Coalition talks between Israel Beiteinu and Likud appear to have hit a hitch, with the two parties failing to finalize an agreement during a meeting at Ramat Gan's Kfar Hamaccabiah Hotel. Several key issues remained unresolved on matters of religion and state and electoral reform, as well as Israel Beiteinu's demands on the issue of immigration and absorption, Army Radio reported. Also Wednesday, for the first time since Prime Minister-designate Binyamin Netanyahu began his efforts to build a coalition, Israel Beiteinu leader Avigdor Lieberman had appeared to show some flexibility, by apparently giving into Netanyahu's demand that the Justice portfolio not remain with current minister Daniel Friedmann. Lieberman has been steadfast in his insistence that he himself become foreign minister and that his party control the two law enforcement portfolios, justice and public security. Just two days after he denounced the anti-Friedmann campaign as "McCarthyism of the Israeli Left," he indicated to Netanyahu that a different justice minister could be appointed on behalf of his party. "We are looking for creative ways to solve the Friedmann problem," a source close to Netanyahu confirmed. "We agreed that the justice minister should be a candidate recommended by Israel Beiteinu but agreed on by both parties." Netanyahu did not want Friedmann in the role because his appointment would antagonize the legal establishment and would be seen as allowing Lieberman to avenge the criminal investigations against him that have stretched for 12 years. Appointing Friedmann would also have likely resulted in well-respected MK Dan Meridor ending his political comeback and retiring from politics for a second time, which would have embarrassed Netanyahu. MK Bennie Begin has also been very critical of Friedmann. Netanyahu and Lieberman discussed alternative candidates for justice minister in a meeting on Wednesday at the Knesset. Two names raised were former justice minister Yaakov Neeman and Lieberman's No. 2 in Israel Beiteinu, MK Uzi Landau, a former public security minister. Both men are close to both Netanyahu and Lieberman. But it is still possible that they would find another well respected lawyer to take the post before the new government is set to be sworn in next Wednesday. Once Israel Beiteinu enters the coalition, the Likud hopes a deal can be finalized with Shas by Sunday, and then talks will intensify with United Torah Judaism and Habayit Hayehudi. Coalition agreements must be submitted to the Knesset 24 hours before they are voted on. Therefore, Netanyahu wants to complete building his coalition by Tuesday, to ensure that his government would be sworn in on Wednesday, ahead of next Friday's deadline. He will only distribute portfolios in his own party on Tuesday night or Wednesday. If needed, Netanyahu can ask the president for more time to assemble a government. It was still unclear whether the National Union would end up joining the coalition. Party chairman Ya'acov Katz shocked Likud officials when he upgraded his demands beyond the Construction and Housing Ministry in an interview with Arutz Sheva. "If Netanyahu does not answer our demands on portfolios, which only he knows, we would be willing to compromise on the Defense or Finance portfolios or the chairmanship of the Knesset Finance Committee," Katz said.