Global Political Paralysis Spreads to Israel

(Bloomberg) --

Israel is reaching new heights for political instability, with the possibility of an unprecedented third election in less than a year looming large.

Benjamin Netanyahu and his main challenger, former military chief Benny Gantz, have both failed to form governments after the country’s second election in September. If their parties don’t manage to team up in a broad-based national unity coalition, the Knesset will automatically disband and they will go back to the voters in early 2020.

Without a fully functioning government for nearly a year, Israel can’t address urgent matters like a crumbling health system, outdated infrastructure and the absence of a 2020 national budget — let alone stalled peace-making with the Palestinians.

While little optimism surrounds the Trump administration’s Middle East peace plan, the chaos in Israel has held up presentation of the proposals for months.

Israel’s political crisis is indicative of a wider malaise. The fracturing of political systems into a proliferation of parties has made forming coalitions extremely tough in places like Belgium and Spain, and created leadership crises in fragmented Middle Eastern countries such as Lebanon.

It’s also uniquely Israeli. Netanyahu, who denies wrongdoing, will shortly hear whether he will be indicted in three corruption cases. If he is, the pressure will mount on him to go.

Being prime minister might allow him to buy time. But it will do little to break the paralysis gripping Israel’s political system.

Global Headlines

Enough evidence? | Gordon Sondland testified that “everyone was in the loop” — Vice President Mike Pence, Secretary of State Michael Pompeo and other top officials — about his months-long push for a quid pro quo from Ukraine that the U.S. ambassador to the European Union said he believed came directly at President Donald Trump’s behest. Democrats must now decide if they’ve gathered enough evidence to justify impeaching Trump quickly or press for more.

• Next up: Former National Security Council aide Fiona Hill is scheduled to testify today.

Echoes of history | The U.S and China are “in the foothills of a cold war” that risks conflict greater than World War I if not constrained, former U.S. Secretary of State Henry Kissinger warned. The rumbles from the world’s two largest economies sparring with each other would be felt everywhere, though there’s still time to defuse trade and political tensions, the veteran diplomat said at Bloomberg’s New Economy Forum in Beijing.

• The U.S-China trade war is exposing growing rifts between China and Silicon Valley.

Democrats’ debate | In Atlanta last night, the Democratic presidential candidates largely avoided lengthy battles over their biggest fault lines, instead competing to prove how much better they would run the country than Trump. The impeachment drama served to mute the policy differences between the 10 candidates as they joined in their repudiation of the president.

• Click here for more takeaways from the debate and here for transcripts.

Schooling Macron | French President Emmanuel Macron learned the limits of Germany’s patience yesterday after weeks of rubbing EU allies the wrong way. Chancellor Angela Merkel, usually measured, deployed her verbal arsenal to insist Western Balkans nations must have a chance to join the bloc, despite Macron’s objections to further enlargement. Separately, her foreign minister advanced German ideas for reforming NATO, a retort to Macron’s claim the military alliance is suffering “brain death.”

New unrest | Colombia is bracing today for its largest protests in years, risking fresh instability in a region that has seen mass unrest in recent months. A planned nationwide strike against President Ivan Duque’s labor and pension reforms has morphed into a broader anti-government rally that is set to include everyone from air traffic controllers to yoga teachers.

What to Watch

• Trump is expected to sign legislation supporting Hong Kong protesters, setting up a confrontation with China that could imperil a long-awaited trade deal.
• Labour leader Jeremy Corbyn will urge U.K. voters to take down bankers and billionaires who “profit from a rigged system” when he presents the party’s general election manifesto today.
• Sri Lankan President Gotabhaya Rajapaksa has appointed his brother Mahinda, who forged close ties with China during his 10-year rule, as the island’s new prime minister.
• Migration Minister George Koumoutsakos warned Greece is nearing the point it can no longer handle the number of immigrants reaching its shores and is enhancing border controls and building closed centers to hold migrants due to be expelled.

Tell us how we’re doing or what we’re missing at balancepower@bloomberg.net.

And finally … Born out of bloodshed, colonial politics, civil war and the pursuit of mining riches, the independence referendum starting Saturday on the South Pacific island of Bougainville has been a long time coming. Although it seems an unlikely candidate for independence, it has one resource that could change its fortune -- a massive copper deposit with reserves worth $60 billion. Still, any split requires Papua New Guinea’s approval and it has indicated it does not want to let Bougainville go.

--With assistance from Kathleen Hunter, Muneeza Naqvi, Matthew Bristow and Rosalind Mathieson.

To contact the editor responsible for this story: Anthony Halpin at thalpin5@bloomberg.net, Karl Maier

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