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Key Points

• Late surge for message of hope makes Tzipi Livni’s Kadima the largest party, but right-wing bloc has the balance of power
• Close results offer complex coalition-building ahead
• The next Israeli government faces serious challenges to Israel’s security and stability

 

Results

(After 97.5% votes counted. Official and final results will be published on Thursday. Seats in previous Knesset in brackets):

 

Kadima: 28 (29)

Likud: 27 (12)

Yisrael Beitenu: 15 (11)

Labour: 13 (19)

Shas: 11 (12)

United Torah Judaism: 5 (6)

National Union: 4 (4)

Hadash: 4 (3)

Ra’am Tal: 4 (4)

Balad: 3 (3)

Meretz: 3 (5)

Jewish Home (National Religious Party): 3 (5)

Pensioners: 0 (7)

 

Key statements following exit polls

Tzipi Livni (Kadima): “All that remains now is to do the right thing, to respect the choice of Israel’s citizens, to respect the voter’s choice, to do what is correct for Israel at this time, particularly in the face of the security, diplomatic and economic challenges, internal and external, and join a unity government headed by us, on the basis of the large parties in Israel, to the left and the right of Kadima.”

Benjamin Netanyahu (Likud):  “I am certain that I will be able to set up a good, broad and stable government that will know how to cope with the security crisis, with the financial crisis, and will know how to lead a fundamental reform in education for excellence and Zionism, as we committed ourselves to doing during the election campaign. I will turn first to our natural partners in the national camp, as I promised, and already this evening I spoke with the heads of the factions, and we decided to start talks tomorrow to set up a new government in the State of Israel. I intend, again as I promised, to turn after that to the other Zionist parties, in order to unite all the forces in the nation, and to lead the State of Israel on a new path.”

Avigdor Lieberman (Yisrael Beitenu): “We want a national government, we want a right-wing government… We will certainly not make decisions tonight. The faction will convene tomorrow, and appoint a negotiation team. I have spoken this evening with Binyamin Netanyahu, I have also spoken with Tzipi Livni, we also said this in the election campaign – we do not disqualify anyone.”

Ehud Barak (Labour): “I don’t recommend that anyone pigeonhole us in any particular place. Nothing can be taken for granted. As we have always done, we will consider what is good for the Labour Party and, more importantly, what is good for the state. We will not serve in a government that is not in accordance with our way, and not in accordance with our credo, and we will not hesitate to go to the opposition, and serve the people from there.”

 

Results: Late surge for Livni’s message of hope

Results after the counting of most of the votes have confirmed a very narrow lead for Tzipi Livni’s Kadima over Bibi Netanyahu’s Likud. Livni’s decision to promote a positive message of peace in the final days of the campaign helped her to attract a late surge among undecided voters. A groundswell of support from sections of the electorate hungry for a fresh candidate and a message of hope, as well as the close nature of the contest, brought a higher than expected turnout of 65.2%, despite stormy weather across the country. However, the swing to Livni came to a considerable degree at the expense of the left-of-centre Labour and Meretz. It was a catastrophic result for both parties, who were rendered increasingly irrelevant as left-of-centre voters plumped for a candidate who offered both the prospect of change, and the best chance of stopping Netanyahu and the Likud. 

Netanyahu will no doubt be disappointed to have fallen behind Kadima. He has led comfortably in most polls since Ehud Olmert’s government faltered in the Second Lebanon War of 2006, and being beaten by Livni despite such favourable conditions raises questions for him personally. His political comeback was made possible more by the actions of Hamas and Hezbollah, who exposed Israel’s security vulnerabilities, than his own personal popularity. But he will nevertheless take comfort in the impressive fact that Likud’s strength more than doubled from its disastrous result in 2006, and that the balance of power in the Knesset now lies with the right-wing parties. Likud’s result was clearly hampered by the highly effective campaign of hawkish Avigdor Lieberman and his Yisrael Beitenu party, growing their support from 11 to 15 seats.

The smaller religious parties performed more or less as expected, though Shas, United Torah Judaism and Jewish Home (incorporating the National Religious Party) have all lost out slightly to Likud and Yisrael Beitenu. The Arab parties returned with similar strength to last time, after Arab voters largely defied calls to boycott the elections. The Jewish and Arab Hadash ‘communist’ list, which represents the non-Zionist left wing, has overtaken Meretz with four seats.  

 

Coalition: how the next Israeli government will look

The options for forming the next government are even more complicated than had been anticipated. President Shimon Peres’s job according to law is to invite the party leader with the best chance of forming a coalition to attempt to do so. With the results so close, this is not necessarily the leader of the largest party. There is a precedent for the second largest party being asked to form the coalition, when Peres himself got the nod as leader of the Labour party in 1990. On that occasion, his attempt ultimately failed. But the real power lies not with the president but with the parties. Once the official results are announced on Thursday, Peres will spend a few days taking the recommendations of the party leaders before inviting one of them to try to form a government. For both of the two largest parties, the challenge of building a stable coalition will be complex and difficult.

