Polls in Israel’s election closed at 7am this morning, Australian eastern time. Results are not yet official, but the exit polls have been supplemented with actual results from sample booths. With the whole country voting as one electorate it’s hard for exit polls to make large errors, although in a close election even one or two seats could make a lot of difference.

With that caveat in place, here’s how it looks for Israel’s next parliament: Likud-Beiteinu, the joint list of Prime Minister Benjamin Netanyahu and his indicted former foreign minister Avigdor Lieberman, will have between 31 and 33 seats in the 120-seat parliament, or Knesset — down from a combined 42 last time. Jewish Home, the extreme pro-settler party, will have about 12 seats (up five) and the two orthodox parties between them probably 18 (up two). That’s a total of maybe 62 for the right, a bare majority.

Against them, there are four centre-left and centre parties, with about 48 seats between them: Meretz six (up three), Labor 16 (up three), Hatnuah, Tzipi Livni’s new party, with seven, and the big winner, Yesh Atid, the vehicle of TV personality Yair Lapid, on maybe 19. (Kadima, the former party of Ariel Sharon, with 28 seats in 2009, looks like falling below the 2% threshold.) Then there are the three non-Zionist (Arab or part-Arab) parties with about 10 seats in aggregate (down one).

On the surface that looks close. Particularly if late counting goes their way, one might think the anti-Netanyahu forces would have a chance of putting together a government by buying off one of the orthodox parties.

In reality that’s not an option. The centre parties, even if they could agree among themselves, will not try to govern with the support of the non-Zionist parties. As Roi Maior puts it:

“The Jewish-Zionist parties of the ‘Left’ or ‘Center’ have never been willing to form a coalition with the non-Zionist Arab parties, or even form a minority coalition relying on their votes.”

So Netanyahu, despite the clear setback (for most of the campaign his coalition was tipped to score in the mid to high 60s), will stay in government, although he might not last a full term. But he has a big choice to make as to what that government will look like.

One option is to go with basically a right-wing coalition, taking in one centrist party (either Yesh Atid or Hatnuah) to shore up his majority.

The other option is to reject the forces to his right and build a centrist coalition with Yesh Atid, Hatnuah and Labor.

Either option would command a solid Knesset majority. The choice between them is a choice of what sort of government Netanyahu wants to lead.

Will he set himself firmly against peace with the Palestinians, expanding the settlements and making a two-state solution impossible? Or will he, like Sharon before him, try to reinvent himself as a peacemaker and give credibility to the view often heard in the West that he is really a closet moderate?

There is very little in Netanyahu’s record that suggests he would seriously consider the second option. A leader who was interested in peace would be unlikely to have teamed up with Lieberman’s group in the first place, and during the campaign Netanyahu vowed not to dismantle any of the settlements — a promise which, if adhered to, would make peace talks all but impossible.

The rivalry and general absence of direction among his opponents makes Netanyahu’s task easier. Yesh Atid seems a completely non-ideological, personality-based party, and although Lapid nominally comes from the Left the signs are that he would be quite comfortable in a right-wing government. Hatnuah is probably less of a prospect, since Livni campaigned on restarting the peace process, but she has been known to change tack before.

The one thing that counts in favour of the broad-based centrist option is that Netanyahu does sometimes look uncomfortable with the collection of racists and anti-democrats that surround him. A government with the resurgent Jewish Home in it will be a scary place. It’s just conceivable that he will decide this is his last chance to make a break for it.

But even if he tried, the fact that so many of the crazies are now in Netanyahu’s own caucus would make any change of front difficult to pull off. Quite probably, like Sharon, he would be disowned by his party — and without Likud behind him, the hypothetical centrist majority would evaporate.

So in spite of the rebuke to Netanyahu, Israel’s future looks like more of the same: a government beholden to the hard Right, willing to defy world opinion and avoid confronting the country’s fundamental problem: the choice between remaining an occupying power and remaining a democracy.