What Netanyahu’s Fifth Term Means for Israel and the Middle East

(Bloomberg Businessweek) -- On Oct. 25, Israeli Prime Minister Benjamin Netanyahu traveled to Oman for a tête-à-tête with Sultan Qaboos at his sprawling waterfront palace. Three days later, Culture and Sport Minister Miri Regev choked up as she watched Israel’s national judo team win a gold medal at a competition in Abu Dhabi. Communications Minister Ayoob Kara attended a conference in Dubai on Oct. 30. A week later, Transportation Minister Israel Katz was spotted doing a traditional sword dance in the Omani capital, Muscat, shortly after presenting a plan to link Israel with the rest of the Middle East by rail.

That parade of Israeli visitors to the Persian Gulf highlights a dramatic shift on Netanyahu’s watch: Although Israel has no diplomatic ties with countries in the region, relations are warming up. Shortly after his visit to Oman, the prime minister broke with most of the Western world to rally behind Saudi Crown Prince Mohammed bin Salman when he was implicated in the murder of Jamal Khashoggi. A few months earlier the prince himself drew attention to the thaw when he said Israelis “have the right to their own land”—once an unthinkable utterance by an Arab leader.

Netanyahu, who after elections on April 9 is on track to become Israel’s longest-serving leader despite his likely indictment in three corruption cases, has pulled the country sharply to the right on security while dismantling much of the socialist legacy of its founders. At the Economic Club of Washington, D.C., last year, he was asked how he’d like to be remembered. “Defender of Israel,” he replied. “Liberator of its economy.” Closer relations with Arab states fit into that vision, helping to achieve multiple goals that are among his top priorities: isolating Iran, sidelining the Palestinians, and boosting growth via increased trade and investment.

Supporters see “Bibi”—as virtually everyone in Israel calls him—as a tough guy in a rough neighborhood. While Netanyahu is a product of the European-descended elite, his base is mostly blue-collar and middle-class nationalists, many of Middle Eastern descent. These people, who say they have little voice with the courts, the media, and higher education—even though the Right has been in power for the bulk of the past four decades—see him as an economic wizard. Yes, the ranks of the working poor have swelled in recent years, but gross domestic product stands at $354 billion, up 75 percent since Netanyahu returned to office in 2009. The country has a vibrant technology sector, recently discovered natural gas reserves, and growing trade links.

To critics, Netanyahu holds a worldview shaped by centuries of Jewish persecution and his uncompromising need for Jewish might. They say he’s opened deep fissures in Israeli society, questioning the loyalty of those who oppose his agenda and undermining the checks and balances that the nation’s founding generation—mostly postwar refugees from Europe—installed to guard against the rise of autocratic rulers. Unlike predecessors who took historic steps such as a reconciliation with Egypt, a retreat from Lebanon, and an accord with the Palestinians, Netanyahu has avoided grand gestures and focused on stability—paying little heed to Palestinian claims on the West Bank. His “isn’t a message of hope, but of nationalism,” says Mitchell Barak, an independent pollster who once worked for the prime minister.

Netanyahu’s hard line against concessions to the Palestinians has emboldened Israeli nationalists. The settler population over the past decade has expanded by almost half, to 413,000. The hills flanking Jerusalem are covered in red-roofed apartments and townhomes populated by Jews who commute to the city. Deeper in the West Bank, thousands of religious hard-liners inhabit dusty collections of trailers and prefab buildings meant to cement Israeli control over the surrounding countryside. Adjacent to the tomb of Abraham in the heart of the ancient city of Hebron, hundreds of settlers occupy a sliver of territory surrounded by barbed wire, watchtowers, and checkpoints manned by machine-gun-wielding soldiers.

Netanyahu has said that under any future agreement, Israel will hold on to all of Jerusalem and no settlers will be forced to leave their homes. And a few days before the election he said he would extend Israeli sovereignty to areas of the West Bank, an incendiary pledge the country’s leaders have avoided for half a century. “This is really acquiescing to the fact that by force you can take people’s land,” says Nabil Shaath, an adviser to Palestinian President Mahmoud Abbas. “We knew this is what Netanyahu wanted all along.”

As public opinion has shifted rightward in the face of continuing Palestinian unrest, Netanyahu has embraced ever-tougher positions—and resolution of the Israeli-Palestinian conflict was barely on the election radar. In 1999 he was unseated after his first term by Ehud Barak, who built his campaign around a two-state solution. This time, Netanyahu’s top challenger, former military chief Benny Gantz, shared most of his positions on security, focusing instead on questions of trust and unity.

A quarter-century after Prime Minister Yitzhak Rabin grudgingly shook Yasser Arafat’s hand on the White House lawn to seal the Oslo Accord—meant to pave the way for independent Jewish and Palestinian states—only about a third of Israelis say they back a two-state solution, down from 70 percent in 2007. Support among younger Jewish Israelis, who have known nothing other than the occupation and resulting violence of successive Palestinian uprisings, is half that of their parents, according to the Israel Democracy Institute. For young people, “the two-state solution is the failure of Oslo and the bloodshed that followed,” says Tamar Hermann, a researcher at the institute.

