Begin fights on, but lack of mandate could prompt new elections in Israel; Whoever wins inherits a country with deep ethnic, political splits

The most anxiously awaited election in Israel's history ended with an indecisiveness that has frustrated the public and will complicate solutions to pressing domestic, economic, and foreign-policy problems.

The outcome could mean new elections in a few months' time. It also leaves unresolved bitter ethnic and political splits revealed in a race that Israel's two big parties billed as crucial for the country's future.

Although a dramatic comeback netted the opposition Labor Party 49 seats in parliament (based on computer projections and as-yet incomplete results), analysts give Prime Minister Menachem Begin's Likud coalition, with 48 seats, the best chance to form a government in the 120- seat Knesset.

The most obvious coaliton partner, a bloc of two religious parties holding 11 seats, already serves in Mr. Begin's government. Begin can almost surely offer it -- along with a small breakaway ethnic-religious party with two seats -- a more tempting deal than can Labor, thus achieving a slim majority of 61 seats.

Coalition negotiations are likely to continue for about two weeks before Israeli President Yitzhak Navon calls on one major party leader to form a government. But Prime Minister Begin is pressing to close the deal with the religious parties as soon as possible in order to prove that he has the political situation under control. If he succeeds, he will become Israel's first minority prime minister.

The closeness of the race indicates the public's belief in the "critical" nature of the election. Third-party strength dropped sharply as voters heeded the two big parties' urgings to make their votes count.

The strong showing of the two major parties underlined a deepening split in the Israeli electorate. Labor, perceived as the bastion of middle-class Israelis of European origin, returned only to the number of seats it held in 1973. A post-1973-war antiestablishment back- lash dropped it down to 32 seats in 1977.

But the right-wing Likud, backed strongly by Israelis who came from arabic-speaking countries, continues an upward trend. It has gained 20 percent in strength since 1973 and gone from 43 seats in 1977 to 48 this time.

Whichever side is not requested to form the government will be deeply frustrated. However, Mr. Begin has made it clear that he would not regard a minority government as limited in its authority. He told reporters, "Such a government has full powers [according to] to Constitution . . . to do what is necessary for the welfare of the State of Israel."

Analysts here are divided, however, as to whether a government with a probable majority of one seat will be able to withstand internal and international pressures. (Two other small parties that might sympathize with the Likud on some issues -- Moshe Dayan's Telem with one seat, and the rignt-wing Tehiya, with two seats -- are unlikely to join a Likud coalition.)

Former Likud Justice Minister Shmuel Tamir, who served in the last Begin government when its majority fell to 61 seats -- necessitating new elections -- says such a situation is "not too stable. You are open to pressures from various groups within the coalition, especially on the economy and foreign affairs, where Israel will face very difficult problems in the months ahead."

Many Israeli economists believe that pre- election Likud policies will ultimately lead to an inflation explosion. They cite such policies as large-scale subsidies of basic commodities and gasoline to keep prices down, as well as cuts in taxes on luxury consumer goods.

This could cause tension within the liberal wing of the Likud coalition. Moreover, resumption of moribund talks with Egypt over autonomy for the Palestinians of the occupied West Bank and Gaza -- postpone until after the election -- could cause additional tension within the party.

However, other analysts note that the Likud has served almost four years after similar doubts were expressed about the party in 1977. They say the Likud's success will probably depend on Mr. Begin's health and determination -- both of which showed ups and downs in those four years. Some analysts believe the government's weakness would actually head off pressure from the US, for the fall of the government once again could delay diplomatic maneuvers over the occupied territory.

In the unlikely even Labor could win over one or both religious parties, its coalition -- which may have to depend on tacit support from the Israeli Communist Party -- would be even weaker than the Likud's. Many analysts believe that Labor will simply sit back and wait for economic or foreign policy issues to bring the Likud down.

There has been some talk of a national unity government embracing both large parties. But the acrimony between Mr. Peres and Mr. Begin, and the gulf dividing their respective parties' outlooks, makes this unlikely. However, when queried by reporters, Labor leader's Shimon Peres did not categorically rule this out.