The Sefardic Torah Guardians Party (popularly known as "SHAS," based on its Hebrew initials) decided this morning that its 12-member Knesset faction would not join a coalition government led by Kadima Pary head and present Foreign Minister Tzipi Livni. As reported in the Jerusalem Post, SHAS balked on the issue of Jersusalem, stating that it would not join a new government without a commitment from that government not to negotiate the unity of Jerusalem with the Palestinian Authority.
This reversal leaves Ms. Livni, the prime minster designate, with the choice of either forming a narrow and unstable 66-seat coalition government, or holding new elections. It was formerly widely expected that the nationalist Likud Party, led by former Prime Minister Benyamin ("Bibi") Netanyahu, would emerge from new elections as the largest Knesset faction, giving Netanyahu the first shot at forming a new government. However, recent polls have shown Likud and Kadima in a dead heat. Kadima Party members and potential coalition partners reportedly are advising Ms. Livni to seek new elections.
Pending new elections Ehud Olmert would continue to serve as Prime Minister of Israel, barring criminal indictment or some unforeseen event.