Netanyahu-Livni Talk in Obama's Shadow

By Allyn Fisher-Ilan

JERUSALEM (Reuters) - Israel's political rivals Benjamin Netanyahu and Tzipi Livni agreed to hold further talks about a future government at their first meeting on Sunday since an inconclusive February 10 election.

Netanyahu, head of the hawkish Likud party, whom President Shimon Peres asked on Friday to form a new ruling coalition, vowed to press on with efforts to persuade centrist leader Livni, Israel's foreign minister, to join him in a government.

He called it "the challenge of the hour and the will of the Israeli people" for Israel's two largest political forces to rule jointly to confront what they see as Iran's pursuit of a nuclear weapon, and its militia allies, Hamas and Hezbollah.

Livni, head of the centrist Kadima party, said she and Netanyahu, "didn't reach any agreement, there are substantial differences," but added "it is important to investigate whether there is a common path."

She agreed at Netanyahu's urging to meet again, telling reporters at the Jerusalem hotel where they had met behind closed doors that "there is no reason not to."

Kadima won 28 seats to 27 for Likud in the election for Israel's 120-member parliament.

In choosing Netanyahu, Peres did not follow the tradition of asking the leader of the party with the most legislators to form a government within 42 days. He opted for Netanyahu because a majority of lawmakers pledged their support for him.

But a narrow government comprised of hawkish factions could put Netanyahu on a collision course with U.S. President Barack Obama and his promise to move quickly to a Palestinian statehood deal.

PLEDGE TO COOPERATE WITH OBAMA
Netanyahu, 59, pledged on Sunday "to cooperate with the Obama administration and to try to advance the common goals of peace, security and prosperity for us and our neighbors."

He has sought to pursue that goal by enlisting Livni's party, which favors trading large parts of the Israeli-occupied West Bank for peace, into a national unity government.

"Unity is reachable, through dialogue ... that is what we are going to do today, beginning with Kadima and tomorrow with Labor," Netanyahu said earlier on Sunday.

But after Livni's remarks Netanyahu wasn't as optimistic, Israeli media reported, and quoted him telling advisers "nothing may come of this."

Netanyahu has plans on Monday to meet Defense Minister Ehud Barak of the left-wing Labor Party, which came in fourth in the election behind Yisrael Beiteinu, a far-right party.

The U.S.-educated Netanyahu has said he wants to shift the focus of stalled, Washington-sponsored peace talks with Palestinians away from tough territorial issues to shoring up their economy, an approach their leaders have rejected.