Netanyahu was trailing by a few seats in the polls, so he resorted to demagoguery to get those few extra seats needed to make him the leading candidate to form a coalition government.
First, he stated that there won’t be a Palestinian state on his watch, to peel off votes from his further-right rival, Naftali Bennett. As a practical matter, read in context, this statement changed nothing: “Netanyahu was simply making explicit what has been his implicit (but obvious) position for some time: Islamic radicalism affects (and severely decreases) the practical possibility of imminent Palestinian statehood.” It’s highly unlikely that a left-leaning coalition could have reached an acceptable agreement with the Palestinians, and if Netanyahu decides to pursue a two-state agreement, he will just say that the security situation has changed.
But the diplomatic repercussions for Israel may be severe:
For Israel, however, Netanyahu’s incendiary interview is a diplomatic disaster. Israel’s supporters have long pointed to Netanyahu’s “Bar Ilan speech” (where he embraced the principle of two states for two peoples) as proof that even Israeli right-wing governments are committed to peace—and that the impediment to progress is truly Palestinian intransigence. Netanyahu’s unambiguous declaration that a Palestinian state will not be established on his watch is a body-blow to that argument. The distinction between support in principle and contingent, practical opposition may interest philosophers, but not diplomats. And if Netanyahu is reelected, the international community will see Israel as the barrier to peace, and the country can expect to be engulfed in a diplomatic tsunami.
Meanwhile, Netanyahu resorted to some anti-Arab demagoguery on election day to try to boost turnout: “Right-wing rule is in danger. Arab voters are streaming in huge quantities to the polling stations,” Netanyahu announced via video. He later tried to explain away the remarks as aimed at foreign donors interfering in Israel’s election by trying to pump Arab citizens’ turnout, but the remark will reasonably come across to people around the world as a betrayal of democratic principles.
So Netanyahu won, but even for people who might otherwise be supportive of him, it should be clear that Israel lost.
UPDATE: The vote tally suggests a that Likud will get 29 seats to left-leaning Zionist Union’s 24. It’s unlikely that Netanyahu’s inflammatory statements won him more than a couple of seats, at best, and those would have gone to natural coalition partner Naftali Bennett instead. So not only did Bibi harm Israel diplomatically, he did so, as it turns out, gratuitously.