Netanyahu picked a fight with a sitting U.S. president and declared there will never be a Palestinian State. It might have helped him squeeze out another election victory, but where is Israel heading?

The Likud and Labor (The Zionist Camp) are tied with 27 seats, but Benjamin Netanyahu has way more paths to bring together the 61 seats necessary for forming a government, and another term for himself. That’s the bottom line of the exit polls published by the Israeli TV channels as the polling stations closed on Tuesday night. Netanyahu and his party members are celebrating, and Bibi is already testing the waters with potential coalition partners.

(Update: Early Wednesday morning, with over 90 percent of votes counted, Netanyahu took a large lead with 30 seats to the Zionist Camp’s 24. Read more here.)

Netanyahu was able to surge in the last few days, following a desperate – and at times, racist –campaign that warned right-wing voters of a “left-wing government backed by the Arabs.” On election day, he published a Facebook status declaring that “Arabs are heading to the polls in masses” and called for his supporters to rush and save the Right from losing power. This was a prime minister warning that his own citizens are voting. But in Netanyahu’s rhetoric, Palestinians were never really citizens anyway, even those who have Israeli identity cards; he sees himself as the leader of the Jewish people, not of Israelis.

The warnings worked. Other right-wing parties hemorrhage support – Bennett and the settlers dropped to eight seats in the exit polls (they had 12 until now), Liberman dropped five, and the far-right Yahad party probably didn’t even make it in. But Likud rose from 20-21 seats to 27-28, and the Right, along with the ultra-Orthodox parties and Moshe Kahlon’s centrist party has about 64 seats. Despite all the recent drama, there wasn’t much movement between the political blocs, compared to 2013 (61:59) or 2009 (65:55).

Sixty-four seats doesn’t constitute a huge majority, but it’s enough for a stable government – as long as Kahlon doesn’t pull any surprises and refuse Bibi’s offer (it’s highly unlikely). Netanyahu will probably try to have a larger majority by inviting Labor or Yair Lapid to join, but whether they do or not, they won’t be able to deny him the victory. Assuming there are no major changes when the final results are in, Bibi will probably remain Israel’s prime minister – for the third consecutive time, and the fourth altogether.

The big question is – to what end? Netanyahu may have won a major victory – he destroyed the opposition on the right and he will once again lead a big party – but he ran a nasty campaign that alienated major parts of the public. He put himself in a diplomatic corner on Iran and committed to never permit the creation of a Palestinian state. What now, Bibi?

In the final days of the campaign, Netanyahu said twice that there will be no Palestinian state – not on his watch. But what alternative Bibi is offering? In two years, Israel will mark 50 years of military control over the lives of millions of Palestinians. The international community is more vocal in its demands for change, and the Palestinian Authority is more desperate than ever. Netanyahu won’t be able to blame the PA for the failure of the ever-lasting peace process when he himself declares that no matter what the Palestinians do, they will never gain their independence, nor will they become full citizens of Israel.

There is symbolic significance to the fact that Netanyahu openly campaigned on his opposition to Palestinian statehood. It means that he is backed by a majority of Israeli voters, and an absolute majority of the Jewish vote. There needs to be, and I think there will be, a debate on the implications of this decision by the Jewish public. For years we have been hearing that Israel will either end the occupation or cease to be a democracy. Could it be that the Jewish public has made its choice?

There is also the problem of picking a fight with an American president on his signature foreign policy issue. Netanyahu pretty much made it clear in Washington that he has no alternatives to offer on the deal with Iran, but that he will still do everything in his power to prevent it. Not only is the conflict with the White House is far from over, Bibi will need to decide what to do if and when a deal does go through. Tonight I really don’t know where Bibi is heading, and for that matter — Israel.

A couple of side notes following the exit polls:

The Joint List. The combined list of Palestinian parties known as the Joint List is now the third-largest party in the Knesset. If Labor enters the government, the Joint List could even assume the formal role of the leader of the opposition. The Palestinian parties were hoping to gain more from this situation – they would have been in a better bargaining position had Herzog ended up with a clear path to a majority – but this is still a significant development.

Will the unified list survive? There are major challenges ahead, for example, over whether to support Herzog’s bid for the premiership in consultations with the president next week. This is part of the larger dilemma the list faces surrounding any possible cooperation with other (lefty, but Zionist) parties. There are two distinct approaches on this question that split the four factions that make up the Joint List. In fact, it won’t be that surprising if the list breaks up over this very question, which touches on the deepest conflicts in the political identity of Palestinian citizens of Israel.

Meretz. The small liberal party seemed to have survived this campaign, which almost saw it eliminated as lefty voters turned to Herzog in order to increase the chances of toppling Netanyahu. The exit polls give Meretz five seats, as oppose to the six they have now. But the campaign revealed deeper problems with Meretz, which can’t seem to break out of its small circle of core supporters, most of them centered in and around Tel Aviv. Squeezed between “The Zionist Camp” and the Palestinian list, Meretz’s fate is but another symbol for the grim state of affair in the Jewish left.