Israel Heads to Fourth Vote in Two Years Over Budget Crisis
Israel Heads to Fourth Election in Two Years Over Budget Crisis
(Bloomberg) -- Israel’s brittle governing coalition collapsed after just seven months, sending the election-fatigued country to its fourth vote in two years.
The campaign will feature a new challenger who might win enough support to dethrone the long-serving Prime Minister Benjamin Netanyahu, polls suggest. The ballot is to take place on March 23 after parliament failed to approve a national budget for the second year in a row.
The grudging alliance between Netanyahu and Defense Minister Benny Gantz had been formed expressly to avoid another vote after three inconclusive matchups, and to combine forces to contain the coronavirus outbreak. A fourth race, after long months of policy paralysis, will be especially bruising as the virus defies efforts to tame it, talk of a third national lockdown is percolating, and unemployment is a steep 15%.
“I didn’t want elections,” Netanyahu said late Tuesday, shortly before parliament disbanded. “But if elections are forced upon us, I promise you we will win.”
The budget crisis was the ostensible reason the alliance between Netanyahu’s Likud party and Gantz’s Blue and White unraveled. Parliament automatically broke up as the midnight Tuesday deadline to approve a spending plan expired.
But while the partnership gave Israel its first permanent government since December 2018, it seemed destined to fail from the start. Distrust bled through their coalition agreement, while squabbling extended to issues as granular as gay conversion therapy and as sweeping as annexing West Bank land the Palestinians want for a state.
Corruption trial
In the background hovered the power-sharing agreement with Gantz that many think Netanyahu never intended to honor, and the prime minister’s corruption trial, which he could derail by forming a more pliant coalition that would pass legislation shielding him from prosecution.
“Netanyahu is taking us to elections just so he doesn’t have to show up in court,” Gantz said in a statement. The prime minister’s trial on bribery and fraud charges is set to kick into high gear in February.
Their marriage of inconvenience broke down after Likud reneged on its pledge to support a two-year budget through 2021. The tussle was as much about politics as economics. A one-year plan would have given Netanyahu a loophole to bring down the government over next year’s budget before Gantz could become premier next November.
Indifferent markets
The men made a last-ditch effort to avert the vote after popular former cabinet minister Gideon Sa’ar bolted Likud earlier this month to form his own party. But rebel lawmakers in both Blue and White and Likud forced a new election early Tuesday by rejecting a bill that would have briefly extended the budget deadline to give Netanyahu and Gantz more time to try to reach a compromise.
The cabinet approved an amendment allowing the Finance Ministry to continue funding emergency social spending, averting “fatal damage to the ability to provide services to Israeli citizens and aid to those hurt by the coronavirus,” Finance Minister Israel Katz said.
Israeli stocks and the country’s currency largely brushed off the political drama. Though the uncertainty “definitely isn’t a positive” for the economy, how Israel manages the pandemic and the vaccine rollout next year will be bigger factors to watch, said Modi Shafrir, chief strategist for Mizrahi Tefahot Bank Ltd.
Netanyahu and Gantz will enter the election badly weakened. Support for the prime minister has sunken following a bungled reopening of the economy after the government was installed in mid-May. Protests against his leadership have drawn thousands across the country weekly since late June.
Polls suggest the nationalist Sa’ar might be able to siphon off enough voters from both the right and center to unseat the country’s longest-serving leader.
Gantz’s Blue and White, which splintered after he teamed up with Netanyahu, is now hovering dangerously close to the threshold for entering parliament, the surveys show.
“Israel’s ongoing political crisis will continue as long as Netanyahu remains prime minister and a government cannot be formed without him,” said Yohanan Plesner, president of the Israel Democracy Institute research center.
“We enter this election with a clear advantage in polls for the political right, but also the growing possibility of a coalition that refuses to cooperate with Netanyahu.”
©2020 Bloomberg L.P.