Israel’s Repeat Election Stalemate Produces No Easy Way Out

(Bloomberg) -- Israel’s repeat election last week ended in a stalemate, with neither Prime Minister Benjamin Netanyahu nor former military chief Benny Gantz winning enough support to easily piece together a governing coalition. The country’s fractured parliamentary system is going to make it tough to paper over differences, and the corruption allegations hanging over Netanyahu are complicating things even further.

The horsetrading has already begun, and President Reuven Rivlin, who’ll be the one to choose a candidate to form the next government, discussed the next steps with Gantz and Netanyahu on Monday and has invited them for another round on Tuesday. These are possible options:

National Unity Government

Netanyahu’s Likud party has 31 of Knesset’s 120 seats and Gantz’s Blue and White bloc has 33, enough together for a parliamentary majority. This alliance is Rivlin’s preferred outcome, but it might be the most complicated effort of all.

• The first problem is sorting out who would lead such a government. Gantz has insisted he won’t serve with a prime minister under indictment, but Netanyahu will be charged with bribery and fraud unless he can change the attorney general’s mind at a hearing next week.
• Blue and White leaders say they could team up with Likud if Netanyahu were out of the picture because the parties share similar views on Israel’s security and role of religion in the state. Netanyahu isn’t volunteering to step aside: Hanging on to his job gives him an opportunity to try to push through legislation shielding a sitting leader from trial. Yet Likud might eventually force him out if that’s the price for retaining power.
• Should Gantz back down, then the two could also divide the four-year term between them, an arrangement that’s been done before. That could stumble over the question of who’d serve first.
• Rivlin doesn’t have to choose either of them. He must choose the candidate he considers best able to put together a government, and picking another Likud member could solve the problem of Gantz’s reluctance to enter into a coalition led by Netanyahu.

The Right-Wing Dream Team

Netanyahu’s real dream is to see himself installed at the helm of a coalition of nationalist and ultra-Orthodox parties. It would likely be his best chance of passing laws to protect himself from prosecution.

The road to a right-wing parliamentary majority would require an unexpected reconciliation with former Defense Minister Avigdor Liberman, whose surprise refusal to join a similar coalition after April 9 elections led to last week’s do-over. Since then, he’s only dug into his opposition to ultra-Orthodox privileges.

The Great Peel-Off

Netanyahu could chase Labor-Gesher seats by dangling economic ministries. But the bloc barely made it into parliament, and Labor might be loathe to alienate traditional center-left supporters by teaming up with a right-wing government. Just last week, Labor head Amir Peretz ruled out serving in a Netanyahu government.

Netanyahu could also try to pick off lawmakers from the Blue and White camp, a mash-up of disparate parties including some staunch right-wingers.

Gantz at the Top

Should Gantz be given the first crack at building a government, his obvious partners on the center-left wouldn’t be enough to give him a parliamentary majority. One option would be to form a minority government relying on the outside support of the Joint List of Arab parties in parliamentary votes.

After running as a centrist party vowing to form a secular government, Gantz could also try for an unconventional grouping with religious, nationalist and ultra-Orthodox parties, possibly forfeiting the support of center-left parties that have been considered obvious partners.

Back to Elections

Israel heads back to the polls for a third time in less than a year if Netanyahu and Gantz both fail. That would rile up the Israeli public and markets, which are fed up with the political paralysis and the costly turmoil.

To contact the reporter on this story: Yaacov Benmeleh in Tel Aviv at ybenmeleh@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Amy Teibel, Paul Abelsky

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