Israeli PM Benjamin Netanyahu's lawyers arrive for his pre-indictment hearing

Israeli Prime Minister Benjamin Netanyahu faced a hearing into corruption allegations against him Wednesday while at the same time plotting how to remain premier following an election stalemate, with unity government talks at a dead end.

The hearing came as deadlocked results from a September 17 general election threatened Netanyahu's bid to continue his reign as Israel's longest-serving prime minister.

To do so, he will have to navigate the twin challenges of a potential corruption indictment against him in the weeks ahead and election results that give neither him nor his challenger Benny Gantz a clear path to a majority coalition.

Both collided Wednesday, when Israel's attorney general convened the first of four days of pre-indictment hearings for Netanyahu after having said he intends to charge him with bribery, fraud and breach of trust.

Only Netanyahu's lawyers and not the premier himself attended the closed-door hearing, which gives him a final chance to convince Attorney General Avichai Mandelblit he should not be indicted.

The hearing covers three separate cases in which Netanyahu is accused of acting on behalf of wealthy supporters and businessmen in exchange for gifts or favourable news coverage.

Netanyahu, who denies all the allegations, asked that the hearing be broadcast live because he has "nothing to hide".

Mandelblit dismissed the request in no uncertain terms, saying the hearing was intended to convince the legal authorities, not the public.

Following the hearing, the attorney general's deliberations on whether to issue the indictments are expected to continue for weeks.

His lawyers expressed confidence as they entered the hearing.

"The prime minister is not above the law, but neither is he below it," said Netanyahu lawyer Ram Caspi.

'Last effort'

While the hearing was under way, Netanyahu met with right-wing allies as he considered whether to inform President Reuven Rivlin he is unable to form a government after being tasked with doing so a week ago.

Negotiators for Netanyahu's Likud had intended to meet with Gantz's centrist Blue and White on Wednesday as part of so far unsuccessful efforts to hammer out a unity government.

Netanyahu had also sought to meet Gantz later the same day.

But Blue and White announced late Tuesday there was no reason for either meeting since "pre-conditions" it sought for further talks were not met.

Both sides held out hope for a change of heart by their opponents, but Netanyahu had already labelled Wednesday's talks a "last effort".

Following Netanyahu's meeting with the right-wing and religious parties backing him in parliament, Likud said no decision had been taken on whether to return to the president without a result.

The party added, however, that Netanyahu planned to meet ex-defence minister Avigdor Lieberman on Thursday morning.

Lieberman's nationalist Yisrael Beitenu party, which won eight seats, could end up playing a kingmaker role in efforts to form a government.

Lieberman has declined to endorse either Netanyahu or Gantz for now.

Should Netanyahu follow through with the negotiating tactic and tell Rivlin he cannot form a government, the president must decide whether to ask Gantz to try.

Alternatively, Rivlin could call on parliament to agree on a candidate for prime minister with a vote of at least 61 of 120 members in the house.

Netanyahu and Gantz have traded blame over their failure so far to reach a deal.

They are divided on a range of issues, but one major point stands out: who would be prime minister first in a unity government.

Gantz argues that since his party finished as the largest, with one seat more than Likud, he should be prime minister first under any rotation arrangement.

He also says Blue and White cannot be part of a government with a prime minister facing indictment.

Netanyahu says though Likud has fewer seats, more of the smaller parties in parliament back him.

He wants to negotiate based on a compromise Rivlin proposed, which could see him remain prime minister for now but step aside if indicted while retaining the title.

Gantz would step in as acting prime minister in the interim.

'Game of chicken'

Both are engaged in a game of "chicken" and the result could be yet another election -- a third in the space of a year after April polls also ended inconclusively, said Gideon Rahat of the Israel Democracy Institute think-tank.

In that case, much will depend on who the public blames for causing a third vote, he said.

"In the game of chicken, sometimes the result is that both drivers are killed," said Rahat.

Though weakened, Netanyahu may still emerge victorious, at least temporarily, said Rahat.

"Yes, he can," said Rahat, when asked if Netanyahu could in the end remain prime minister despite the multiple challenges.

But "he lost some of his magic".