(VIDEO) The State of Israel is waking up to a new political reality: For the first time in the nation's history, a newly formed party has won the elections, but Kadima will not have an easy time as it works to form a governing coalition: Labor is not far behind and will likely demand top portfolios, while the surprising Pensioners party may also make tough demands.
Meanwhile, Likud suffered a devastating blow, finishing fifth in the vote, behind religious party Shas and Avigdor Lieberman's Israel Our Home.
With 99.67 percent of ballots counted by Wednesday morning, Kadima has emerged as the winner of the 2006 elections, winning 28 Knesset seats, followed by the Labor party with 20, and Shas with 13.
Video: Election Day recap
Kadima's victory falls short of the overwhelming win predicted by pre-election polls, yet party leader Ehud Olmert will still be tasked with forming the next government, which will likely include Labor as well as several other parties.
The big story of the elections, however, may be the resounding defeat suffered by former ruling party Likud, which only garnered 11 Knesset seats. In another shocker, the Pensioners party, which was not assured of winning any seats, ended up winning a stunning seven seats.
Another elections success story, Avigdor Lieberman's Israel Our Home, won 12 Knesset seats.
Olmert wins elections (Photo: Haim Tsach)
The overall results:
Israel Our Home: 12
National Union-NRP: 9
Pensioners party: 7
United Torah Judaism: 6
Arab parties: 10
The voting breakdown showed Kadima was the big winner in several large cities, most notably Tel Aviv and Haifa, but fared poorly in Jerusalem, where it won only 12 percent of the vote.
Bibi: We suffered a major blow
In a breakdown of the political blocs – the most significant for Prime Minister-designate Ehud Olmert and the “convergence” plan he wishes to implement, the centrist-leftist parties won only 52 seats, or 59 including the Pensioners party. The right-wing and ultra-Orthodox parties gained 51 Knesset seats. The soldiers’ votes may still change the picture, but just slightly.
In his victory speech early Wednesday, Olmert called on Palestinian leader Mahmoud Abbas to work together for "reconciliation, compromise and peace," but told the PA chairman Israel will not "wait forever."
The acting PM also repeated his pre-election pledges to "take our destiny in our own hands, in coordination with the United States and the international community."
Labor's Peretz – on way to coalition? (Photo: Tsafrir Abayov)
"I'm saying those things here and now out of a belief in the State of Israel's immense power and the immeasurable courage of its soldiers, military leaders, and security forces to hit any enemy and defeat any terrorist," Olmert said. "Out of this sense of strength we must act with all our power in order to create hope for a different life for our young generation and that of our Palestinian neighbors."
Meanwhile, in his speech early Wednesday, party leader Amir Peretz said: "We had an amazing battle, people working day and night, and did something unbelievable. Yet the work is not over yet, it's only beginning."
"We don't intend to be tempted by coalition games. We succeeded as a party to raise the level of credibility of elected officials in Israel, and this is no easy task," Peretz said. "Under no circumstances will we join a new government without it being clear what the social red lines are."
Earlier, Likud Chairman Benjamin Netanyahu faced party activists, but as opposed to many predictions did not show any intention to quit despite his party's poor showing.
"We'll rehabilitate the movement, we'll continue with our way…we saw better days and we will see better days yet," he said, after activists welcomed him with loud cheers.
"We suffered a serious blow, but our way is the right one and the only one that will bring security to the country," he said.
However, the 2006 elections may be remembered most of all for the low voter turnout: Only 63.2 percent of those eligible to vote took the time to exercise their democratic right, despite the fact that the issues at hand were of grave importance.