By Dan Williams
JERUSALEM (Reuters) - Deadlocked talks with potential coalition partners have forced Israeli Prime Minister Benjamin Netanyahu to seek more time to build a new government and avert a possible snap election, officials said on Friday.
They said Netanyahu would meet President Shimon Peres on Saturday to ask for a two-week extension after his right-wing party, the narrow victor in Israel's January 22 ballot, exhausted the standard four weeks allotted to build a coalition.
Peres is expected to accept Netanyahu's request.
However, should Netanyahu fail to win enough allies for a parliamentary majority by March 16 and a third term as premier, Peres could hand the task to a rival party leader. If no government emerged then, Israelis must return to the polls.
U.S. President Barack Obama is due to visit Israel at the end of March to discuss the stalemate in Palestinian statehood talks and other regional challenges like Iran and Syria. But he would likely cancel if Netanyahu failed to form a coalition.
Washington has not published dates for Obama's trip, and the U.S. ambassador to Israel, Daniel Shapiro, has said it would take place only after the Israelis had a new government.
Netanyahu's Likud-Beitenu ticket won 31 of the Knesset's 120 seats in the January vote - an eroded lead that required he cast a wide net for partners while juggling their disparate demands.
He has faced unified resistance from the parties that placed second and fourth, Yesh Atid (There is a Future) and Bayit Yehudi (Jewish Home), which insist Israel scale back the mass exemptions from military conscription and the welfare stipends it provides to ultra-Orthodox Jews.
The third-biggest Israeli party, center-left Labour, has ruled out entering a government under Netanyahu.
PERKS, NOT PALESTINE
Likud Beitenu has tried without success to drive a wedge between the centrist Yesh Atid and the ultranationalist Bayit Yehudi, which differ on other major issues such as how - and if - Israel should revive peacemaking with the Palestinians.
After inconclusive meetings with both parties Likud Beitenu negotiator David Shimron said Netanyahu's party would not accept a boycott of the ultra-Orthodox, telling reporters: "We will have to see where we go from here in forming a government."
Netanyahu's outgoing coalition includes two ultra-Orthodox parties which have generally backed him on other policies such as the settlement of occupied West Bank land in defiance of world powers, who support the Palestinian drive for a state.
Fourth placed Bayit Yehudi is even less accommodating of the Palestinians than Netanyahu, who says he wants to revive stalled peace talks. By contrast, the centrist Yesh Atid says Netanyahu has not done enough to make peace with the Palestinians.
Opinion polls suggest that if a new election were held now, Yesh Atid and Bayit Yehudi, which currently hold 19 and 12 seats respectively, would make further gains on Netanyahu.
Analysts attribute that to middle-class Israelis' support for the newcomer parties' stand against ultra-Orthodox perks.
Bayit Yehudi says this has eclipsed concern in the Jewish state for the Palestinians, who are themselves divided between U.S.-backed moderates and hardline Hamas Islamists.
"Our understandings with Yesh Atid are already proving to have brought positive results for both parties," Bayit Yehudi negotiator Eyal Gabbai told Israel's Army Radio.
Netanyahu has so far reached a deal with just one other party, the centrist Hatnuah led by former Foreign Minister Tzipi Livni, which brings six seats to his coalition. Livni has made achieving a peace accord with the Palestinians her core policy.
(Writing by Dan Williams; Editing by Crispian Balmer and Jon Boyle)
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