| Political Party | Knesset Seats 2003 | Knesset Seats 1999 | Change |
|---|---|---|---|
| Likud | 38 | 19 | + 19 |
| Labor | 19 | 26 | - 7 |
| Shinui | 15 | 6 | + 9 |
| Shas | 11 | 17 | - 6 |
| National Union | 7 | 7 | n/c |
| National Religious Party | 6 | 5 | + 1 |
| Meretz | 6 | 10 | - 4 |
| United Torah Judaism | 5 | 5 | n/c |
| Am Ehad | 3 | 2 | + 1 |
| Israel B'Aliya (Sheransky) | 2 | 6 | - 4 |
| Arab Parties | 8 | 11 | - 3 |
| Center Party | 0 | 6 | - 6 |
The immediate result of the election was that the leaders of the Meretz and Israel B'Aliya parties resigned, accepting responsibility for their defeats, though Yossi Sarid of Meretz retained his Knesset seat. Natan Sheransky resigned from the Knesset too, but his party merged with the Likud where he was rewarded by a ministerial post. Thus the first major change caused by the election was the disappearance of ethnic Russian parties.
Ever since the resignation of the patriotic Golda Meir in 1974, the Labor Party had been moving rapidly to the Left of the political spectrum under Itzhak Rabin, Shimon Peres and Ehud Barak. Amram Mitzna, who was ready to negotiate with Arafat under fire and unilaterally withdraw if the negotiations failed, made his party indistinguishable from the extremists of Meretz. After two intifadas claiming hundreds of Jewish dead, the country was in no mood for this. And so, for the first time in its history, Labor and Meretz lost 11 Knesset seats, leaving them only 25. The Arab parties lost three more, retaining eight. With 33 seats out of 120, the Left ceased to be a major player. The shock of this upheaval is underlined by the fact that Ehud Barak disposed of a coalition including only 60 Knesset members, as did his Likud predecessor Benyamin Netanyahu, leaving the Opposition much room to maneuver. This time, any Government formed has a good chance of lasting nearly five years.
With 40 seats in the Knesset, Sharon could choose his coalition. Mitzna had announced in advance that Labor would not join a coalition under Sharon and, when invited to conduct negotiations nevertheless, demanded that the Likud should accept his political program, thus achieving his desire to sit in the Opposition. Sharon's options then were Shas and UTJ without Shinui or Shinui without Shas and the UTJ. In either case, he intended to invite the NRP and the National Union to give him a solid parliamentary majority. He chose Shinui, chiefly because they were likely to cause him less trouble and make for a more politically balanced Government, neutralizing the effect of the Right-wing parties abroad. The latter, however, would make it easier for him to stand up to unreasonable foreign pressures.
The key to the formation of the Government was the agreement hammered out between Shinui and the NRP on religious issues. The concessions made to Shinui included the abolishing of the Religious Affairs Ministry and the religious councils, a revision of the law governing exemptions from army service for yeshiva students, making it less automatic, and the provision of marriage arrangements for persons previously denied the right to marry in Israel (though a civil marriage abroad was considered legal). Otherwise, the religious status quo was largely retained.
The Likud kept all the important ministries except Justice and the Interior, which were given to Shinui. However, Silvan Shalom was moved from the Treasury to the Foreign Ministry and Benyamin Netanyahu - from the Foreign Ministry to the Treasury. There were two good reasons for this. Netanyahu, a long-time champion of privatization and private enterprise, was by far the best choice available for getting Israel out of its economic crisis. On the other hand, his opposition to a Palestinian state would not make him popular in Washington, where Sharon could trust Shalom to represent his more elastic approach. Shaul Mofaz remained Minister of Defense and Ehud Olmert became Deputy Prime Minister and Minister of Trade and Industry with a seat in the inner Cabinet. Reuven Rivlin took over as Speaker of the Knesset from Labor's Avraham Burg. The Likud also took over the chairmanships of the Knesset Finance Committee and Foreign Affairs & Security Committee, smoothing the path for Netanyahu and Mofaz.
