GWEN IFILL: Israeli Prime Minister Benjamin Netanyahu is in the final throes of a political fight, as he fades in the polls, ahead of tomorrow's election.

Late this afternoon, in an attempt to secure more right-wing votes, he announced that there will be no Palestinian state if he's reelected.

NewsHour special correspondent Martin Seemungal reports from Israel.

MARTIN SEEMUNGAL: Israeli Prime Minister Benjamin Netanyahu taking his campaign to the Jewish settlement of Har Homa, the heart of right-wing territory. Netanyahu needs them to vote Likud, warning settlers about the dangers of a center-left government led by Isaac Herzog and Tzipi Livni.

PRIME MINISTER BENJAMIN NETANYAHU, Israel (through interpreter): The truth is simple. If they form the next government, here on these hills, we will have a second Hamastan. But we prevented it. We develop here great neighborhoods for tens of thousands of Israelis. And we are committed to it.

MARTIN SEEMUNGA: In an interview later in the day, Netanyahu stated plainly that if he is reelected, there would be no Palestinian state, a reversal of his support for two states for two peoples. It is a significant turnaround, a clear sign that Netanyahu knows he is fighting for his political survival.

Amos Harel is a columnist for Israel's Haaretz newspaper.

AMOS HAREL, Haaretz: Netanyahu is much more active than we have been used to. For instance, he avoided any kinds of interview with Israeli media for years. In the last two weeks, he's been interviewed everywhere including local radio stations. He's calling in everybody to go and vote and he's working for his base, going back to the right-wing voters and hoping that the polls that actually show that the Zionist camp leading are going to help him, because it's sort of a panic attack or a call for arms for the Likudniks, for the old voters of Likud.

MARTIN SEEMUNGAL: When the election was announced back in December, few believed much would change. Everyone felt Bibi Netanyahu would be reelected. But it has changed.

During the last election, you could walk into a market like this in Tel Aviv and pretty much everyone would be voting for Benjamin Netanyahu. It's a Likud stronghold. People here still support Likud, but it's not the same as it was before.

Ruth Moses voted for Netanyahu the last election, but this time?

RUTH MOSES: I hope not Netanyahu. I hope not Netanyahu, because he don't do nothing for the people. He do only for himself. He like to live in luxury.

MARTIN SEEMUNGAL: Who did you vote for the last time?

MAN: The right.

MARTIN SEEMUNGAL: So you voted for Likud last time?

MAN: Right.

MARTIN SEEMUNGAL: And this time?

MAN: I'm not sure.

MARTIN SEEMUNGAL: Yachil Deloya has always voted Likud, always supported Netanyahu, and says he will again. But he's worried.

Are you afraid he might lose this time?

YACHIL DELOYA: Yes I am afraid a little bit, because it's a time that you feel like he might lose. But we hope. We hope for good news.

MARTIN SEEMUNGAL: The voices against Netanyahu are growing increasingly loud. Two hundred former top-ranking military and security officials made a very public statement denouncing him.

Former General Asher Levy is one of them.

BRIG GEN. ASHER LEVY (RET.), Israel Defense Forces: So, we are not leftists. We think that he is damaging our security situation, and because of that, we think he should be changed. We are not telling anybody who to vote for, but we are definitely against Bibi Netanyahu. We think there should be change.

MARTIN SEEMUNGAL: Herzog faced Netanyahu in a TV debate on Saturday. Herzog's lack of security credentials has led to a caricature here that he is weak, but he launched a very strong attack.

ISAAC HERZOG, Labor Party candidate for Prime Minister (through interpreter): The international community knows that you are weak and doesn't accept your position.

MARTIN SEEMUNGAL: It is estimated that at least 10 percent of Israelis have yet to decide. And in a close race like this, those votes are critical. Campaigning will continue until the polls close tomorrow night.

For the NewsHour, I'm Martin Seemungal in Tel Aviv.

GWEN IFILL: I spoke with Martin a short time ago.

Martin, thank you so much for joining us.

The big news today, of course, is Bibi's statement about changing his mind or whatever on the two-state solution, saying that if he were reelected he wouldn't support it. How big a switch this for him, especially since 2009, when he gave that big speech saying he was for it?

MARTIN SEEMUNGAL: It's a very big switch.

He gave that speech at the Bar Ilan University and everyone was touting this as a very significant moment, Likud — actually, a Likud leader and Israeli prime minister coming out and committing himself openly, especially Benjamin Netanyahu, who'd been seen as such a hard-liner, saying he believes in the two-state solution, two states for two peoples.

Obviously, he's — over the last six years, not moved much on that front. His critics have been saying that, even though he said that, quoting that speech, he's never really done much to deliver. Negotiations have been off and on, and mostly off. People say he's paid lip service to that statement and that — and because of that, the Palestinians have broken off negotiations.

They have been frozen for so long. The Americans have been trying to get Netanyahu to commit to go to the table, bring the Palestinians along as well, obviously. But the key is that this statement, it's no coincidence it's coming out on the eve of this election, because, basically, he's making a statement to the right wing that he — if there was any doubt as to where he stands, he is standing with them, and that is there will be no Palestinian state.

GWEN IFILL: So, how much is this, surprisingly for us who have been watching casually, close election, how much of it is being driven by domestic concerns and how much of it by international concerns, as we have seen in past Israeli elections?

MARTIN SEEMUNGAL: Well, it's a bit of both in some cases, in one sense, because, basically, the way you look at it is, Netanyahu has been pushing the international threat, the fact that Iran is this existential threat to Israel, and only he can defend the country. And, of course, many people, especially in the right wing, see Mr. Benjamin Netanyahu as Mr. Security.

So that is the card he plays, so he plays that international card. Now, underneath all that are Israelis who say, yes, we believe he's a strong prime minister, but on the other hand, you know, we don't really want to talk about that. The polls show that, as far as Israelis are concerned, they're not really that concerned about security.

And so what they're really concerned about are the domestic issues, the fact that housing prices are sky-high, the fact that the cost of living is so expensive for Israelis. That's a thing that you hear people want to talk about, but that really hasn't evolved in the election campaign in the debate.

And so, as a result, a lot of people are saying that Benjamin Netanyahu has made a mistake in not addressing those concerns, and that's why he's been dipping in the polls.

GWEN IFILL: Now, the biggest threat to him is Isaac Herzog, who has been running in kind of — in tandem with Tzipi Livni, who said today that she won't be — they had worked out a deal where they would be rotating the premiership. And that will not happen now.

How much of this is about post-election positioning?

MARTIN SEEMUNGAL: Well, it's all about that, because many are saying that Isaac Herzog has been weak, he's not charismatic.

And so in many ways, they brought in Tzipi Livni because she has more, let's say, right-wing credentials. She's seen as a center — center-right almost. The fact that she's now withdrawing at this point, some people are saying, it's a bit late to be doing that, it could harm them. But obviously they're calculating that they want to see — they want to sell themselves as one party.

GWEN IFILL: It's going to be a fascinating outcome to watch.

Martin Seemungal for us in Tel Aviv tonight, thank you.