Netanyahu has claimed that the election is a victory for the right-wing camp, and has said he will turn first to the right-wing parties to back him. Likud, Yisrael Beitenu, Shas and the smaller religious and right-wing parties taken together have 65 seats, enough to form a majority government. This certainly makes Netanyahu by far the most likely candidate for prime minister. But a coalition of right-wing parties will be far from ideal for Netanyahu for several reasons. Firstly, he would rather place himself in the centre of a broad-based centrist coalition, where he can trade off the demands of parties to the left and right, rather than being the most moderate player in coalition of parties all pulling him further to the right. This is especially the case with the new Obama administration looking for diplomatic progress. Secondly, in such a coalition, he would have to satisfy the demands of at least four of the five smaller right-wing parties: Yisrael Beitenu (secular nationalist), Shas (Sephardi religious), United Torah Judaism (Ashkenazi ultra-orthodox), Jewish Home (national religious) and National Union (right-wing mix of secular and religious). If any one of them were to jump ship, his Knesset majority would be in danger. Satisfying their various demands, which typically include budget commitments that benefit their constituencies, will be all the more difficult in an economic climate in which finances will be extremely tight, and economic dependence on the US potentially greater. Thirdly, these parties will struggle to get on with one another. In particular, the two largest of them, Shas and Yisrael Beitenu, will have to overcome extremely bitter recriminations that broke out in the last few days. In his speech on election night, Yisrael Beitenu’s Lieberman made clear that he would not easily forget the attacks made on him by Shas in the final week of the election, whose spiritual leader stated that a vote for Lieberman would give strength to the devil.

The job would be easier if Labour could be attracted to join the coalition, but with the support of the left-of-centre party having fallen so low, to join a right-wing government would almost certainly sound the final death knell for the party. Many of the party’s Knesset members are now of the opinion that the only hope of Labour reviving its political fortunes is to lead the opposition, rather than be a minor player in the government.

Livni, as leader of the largest party, is also claiming the right to form a coalition. A purely left-wing bloc is not an option. Kadima, Labour and Meretz together have only 44 seats. Even with the support of the Arab parties, which have never before entered a governing coalition in Israel, the bloc would only reach 55 seats. For Kadima and Labour to form a coalition without Likud, they would have to attract support from the right-wing bloc. Yisrael Beitenu leader Avigdor Lieberman, with his 15 seats, has declared that he will not rule anything out, but Meretz are absolutely committed to not sitting in a coalition with his party. Kadima, Labour and Yisrael Beitenu together have 56 seats, so they would still need at least one of the right-leaning religious parties to join the coalition to make up the numbers. It looks like an increasingly unlikely scenario.

Is there a chance of the two largest parties joining together in a government of national unity? With Israelis concerned about the threats that face the future stability and security of the country, this is by far the most popular option for the public. Together, Kadima and Likud have 55 seats. With the participation of any of Labour, Shas, or Yisrael Beitenu, the government would have a majority. There is a strong precedent for the two largest parties working together in Israeli politics. In particular, between 1984 and 1988, Labour and Likud, who each had around 40 seats in the Knesset, entered a power-sharing agreement where the role of prime minister was rotated after two years.

Kadima and Likud share an agenda which is focused on the broad national interest, rather than the specific sectoral demands typical of the smaller parties. On the diplomatic front, they agree on the need to isolate Hamas and other extremists in the Palestinian camp and continue to work with the moderates in the West Bank Palestinian Authority. They also agree on the primacy of Iran as a growing existential threat to the State of Israel, as well as the need to address the threat of the global economic crisis. The main factors which may prevent such a government, however, are the differences Likud has with Kadima on whether or not to continue substantial peace negotiations with the Palestinians and Syrians. Just as important as the policy differences is the clash of personalities among the party leaders, particularly the animosity between Livni and Netanyahu. However, both leaders have expressed their readiness to work with each other in a government of national unity. Given the challenges and internal contradictions facing any other coalition, this could yet turn out to be the most feasible option.

 

The challenges ahead

Whatever the make-up of the next Israeli government, the challenges that face it are considerable. After the last election in 2006, Ehud Olmert formed a government committed to continuing the process of withdrawing from most of the territories in order to consolidate Israel as a Jewish and democratic state within recognised borders. Hezbollah and Hamas, under Iran’s sponsorship, succeeded in derailing the ambitions of that government, by attacking Israel from territories it had previously vacated. They weakened the case in Israel for further withdrawals. Furthermore, the rise to power of Hamas in Gaza and the divisions within the Palestinian camp have made the two-state solution that most Israelis favour look increasingly difficult to achieve. All the main parties agree that there can be no long-term agreement with Hamas, so long as it seeks Israel’s destruction as its long-term goal. Whilst a renewed ceasefire with Hamas may be possible, there is a lack of consensus on how to deal with Hamas in the long term, and how to strengthen moderate Palestinians.

Equally serious threats lie over the horizon, including the ticking clock of Iran’s nuclear programme. The radical Islamist regime, committed to Israel’s destruction, is moving fast towards nuclear weapons capabilities. Whilst the EU and US are also committed to stopping Iran from acquiring nuclear weapons, the conjunction of nuclear weapons and sponsorship of terrorism which Iran represents is a much more immediate threat to Israel. In Israel’s favour is the fact that large sections of the Arab world feel as threatened by Iran and its radical alliance as Israel does. But leveraging this shared interest into a diplomatic force for change in region will be more difficult as long as the Palestinian question remains unanswered.

The most immediate challenge is economic. Among the government’s most pressing tasks will be to pass an overdue budget for 2009. If it fails to do so within 45 days of its formation, a new election will be triggered by law. With the global financial crisis lapping at Israel’s shores, Israel faces a potentially crippling budget deficit. Among the most immediate dilemmas facing the incoming administration will be how to build a budget and an economic policy that can withstand the economic storms ahead.