Gantz said in a statement on Wednesday that he had told Israeli President Reuven Rivlin that it was not possible to form a government.
"I did not leave anything untried. I've sifted through every grain of sand, "Gantz said in a televised address. He accused Prime Minister Netanyahu of not negotiating in good faith about a possible unity government, but "with childish videos and slogans."
Over the next three weeks, the law allows every member of the Knesset to give the Israeli parliament a chance, something both Gantz and Netanyahu failed to do: cobble together the 61
votes needed to form a government. If this fails, as most analysts predict, the country's nightmare is likely to continue with a renewed election in March.
"Israel is at a dead end," said Daniel B. Shapiro, a former US ambassador to Israel and a researcher at the Tel Aviv National Security Studies Institute. "There simply does not seem to be a functioning coalition between the parties when they were elected."
Israel is a country that is deeply divided, not just along a single fault line, but a spider web of them. A number of parties divided on questions of religion, security and the role of Arabs in Israeli society struggle for influence. At the center is Netanyahu, a polarizing leader likely to be charged with corruption by the end of the month.
"You have too many conflicting interests and personalities and a prime minister is fighting for survival," Shapiro said.
The collapse of governance is whirling around in a country that has been proud of a stable, albeit rough, leadership in recent decades. Over the months, concerns have grown that budgets and planning are beginning to suffer in a time of mounting tensions in the region.
The Gantz-led Israeli military has spent the last few weeks conducting operations against militants in the Gaza Strip and Iranian military targets in Syria. Army officials speaking on the condition of anonymity say they need a government for long-term strategic planning and budgeting.
"Things happen on their own, without the politicians," said Aviv Bushinsky, a political commentator and former Netanyahu employee. "That can be both good and bad."
Analysts do not know how to predict what the next phase will bring, as they have never seen such a phase. Never before has Israel's parliamentary system had to trigger the upcoming 21-day "free-for-all" that will allow any lawmaker to become a government builder.
Most say that the momentum that has hampered politics so far will not change. As has been the case for months, the budding kingmaker will be targeting Avigdor Liberman, the former Hawkian defense minister, whose resignation from the government triggered political insecurity exactly one year ago.
Liberman announced Wednesday that he would not support either a Gantz-led minority coalition or a Netanyahu-led bloc of right-wing religious parties. Both leaders had tried to convince him to reach an agreement, but both options seemed to contradict his secular, right-wing ideology.
Liberman, chairman of the Yisrael Beiteinu party, has been a wild card since April's first election this year. After this vote, he refused to join a led by Netanyahu coalition, as it allies with religious factions.
Since the September elections, Liberman refused to support one of the two candidates and called on Netanyahu and Gantz to bring their parties together in a secular framework of unity.
Liberman said in his press conference that he would not work with a faction of Arab parties he consistently referred to as the "fifth column". This excludes the possibility that Gantz forms a minority government supported by Gantz outside the coalition of 13 Arab legislators. Liberman also reaffirmed his position not to join any government with Netanyahu and parties representing ultra-Orthodox Jews and a group of Jewish settlers whom Liberman called "messianic."
In fact, most analysts say only Gantz or Netanyahu have a chance to get enough support to prevail. All sides will be under pressure to close deals, as the idea of a third choice is extremely unpopular with exhausted voters.
The 21-day window effectively balances the playing field between Gantz and Netanyahu, although Netanyahu has a slight advantage because he has the support of 55 right-wing and religious Knesset members.
Gantz could yield to Netanyahu in a government of national unity and join. In this case, it is likely that the blue-white party of Gantz dissolves. Gantz # 2, Yair Lapid, former chairman of the Yesh Atid party, has stated that he will not join a government accusing a prime minister. Moshe Yaalon, a former Defense Secretary, expressed the same. If these two stay outside, Gantz could realistically join Netanyahu with just 15 Knesset members.
If no agreement is reached by December 11th, the third campaign (or earlier, if the Knesset simply gives up and votes to disband earlier) begins.
But would another trip to the ballot box change a lot? Previous surveys show no major shift in the vote. But one thing would be different: If Israel's Attorney General rejects the corruption ads against Netanyahu as expected, the Prime Minister will be under an unprecedented legal cloud during the election campaign.
"That's the only thing that would be different in a third election," Shapiro said. "Would that change the votes, would he even stand to run for office?"
Bushinsky believes that somebody is moving under pressure and If not, he predicts the third election will succeed.
"We will not have a fourth," he said. "If we have a fourth, Jerusalem will become one new Bastille. "