Foreign Minister Tzipi Livni, who heads the ruling Kadima party, told President Shimon Peres Sunday evening that her efforts to build a coalition government were unsuccessful, and recommended that early general elections be held.
"I was willing to make sacrifices to build a coalition government... but I was unwilling to pawn Israel's financial and political future nor the hope of a better future and different politics," she said after the meeting with Peres.
Livni recommended that general elections be held in the near future, and added that she hoped to see "the most worthy of us, who is truly concerned with the country's best interests, be elected."
Peres could decide within the next three days to appoint another MK whom he believes could form a stable government. It is considered unlikely, however, that he will opt for this path.
Livni: I wouldn't promise Jerusalem
Livni has admitted that her failure to reach a deal with Shas resulted from her refusal to a Shas demand that she promise to keep all of Jerusalem.
Livni was able to reach a coalition agreement with Labor, but the Shas Party informed her late last week that it would be unable to join her government. Without Shas, Livni cannot form a government with a comfortable Knesset majority.
Shas says that Livni refused to meet its demands: Increased montly child allowance payments for large and medium-sized families, and a promise to keep Jerusalem united and Israeli.
Livni herself has admitted to both these points, taking credit not only for declining to increase child allowances, but for refusing to promise to keep Jerusalem Jewish.
Livni: For Israel's Sake, Jerusalem Must be Negotiated
Livni - who has been leading negotiations with the Palestinian Authority as Foreign Minister - was quoted on Voice of Israel radio as having said, "For the benefit of the State, I cannot promise not to hold negotiations over Jerusalem."
A spokesman for Opposition Leader Binyamin Netanyahu, who is expected to win the coming election, said that the fact that Livni was unable to come towards Shas on its Jerusalem demand is "proof that she has no backbone or ability to withstand the pressures of negotiations."