Prime Minister-designate Binyamin Netanyahu will make a final decision as early as Monday about whether to seek a national-unity government with Kadima or form a narrow coalition with right-wing parties.
Chances for a unity government appeared slim on Sunday evening after associates of both Netanyahu and Livni accused the other of refusing to make the sacrifices necessary to reach a power-sharing agreement.
Meanwhile, the Likud continued negotiating with other parties as if contacts with Kadima had not taken place.
"Without an agreement on the two-state solution and [the] Annapolis [process] - there will be no deal," Livni told Kadima ministers. "This is a fundamental choice Bibi must make - will he go with the Right, or with us? [A national unity government] should be an equal partnership with diplomatic understandings, or there won't be a deal."
Livni's associates said she was still waiting for answers from Netanyahu on diplomatic issues. They said they were also waiting to hear whether the Likud leader would be willing to discard the understandings his party had reached with other coalition partners and draft new coalition guidelines with Kadima.
"The ball is in Netanyahu's court," a Livni associate said. "He will build a government with Kadima, or with what he calls his 'natural partners.' He can't have a mix of the two. Even if there is a rotation in the Prime Minister's Office, she won't join unless she can advance what she believes in."
Netanyahu's associates responded that the onus was on Livni. They said he had already done his part by offering to leave the Prime Minister's Office after three years and allow her to be prime minister for the final 21 months of the Knesset's term.
"He doesn't need to prove his sincerity," a Netanyahu associate said. "His first call after President Shimon Peres appointed him to form a government was to her, he met with her twice at the start of the talks, and now he is trying again to bring her into the government. Now it's up to Tzipi to take a brave step toward him."
Likud sources rejected Livni's demands that Netanyahu endorse her negotiations with the Palestinians that began in Annapolis in November 2007 or openly declare support for a Palestinian state. But they said he would agree to a more vague diplomatic statement.
"Bibi wasn't a leftist and he won't be a leftist, so he won't say anything leftist," a Likud source close to Netanyahu said. "If someone thinks the banner of 'two states for two peoples' will fly over Metzudat Ze'ev [Likud headquarters], they are wrong. But there are government decisions that can be endorsed and interpreted in one way or another, such as the road map."
Livni met for an extended period with Labor Party chairman Ehud Barak outside Sunday's cabinet meeting. Negotiations also continued between Likud and Labor officials.
Labor officials said they expected Livni to insist on Labor joining the coalition along with Kadima if she entered the government.
They said Livni might make such a move to prevent Labor from taking away future votes from Kadima by providing an alternative to the government in the opposition, and also because she would prefer that the Defense portfolio go to Barak and not to her Kadima rival, Shaul Mofaz.
If talks with Kadima and Labor intensify, it is likely that Netanyahu will have to ask Peres for a two-week extension to form a coalition. If he decides on a narrow government, he should be able to complete negotiations with right-wing parties by Thursday's deadline.
Progress was reported on Sunday in the talks at Ramat Gan's Kfar Hamaccabiah Hotel with United Torah Judaism and Habayit Hayehudi.
Likud sources stressed that any deal reached with any party was tentative pending the results of talks with Kadima and Labor, and that this was known to every potential coalition partner.
"From day one, we made it clear that we wanted as wide a government as possible and that we were keeping our options open," a source close to Netanyahu said.
