Today, the process leading to the formation of an Israeli government is conducted according to the regulations stipulated in Israel’s Basic Law: The Government (Article 7). The law states that following the elections and upon consultation with the parties in the Knesset, the president appoints a Knesset Member who accepts the responsibility of forming the new government. While the law does not require the president to appoint the candidate who received the most recommendations, it is customary to choose the person whose chances of forming a government are the highest. In practice, the president usually turns to the leader of the largest party although the law does not require him or her to do so.
In the wake of the 2009 election, Tzipi Livni was the leader of the party that received the largest number of votes--Kadima. Nonetheless, Likud’s Benjamin Netanyahu was given the opportunity to form Israel’s next government due to his greater chances of success. He leads the right-wing parties, which won the majority of the seats in the incoming 18th Knesset, and is therefore more likely to fuse the necessary Knesset majority.
There has been only one other case in which the president appointed a coalition-builder whose party was not the largest. In 1990, Yitzchak Shamir, leader of the Likud party (38 seats), was chosen to form a government despite the fact that the Labor party had won 39 seats. This was the only instance in Israeli history that the president had to call upon two candidates to form the government — following Shimon Peres' unsuccessful initial attempt, Yitzhak Shamir eventually succeeded in forming a narrow government. The short-lived double ballot system in the 1990s led to another case in which the Prime Minister was not, in fact, the leader of the largest political party. In 1996, Benjamin Netanyahu received enough votes to become Prime Minister, while his Likud party received only 32 seats in the Knesset — less than the Labor party's 34.
In order to obviate the ambiguity surrounding the selection process of the Prime Minister, and in order to increase the elected Prime Minister's chances of forming a government, IDI has been promoting the establishment of a clear set of rules that would automatically give the leader of the largest party the "right of first offer" to form the incoming government.