THE outcome of the Israeli elections was balanced on a knife edge early this morning, and Middle East peace hopes with them, as initial results indicated a slender advantage for Mr Benjamin Netanyahu, the hardline Likud prime ministerial challenger.
Voting analysts acknowledged, however, following extensive exit polling, that either Mr Netanyahu or the Labour leader, Mr Shimon Peres, could yet emerge victorious.
In the small hours, with more than one third of votes counted, both Israeli television stations predicted a narrow victory for Mr Netanyahu by a margin of some 2 per cent. Earlier predictions had suggested Mr Peres might just manage to hold onto power.
As the counting went on into the night, initial euphoria in the Labour camp gave way to despair, and it was the Likud supporters who were dancing at their party's campaign headquarters. Mr Peres remained at home, awaiting the final results Mr Netanyahu paid a morale boosting visit to his campaign HQ when the polls still showed him losing, then he too ducked out of the limelight to await the complete tallies.
If the TV predictions prove correct - and the final figures may not be known until later today or even tomorrow - Mr Netanyahu will have no difficulty forming a coalition. Although the exit polls showed a fall in support for Likud, from 40 seats to 31 in the 120 member Knesset, Mr Netanyahu's natural coalition partners fared well: the various religious parties dramatically increased in strength to about 24 seats from their current 16.
Mr Netanyahu would need only to woo one other minor party - Natan Sharansky's immigrant party or the centrist Third Way, for example - to achieve a Knesset majority. By the same token, however. if Mr Peres proved victorious, he too would have little trouble winning over enough of the minor factions to form a government.
Mr Netanyahu was not so foolhardy as to be boasting of victory before the final results were in, but he could certainly afford to delight in his performance - closing a gap that six months ago showed Mr Peres more than 30 per cent ahead. There is little doubt that, had Mr Peres called elections soon after the assassination of his predecessor, Yitzhak Rabin, last November, his victory would have been assured.
But he preferred to bring stability to Israel's tottering democracy, and four murderous Hamas suicide bombings here in February and March reawakened Israeli fears about the peace process and let Mr Netanyahu back into the race.
Should he turn out to have won this remarkably close fought campaign, and form the government that takes Israel into the next century, Mr Netanyahu has indicated that he would re evaluate the peace process with the Palestinians
His victory would be a slap in the face for the moderate Arab states, and for an American administration that had made its preference for Mr Peres abundantly clear. And, as Mrs Leah Rabin, Mr Rabin's widow, said. after casting her ballot early yesterday, it would mean that her husband had given his life in vain.