Prime Minister Benjamin Netanyahu’s right-wing electoral alliance, Likud-Beiteinu, and his religious coalition partners won a much-reduced majority in Tuesday’s elections, resulting in a hung parliament.

The election was shaped by a number of key factors. Of particular importance was the larger than expected 67 percent turnout, the highest since 1999. This testifies to the fact that the social discontent manifest in the mass protests of summer 2011 has not gone away.

Secondly, there was a surprisingly strong showing for Yesh Atid, formed last year, which was able to benefit from professions of support for economic and social measures to benefit Israel’s middle classes.

And finally, there was the ongoing splintering of short-lived political parties and factions without any real social base, under the impact of the global financial crisis.

Netanyahu called an early election in the belief that the disarray of the opposition parties would enable him to win a large majority, in turn allowing him to push through an austerity budget for 2013, while at the same time pursuing an aggressive policy towards the Palestinians and preparations for an attack on Iran.

But hostility to his social and economic policies and his drive to expand Israeli settlements in East Jerusalem and the West Bank—which has strained his relations with Washington, Israel’s ultimate guarantor—meant that his calculations backfired.

There is still uncertainty about the number of seats won by some of the smaller parties and final results will not be known until January 30. But with 99 percent of the votes counted, the broad outline is clear.

Netanyahu has the support of about 61 members of the 120-seat Knesset, Israel’s parliament. This has forced him to say he will seek a broad coalition to govern Israel. Under the constitution, he has six weeks to try to strike a deal with either the religious parties or with Yesh Atid and other secular parties.

Under such conditions, he is unlikely to be able to form a stable government that can push through both his militaristic agenda abroad and his austerity programme at home. It portends increasing political and social volatility.

Likud will have 20 seats in this parliament, seven fewer than before, while Yisrael-Beiteinu will have 11, four fewer. The main winner on the extreme right with 11 seats is the newly formed Jewish Home party, led by Naftali Bennett, once Netanyahu’s political aide.

Shas and other religious parties have 18 seats.

Anti-austerity opinion and hostility to Netanyahu’s pro-war policies find no genuine means of articulation in the rightward-lurching official “left” and “centrist” alternatives. The political outcome of the mass social protests of 2011, whose leaders insisted upon a “no politics” politics, has been a temporary strengthening of these moribund and essentially reactionary parties.

Yesh Atid came a close second to Likud, taking 19 seats. Its very name—There Is a Future—testifies to the vacuous and unprincipled nature of its politics. Its leader, Yair Lapid, a television anchorman and son of the late Tommy Lapid, himself a TV personality who headed the secular Shinui party from 1997 to 2006, ran a campaign aimed at the middle class, whipping up tensions between the secular and ultra-Orthodox Jews. He called for the ultra-Orthodox to be drafted into the army and workforce. While seeking a deal with the Palestinians, he does so on Israel’s terms—refusing calls to give back East Jerusalem and insisting on the retention of the settlements.

Labour, which has seen several splits and defections of leading members, ran a campaign on “social issues,” with two of the leaders of the protest movement high up on its list. Despite that, it failed to make a significant impact, winning 15 seats, up from 13 in the 2009 elections, to become the third largest party.

Its leader, ex-journalist Shelly Yachimovich, distanced herself from her party’s former programme of “peace” with the Palestinians, supporting Netanyahu’s assault on Gaza last November and the settlement project.

Hatnua, with six seats, was formed by former Kadima leader and Foreign Minister Tzipi Livni. It campaigned on the issue of reaching a deal with the Palestinians, but only in order to forestall a Palestinian majority in Israel and the Occupied Territories.

Meretz, the social democratic party that was once associated with peace advocates, doubled its representation in the Knesset, with six seats.

It is still unclear whether Kadima, which won the most seats in 2009 (28), has gained enough votes to win any seats at all. The party collapsed last year after its leader Shaul Mofaz took Kadima into Netanyahu’s coalition only to quit six weeks later over the failure to secure an end to exemption from military service for ultra-Orthodox yeshiva students.

The parties to which Israel’s Palestinian citizens, who form 20 percent of the population, have traditionally given their votes have won 12 seats, 10 percent of those available.

Netanyahu now faces the need to fashion a coalition that will accommodate the far-right wing of his Likud party and other settler and religious parties, who have scuppered every attempt at a settlement with the Palestinians, as well as some of the centrist parties. All of them are seeking exemptions from the forthcoming austerity budget for their own social base. Netanyahu is in talks with the rightwing parties, Lapid’s Yesh Atid and possibly Livni’s Hatnua to try and cobble together a workable coalition.

Lapid is now in the position of kingmaker. Netanyahu called him shortly after the polls. Lapid, for his part, has indicated he is willing to work with Netanyahu, saying that the only way to face Israel’s challenges was “together.” He added, however, “What is good for Israel is not in the possession of the right, and nor is it in the possession of the left. It lies in the possibility of creating here a real and decent centre.”

Labour’s Yachimovich has said that she too would try and “form a coalition on an economic-social basis that will also push the peace process forward,” but it is unlikely that she can do so. At the very least, it would require her to include the parties which have the Palestinian Israeli vote, something that no governing party has ever been willing to do.

The “centre” and “left” agree on all fundamentals. Whichever parties ultimately form the next coalition government, they will support Netanyahu’s war agenda and impose the diktats of Israel’s plutocrats and the international financial elite on Israel’s already impoverished workers and their families through further cuts in welfare and public services, along with tax hikes.

Instead of relying on parties tied to capitalism and Zionism, Israeli workers, youth and students must organise themselves independently of all wings of the ruling class, and unite with their class brothers and sisters regardless of religion or ethnicity within Israel, the occupied Palestinian territories and throughout the Middle East. They must fight on a socialist programme for a workers’ government that will expropriate the banks and big business and reorganise the economy on the basis of social need not private profit.