The change in tone has helped Netanyahu drive a wedge between the Palestinians and their Gulf Arab backers. By tapping into a shared loathing of Iran, he aims to forge a broader Middle East accord that shifts the Arab-Israeli relationship away from its historic focus on the question of Palestinian statehood. Tensions with Iran have “brought Israel and many Arab states closer together than ever before,” Netanyahu told the United Nations General Assembly in September. “Israel deeply values these new friendships, and I hope the day will soon arrive when Israel will be able to expand peace, a formal peace, beyond Egypt and Jordan to other Arab neighbors, including the Palestinians.”

After butting heads with President Barack Obama, Netanyahu has cozied up to the Trump White House, which has recognized Jerusalem as Israel’s capital, accepted Israeli sovereignty over most of the Golan Heights, and cut funding to the Palestinians. The Palestinian Authority has broken off contact with the U.S., and Abbas scoffed at a Trump peace plan expected to be released after the election, deeming the administration irredeemably biased toward Israel. “We’ve seen a significant hardening of attitudes among Jews and Palestinians since Netanyahu took office,” says Khalil Shikaki, director of the Palestinian Center for Policy and Survey Research in Ramallah, the Palestinian Authority’s de facto capital.

Netanyahu won despite being accused of accepting some $200,000 in gifts from wealthy friends and trying to win sympathetic press coverage by shaping rules to benefit media moguls. He denies the charges and characterizes the probes, led by an attorney general he appointed and a police chief installed by his government, as a left-wing “witch hunt.” In a December poll by the Israel Democracy Institute, 36 percent of Jewish Israelis identified the left-right divide as the greatest source of tension in the country, surpassing divisions between Arabs and Jews. That’s four times the level in 2012, when almost half saw the Arab-Jewish rift as the primary conflict. “The country is much more polarized than it was 10 years ago,” says Gerald Steinberg, a professor of political studies at Bar-Ilan University.

That polarization has spurred alienation among the country’s Arab citizens. A recent law defining Israel as the homeland of the Jewish people stirred controversy by failing to mention equality for Arabs, who make up a fifth of the population and whose rights are enshrined in other legislation. Netanyahu has long fanned anti-Arab sentiment, warning in the last election that Arabs were “going to the polls in droves” and, this year, that they might help the Left return to power. In February he brokered a merger of political groups that could catapult a racist anti-Arab party into the next coalition. The Otzma Yehudit party advocates expelling Arabs from Israel and the occupied territories, and Netanyahu’s legitimization of their extremism has outraged pro-Israel groups in the U.S. The American Jewish Committee dubbed Otzma Yehudit’s views “reprehensible,” and the American Israel Public Affairs Committee (Aipac), the powerful pro-Israel lobby in Washington, calls the party racist.

Members of Netanyahu’s cabinet have joined his fight, with Justice Minister Ayelet Shaked seeking to weaken Israel’s activist courts and Culture Minister Regev withholding government funds from art she regards as hostile to Israeli values. Education Minister Naftali Bennett has proposed an ethics code circumscribing political activism in university classrooms, in part to prevent lecturers from promoting a boycott of Israel mounted by Palestinians and their supporters. While some of these initiatives have foundered, Netanyahu “has seeded the notion that the justice system persecutes the Right at the behest of the liberal media,” says Dahlia Scheindlin, a political analyst at Mitvim research center. In his estimation, she says, “checks and balances such as judicial independence or civil society—and, needless to say, the critical media—are wrong.”

Much like Netanyahu has warmed to the Arab world, he has embraced right-wing governments in Europe as relations with the European Union have soured over the Iran nuclear deal and the occupation of the West Bank. Last year he endorsed a Polish law making it an offense to suggest publicly that Poland bears any responsibility for the mass murder of Jews during World War II. In July he gave a hero’s welcome to Hungarian Prime Minister Viktor Orban, with whom he shares an antipathy for Hungarian-American billionaire George Soros, a Jew who funds liberal causes in both countries. “Israel’s interest is to break up European unity on the peace process and the Iranian nuclear deal,” says Michael Oren, an adviser to Netanyahu and ambassador to the U.S. from 2009 to 2013. “A united Europe hasn’t been a blessing for this country.”

While Netanyahu frequently claims to be the global voice of the Jewish people, his agenda has rankled a new generation in the U.S. who don’t necessarily share their parents’ attachment to a post-Holocaust Israel. His embrace of Trump and the Republican Party is anathema to many Jews, who overwhelmingly vote Democrat. Rabbi Eric Yoffie, a former chief of the U.S. movement for Reform Judaism, acknowledges that ties with the U.S. are essential for any Israeli government. But he says Netanyahu has engaged in a “sycophantic buddy movie with America’s unbalanced and unpredictable president.” The prime minister’s “unnecessary embrace of everything Trump will cost Israel dearly,” Yoffie says.

Netanyahu is poised to surpass founding father David Ben-Gurion as Israel’s longest-serving prime minister in July. While he remains under investigation and might be forced to resign if convicted, the legal process could take years—giving him ample time to further shape Israeli society. “He took Israel as a liberal democracy and pushed it into an illiberal democracy,” says Gayil Talshir, a lecturer at the Hebrew University of Jerusalem. “Even if he vanishes from Israeli politics, his legacy is here to stay.”

To contact the editor responsible for this story: David Rocks at drocks1@bloomberg.net

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