After both Benjamin Netanyahu and Benny Gantz proved unable to form a government, Israel appears to be headed to its third election in a year, only this time one of the parties will be running behind a leader who has been indicted:

Having failed to form a government after two elections, Israel barreled toward a record third on Wednesday, extending the political deadlock that has paralyzed the country for nearly a year and assuring at least three more months of bitter, divisive campaigning and government dysfunction.

And with the country hopelessly divided over the fate of Prime Minister Benjamin Netanyahu, who has been indicted on three counts of corruption, there is little indication that the third election will be any more decisive than the first two.

Israel’s inability to break the logjam has raised questions about the political system its citizens often boast is the only democracy in the Middle East. A democracy often compared to that of Britain or the United States is now evoking comparisons to the less stable governments of Greece and Italy.

“What used to be a celebration of democracy has become a moment of shame for this building,” Yair Lapid, a former finance minister and political rival of the prime minister, said on the floor of Parliament Wednesday night.

The Parliament had until midnight Wednesday to form a majority government. But the hour passed with the two leading candidates for prime minister, Mr. Netanyahu and the former army chief Benny Gantz, unable to negotiate a power-sharing agreement.

Until a new government is created, Mr. Netanyahu remains prime minister of a caretaker government.

By clinging to office, analysts say, Mr. Netanyahu would at least leave himself in better position to negotiate a plea bargain with state prosecutors, and could perhaps avoid trial altogether in exchange for retiring from public life.

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Israeli opinion polls show that another contest between Mr. Netanyahu and Mr. Gantz would result in the same stalemate: Mr. Gantz’s Blue and White party nearly always comes out slightly ahead, but falls short of enough partners to form a majority coalition.

A poll on Tuesday by Israel’s Channel 13, however, showed Blue and White opening up a four-seat lead over Likud, and the anti-Netanyahu parties combined reaching 60 seats, compared with 52 seats for the prime minister’s party and its allies. A 61-seat majority is needed to form a government.

The circumstances have shifted in other unhappy ways for Mr. Netanyahu: He is now contending with a noisy rebellion in the ranks of his own conservative Likud party from a growing contingent of local officials and activists who fear that his refusal to step aside could hand power to Israel’s center-left coalition. Likud on Wednesday tentatively called a primary contest for the party’s leadership on Dec. 26.

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Mr. Gantz’s chances in a third round of elections also may have improved after his No. 2, Mr. Lapid, agreed Monday to give up his longstanding insistence on eventually succeeding Mr. Gantz as party leader, and potentially as prime minister.

Polls have shown that Mr. Lapid’s rotation agreement with Mr. Gantz was costing Blue and White two to four seats in Parliament.

Most Israelis are fed up with the contest and resent the idea of having a third election.

It will cost this small country some $500 million at a time when it is running a deficit, will prevent critical problems like overcrowded hospitals and failing schools from being addressed, and will make the military wait for approval of a new five-year spending plan despite growing threats in Lebanon, Syria, Iraq and Iran.

Still, Yohanan Plesner, president of the nonpartisan Israel Democracy Institute, said Israel’s governing institutions remained robust, particularly the law-enforcement authorities that had just indicted a sitting prime minister for the first time.

Despite inherent flaws in the electoral system and some legal ambiguities in how to deal with a prime minister under indictment, he said, “I don’t think there is cause for long term alarm.”

After Israel’s latest round of elections in September, and one month after Prime Minister Benjamin Netanyahu announced that he too was unable to form a government, and it leaves the Israeli political system into limbo for a period that could last well into next year.

After the first set of elections this year, which took place in April and appeared to enure to the benefit of Prime Minister Benjamin Netanyahu and his Likud Party, Netanyahu was given the chance to form a government. In that case, President Rivlin chose Netanyahu because his Likud coalition had come closet to the 62 seats needed for a Knesset majority. That effort ended in failure in May when it became apparent that Netanyahu would be unable to form a working majority in the Knesset thanks largely to the refusal of his former ally-turned-rival Avigdor Lieberman, who heads a small coalition of parties devoted to creating a more secular issue, to join a unity government that included ultra-orthodox parties.

That led to the second round of elections last month in which Netanyahu and his chief rival Blue and White Party leader Benny Gantz ended up essentially tied in the number of seats their respective parties control in the Knesset. In both cases, though, that number was only about 50% of the way toward the 62 seats they’d need to command a majority, meaning that either party will have to form a coalition if they’re going to form a government. Toward that end, there has been considerable pressure on both parties to form a national unity government in which the position of Prime Minister would rotate between the two parties over the four years the new Knesset would be serving,

While both parties have essentially endorsed that idea, the hangup appears to be on the question of Netanyahu’s fate. Netanyahu is apparently still insisting that Likud hold the Priemership first, with Gantz serving as Foreign Minister under Netanyahu. Gantz, on the other hand, is insisting that his party must hold the Prime Minister’s position first and that the Likud candidate for Minister must be someone other than Netanyahu given the fact that Bibi is facing criminal charges that could move forward as early next month. Unless that dispute is resolved somehow, the idea of a Likud/Blue and White unity government would appear to be off the table.

There will, of course, be one significant difference between this election and the previous two. Specifically, that is the fact that Israeli Prime Minister Benjamin Netanyahu was indicted last month on a series of criminal charges. While this has apparently served to cause his more hardcore supporters to rally around him, there is polling indicating that it has caused more moderate Israelis to drift away from Likud. If that holds up in the March elections, then the logjam in Israeli politics may break after all.