When last seen, Benjamin Netanyahu was resigning from Ariel Sharon's cabinet to protest Israel's unilateral withdrawal from the Gaza Strip.

As of this writing Israel's election is too close to call.

Foreign Minister Tzipi Livni's Kadima has won the most seats of any party in the Knesset. However, Kadima has won only two more seats than the Likud Party led by Benjamin Netanyahu. 

It is thought that Netanyahu might have a better chance to form a government with Avigdor Lieberman's Yisrael Beitenu. Lieberman has supplanted the Labor Party (led by former Prime Minister Ehud Barak) as the grouping with the third-most seats in the Knesset. He does not come without controversy though. Lieberman takes the position that Israeli Arabs should be stripped of their citizenship if they do not take a loyalty oath. But if Netanyahu can form a government with Lieberman and religious parties like Shas, it will mark the culmination of a long, remarkable comeback after a decade in the political wilderness. 

Netanyahu was elected Prime Minister of Israel in June 1996 less than a year after the assassination of Yitzhak Rabin. It was the first time Israelis voted for their Prime Minister directly. "Bibi" (as Netanyahu is affectionately known) defeated Shimon Peres, who had become Prime Minister after the Rabin assassination. Peres appeared ineffectual after a wave of suicide bombings had occurred several months earlier.  Despite his victory as Prime Minister, Israelis had also voted for a left-leaning Knesset.  It was kind of like having a Republican President and a Democratic Congress.

Because of this situation, Netanyahu reluctantly ended up negotiating with PLO Chairman Yasser Arafat and signed the Wye River Accord under the watch of President Clinton in 1998. While Israel ceded further control to the Palestinians including Hebron, Arafat did not do anything to disarm Palestinian terrorists. Where have we seen this before?

The Left in Israel hated Netanyahu but the Wye River debacle caused him to lose support amongst Israeli conservatives. Throw in a bad economy, some corruption and scandal and three years later Israelis ousted Netanyahu in favor of Labor's Ehud Barak.  Netanyahu would leave political life for several years.

In 2001, Ariel Sharon would defeat Barak, becoming Prime Minister in a comeback arguably more remarkable than that of Netanyahu. Sharon would bring Netanyahu into his Cabinet as Foreign Minister the following year but the two clashed and months later Bibi unsuccessfully challenged Sharon for the Likud Party leadership. 

Netanyahu, however, mended fences with Sharon. After Sharon was re-elected in 2003 he brought Netanyahu back into Cabinet once again, this time as Finance Minister.  Netanyahu introduced an ambitious set of reforms to liberalize Israel's heavily regulated and socialized marketplace. However, Netanyahu would clash with Sharon again. This time over Sharon's plan to unilaterally withdraw from the Gaza Strip. Netanyahu resigned from Sharon's cabinet in August 2005 in protest, causing deep divisions within Likud.

Three months later, however, it was Sharon who resigned from the Likud Party. Joining him were the likes of former Jerusalem mayor Ehud Olmert and Tzipi Livni to form the centrist Kadima Party. Kadima also included former Labor Party members such as former Prime Minister and current Israeli President Shimon Peres. This gave Netanyahu the opening to re-emerge as Likud leader.

Tragically, Sharon was incapacitated due to a stroke in December 2005 and was succeeded as Prime Minister by Olmert. Kadima would be elected in its own right in the March 2006 elections. The election was not so good for Likud, which was reduced to 12 seats in the Knesset. It was their worst showing since their first election in 1973. 

But within months the Israeli public had lost confidence in Olmert. Much of this was due to the indecisiveness of Olmert and Defense Minister Amir Peretz (also then Labor Party leader) during the war with Hezbollah in Lebanon that summer. Combined with Hamas rocket attacks, the nuclear threat from Iran and the usual corruption and scandals, while the fortunes of Kadima and Labor sank the fortunes of Netanyahu and Likud have risen steadily.

However, Kadima, now led by Livni, is not going away quietly. Its fortunes improved with Israel's more aggressive response against Hamas in Gaza in December 2008 and January 2009. It apparently made up for its ineffectual response to Hezbollah in Lebanon two-and-a-half years ago.

Although many are looking at Lieberman to be kingmaker or queenmaker, for now it is in the hands of Netanyahu's old rival, Shimon Peres. On one hand Netanyahu has a better chance of forming a government with Lieberman and the smaller parties in the Knesset.  Livni also failed to form a coalition government when she won the Kadima Party leadership last fall and there is little reason to believe she will fare better this time.  However, Peres might not be so eager to hand the reins of power to his one-time nemesis and is certainly more comfortable with Livni.

After all, Peres and Livni are in simpatico on the peace process with the Palestinians.  Peres and Netanyahu are not. Peres would also like to avoid a situation where Lieberman is brought into the government. He would rather see Livni and Netanyahu form a national unity government with Livni as the senior partner than to include a loose cannon like Lieberman. Remember that Peres was part of a national unity government with his one-time Likud rival Yitzhak Shamir from 1984 to 1990. Peres still remembers his loss to Netanyahu nearly 13 years ago. Does he really want to give Netanyahu another shot at being Prime Minister? Given his ideological views, tactical preferences and personal feelings, Peres might be inclined to give Livni the first crack at forming a government.

There is probably one other factor Peres is considering very carefully – President Obama.  The new President is very eager to get the peace process going and would much rather deal with Livni than Netanyahu. The Obama Administration would have a fit if Netanyahu were to return to power. In the eyes of the Obama Administration, Netanyahu is an obstacle to peace. For Obama the security of Israelis is less important than the whims of world approval. Of course such global affirmation for Israel has not exactly been forthcoming.

The other reason Obama isn't eager to deal with Netanyahu is because Bibi's command of the English language is better. Yes, Obama can speak and think on his feet but Bibi is better and knows his way around the media. Bibi doesn't suffer fools gladly either.  Bibi is more likely to intimidate Obama than the other way around. Obama would rather deal with Ahmadinejad than he would Netanyahu. That being the case it represents everything that is wrong with Obama's worldview. But Bibi might be back whether Obama likes it or not.