Netanyahu, Livni Hold First Post-Election Talks

While not ruling out a Palestinian state, he has said it must have limited powers ensuring it is demilitarised.

Israel's political rivals Benjamin Netanyahu and Tzipi Livni met on Sunday for the first time since an indecisive Feb. 10 election to talk about a future government.

Netanyahu, hawkish leader of the right-wing Likud party, has vowed to persuade Livni, the foreign minister, to be part of a joint government.

Netanyahu, whom President Shimon Peres asked on Friday to form a new ruling coalition, pledged earlier to cooperate with the United States on Middle East peace.

The 59-year-old has said he will pursue that goal by enlisting Livni's centrist Kadima party, which favours trading large parts of the Israeli-occupied West Bank for peace, into a national unity government.

"Unity is reachable, through dialogue ... that is what we are going to do today, beginning with Kadima and tomorrow with Labour," Netanyahu, who has also previously served as prime minister, said earlier on Sunday.

Livni, 50, has not ruled out negotiating a common government but told party loyalists shortly before the talks that joining hands with 65 rightist members of parliament who back Netanyahu risked "betraying the confidence of voters".

She won her party's support to discuss Netanyahu's offer shortly before the two met, shaking hands before cameras at a Jerusalem hotel. She told a two-hour meeting of Kadima lawmakers she would object to joining any cabinet "whose path isn't ours".

In a statement, Kadima lawmakers said acceptance of the party's centrist policies on peace and domestic issues was "a condition for (the party) joining any unity government".

Kadima won 28 seats to 27 for Likud in the election for Israel's 120-member parliament. In choosing Netanyahu, Peres did not follow the tradition of asking the leader of the party with the most legislators to form a government within 42 days.

COLLISION COURSE

A narrow Israeli government comprised of hawkish parties who won a parliamentary majority could put Netanyahu on a collision course with U.S. President Barack Obama and his promise to move quickly to a Palestinian statehood deal.

"I intend and expect to cooperate with the Obama administration and to try to advance the common goals of peace, security and prosperity for us and our neighbours," the U.S.-educated Netanyahu told reporters.

He has said he wants to shift the focus of stalled, U.S.-sponsored peace talks with Palestinians away from tough territorial issues to shoring up their economy, an approach their leaders have rejected.

As prime minister from 1996 to 1999, he clashed with the Clinton administration but bowed to U.S. pressure and handed over parts of the West Bank city of Hebron to Palestinian rule.

While not ruling out a Palestinian state, he has said it must have limited powers ensuring it is demilitarised.

Along with rival Kadima, Netanyahu advocates expanding existing Jewish settlements in the West Bank, in defiance of the United States, which brought little pressure on Israel over the issue during George W. Bush's presidency.

Defence Minister Ehud Barak's Labour Party came in fourth in the election behind Yisrael Beiteinu, a far-right party. Netanyahu may seek to include Barak as well in his coalition. The two have plans to meet on Monday.