From Ynet News, 23/2/09, by Attila Somfalvi:
Following closed meeting with Livni, Prime minister-designate convinced Kadima won't join Likud-led coalition...
Prime-Minister designate Benjamin Netanyahu and Kadima Chairwoman Tzipi Livni met at Jerusalem's Inbal Hotel Sunday night for the first time since the recent general elections and just two days after President Shimon Peres tasked the Likud leader with forming the next government.
...However, Netanyahu later told aides he was convinced Kadima would not join a Likud-led coalition, adding that "nothing will come out (of the negotiations)."
...According to the Kadima leader, nothing had changed during the meeting. "There is no reason to assemble negotiating teams," she said.
A Netanyahu aide said "there were agreements on certain subjects, but Livni was adamant on the subject of two states for two peoples. Netanyahu told Livni she should not latch onto this formula at this time and that other ways could be found to define the political subject with the Palestinians."
Netanyahu reportedly guaranteed Livni a key role in the next government. "I intend to conduct negotiations with the Palestinians which you will participate in," he told her.
Earlier, Livni told a Kadima faction meeting that the party would not sit in a coalition together with Netanyahu's "natural partners", including the rightist factions and the religious Shas Party.
She was backed my most fraction members, but Minister Shaul Mofaz, placed second on Kadima's Knesset roster, said "there is no exaltation in the opposition. The citizens want us to have an impact, and we won't let the extreme right lead the process."