The Jerusalem Post, Haaretz, and CNN, among others, report that Ariel Sharon has secured a 61-seat minimum winning coalition consisting of the Likud (and the remnants of Yisrael Ba'aliya which joined it last month), the National Religious Party (NRP), and Shinui. Talks are apparently underway to possibly bring in other parties to bolster the size of the coalition, including the National Union. Nobody seems to really know what the coalition's positions on the peace process or settlements are; most of the discussion (as always) is about internal Israeli politics.
Strangely enough, the Independent runs with an AP report with a headline calling this a “hard-line coalition”; one wonders how they'd have described a Shas-NRP-NU-Likud coalition.
Matthew Yglesias has some new comments as well; I basically agree with him that we're looking at an interim coalition until events (i.e. war in Iraq or some obvious incident of bad faith on the part of the Palestinians) force Labor to abandon its “no coalition with Sharon” pledge, especially since some reports note that Sharon is updating Mitzna on the progress of the coalition talks (which seems rather odd since Mitzna isn't leading Labor into the coalition).
Previous discussion here.