - will control some 67 seats after the election compared with only about 40 for any centre-left bloc.
That would give Netanyahu a narrow but relatively strong majority in the assembly.
However, such a coalition might have an image problem abroad, containing uncompromising elements such as the Jewish Home party, which is set to take up to 15 seats and is adamantly opposed to the creation of any Palestinian state.
After his last election victory in 2009, Netanyahu struck a deal with the Labour party, a reassuring presence in the cabinet for many foreign governments because of its historic commitment to U.S.-backed peace diplomacy.
The Labour party quit the coalition in 2011 and under the new leadership of Shelly Yachimovich has vowed not to enter any Netanyahu government, preferring to stay in opposition.
However, the prime minister could reach out to two other centre-left parties - Yesh Atid led by former TV host Yair Lapid, and Hatnua, led by ex-Foreign Minister Tzipi Livni.
Neither has ruled out a partnership with Netanyahu, and their parties' participation in a coalition could give him control of some 76 seats, a commanding margin for Israel.
Both parties are committed to resolving the decades-old Middle East conflict. They also want to end military service exemptions for ultra-Orthodox men - a pledge that might complicate life for Netanyahu as he seeks a wide coalition pact.
According to one scenario raised in the Israeli media, Netanyahu could try to exclude ultra-Orthodox parties from his coalition, but that could probably only happen if he does better than expected and takes up to 40 seats.
Leaving the ultra-Orthodox out and bringing centrist parties in would ease the way for him to pass austerity measures likely after news this week that the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate.
Ultra-Orthodox parties have traditionally balked at steep spending cuts, which they fear could reduce state stipends for their own religious institutions.
Another possibility mooted in the media is for Netanyahu to try to exclude the Jewish Home party, led by the hi-tech entrepreneur Naftali Bennett, who was once close to the prime minister but then allegedly fell out with his fiery wife.
Perhaps aware of this danger, the Jewish Home has run campaign ads portraying itself as a natural ally for Netanyahu, adding that its presence in government would help the prime minister resist outside demands to make concessions for peace.
"A strong (Jewish Home) is the only way that Netanyahu will be able to withstand this pressure," party candidate Jeremy Gimpel told a debate in Jerusalem on Wednesday.
(Additional reporting by Crispian Balmer; Editing by Alistair Lyon)
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