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Key Points

• The elections and subsequent coalition negotiations have produced a broad coalition bringing together centre-left, centre-right and right-wing forces, but significant contradictions between the partners remain.

• Bringing Labour into the government represents a significant achievement for Netanyahu, who wished to avoid the scenario of a narrow right-wing and religious coalition. Labour chose to join because of the need for national unity at a crucial strategic moment for Israel, because of the considerable concessions Netanyahu made to bring it in, and because of Labour’s historic tendency to see itself as a party of the establishment and of national leadership. There had long been talk of a Likud-Labour plan to come together in government and force out Kadima.

• On the diplomatic process, three of the main partners – Labour, Yisrael Beiteinu and Shas – have clearly differing positions. The formula reached in the government guidelines of committing to previous agreements signed by Israel in the peace process will be sufficient for all parties to sign. But it is possible to conceive of many situations in which sharply differing outlooks will cause friction. In other areas, including religious-secular relations and economic matters, there are also clear fault-lines among the members of the new coalition.

Introduction

The elections for the eighteenth Knesset produced an anomalous situation. Kadima, led by Tzipi Livni, emerged as the largest single party, winning 28 seats. Binyamin Netanyahu’s Likud, which had been expected to emerge victorious, came in second with 27 seats. In previous elections, the leader of the largest party had always been the first to be invited by the president to form a government. On this occasion, however, the larger right-wing bloc achieved a combined total of more than 60 seats in the 120 member Knesset, while the left wing bloc did not. For this reason, Netanyahu was offered the chance to form a government. 

After a difficult and protracted negotiation process, the new Israeli government will include Avigdor Lieberman’s Yisrael Beiteinu (Israel is our Home) (15), Labour (13), the Sephardi religious Shas (11) and the national religious Habayit Hayehudi (Jewish Home) (3). When added to the Likud’s 27 seats, this constitutes a 69 seat Knesset majority. This analysis will look at the key elements of the new government platform, and how stable the emerging coalition is likely to be. 

Initial coalition negotiations

The first question in the coalition building process was whether Netanyahu would succeed in bringing in Kadima in. The Likud leader made clear his interest in building as broad a coalition as possible. With potential confrontation with Iran looming, there is an obvious need for the greatest level of unity among political forces. Also, if a narrow right-wing government were to be formed, this raised the unappealing prospect for Netanyahu of being caught between rightist coalition partners and a US Administration committed to Israeli concessions in the peace process. The key issues which prevented Kadima’s entry were a failure to agree on the rotation of the prime ministership between Netanyahu and Livni, and a failure to reach agreement over the issue of the government’s commitment to a two-state solution.

In the course of the first month’s negotiations, Netanyahu succeeded in obtaining a firm commitment to join the government from one party only – the Yisrael Beiteinu list led by former Likud Director-General Avigdor Lieberman. The agreement they reached on March 17 promised to make Lieberman foreign minister, and grant Yisrael Beiteinu an additional four ministerial portfolios – Public Security, Immigrant Absorption, Tourism and National Infrastructure. 

Other than pledging to bring down Hamas rule in Gaza, the agreement does not commit the government to other aspects of Yisrael Beiteinu’s program. Specifically, the agreement contains no reference to Lieberman’s controversial ‘no loyalty – no citizenship’ proposal. Nevertheless, Netanyahu has committed to revoking social services and pension rights of any individual convicted of espionage or believed to be a terror operative.[i]

However, the agreement does address Yisrael Beiteinu’s secularization program. The agreement will establish a committee to formulate a proposal for legislation on civil marriage. The agreement also commits the government to loosen regulations on conversion to Judaism, by allowing the heads of local rabbinical authorities to regulate conversions in their own locality. These issues are important to Yisrael Beitenu’s Russian immigrant support base, many of whom face difficulties because they are not recognized as Jewish by Rabbinic authorities.

The agreement with Yisrael Beiteinu was the first firm achievement of the coalition negotiations. On March 23, the Ultra-Orthodox Shas party also committed to joining the coalition, in return for the Housing and Construction and Religious Services ministries and an additional minister without portfolio. They also reportedly received commitments from Netanyahu to put extra cash into child-welfare payments, an important issue for Shas voters.

Agreement with Labour

Though at this point, reaching his deadline to present his government, Netanyahu had the option of trying to make up a majority by bringing in the smaller right wing and religious parties, instead he asked for and was granted a two week extension. The extension produced the unexpected result of a crucial agreement between Likud and Labour. The agreement was met with opposition from within Labour, but the party’s central committee approved it. Labour’s entry into the government transforms the nature of the emerging coalition. From a rightist coalition in which the Likud would have formed the leftward edge, Netanyahu will now lead a coalition in which Likud occupies the centre ground – a far preferable situation for the leader.

However, Labour leader Ehud Barak, aware of Netanyahu’s strong desire to bring Labour in, has carved out an impressive deal for his party. Histadrut leader Ofer Eini played a crucial role behind the scenes in ensuring internal Labour support for the agreement. The agreement itself reflects the involvement of the Histadrut (Trade Unions) head and his concerns. Thus, all economic decisions will first be brought for debate at a round table forum that will be attended by representatives of the government, the Histadrut and the Manufacturers Association. In addition, unemployment benefits and old age allowances will be increased.[ii] The agreement with Labour also promises the party four ministerial portfolios – Defence, Industry and Trade, Agriculture and Social Affairs.  In addition, the party will receive two deputy ministerships and the chairmanship of the Knesset Foreign Affairs and Defence Committee for one-third of the coalition’s term. In terms of foreign policy stances, the Defence Minister will be a member of the inner security cabinet and the government will be committed to all previous signed agreements in the peace process.

The decision by Labour to join the government gave the coalition a Knesset majority of 66. Then, on March 25, the national religious Habayit Hayehudi joined the coalition, adding a further three MKs.

Why did Labour choose to join the coalition?

There was fierce debate within Labour over joining the coalition. On the one hand, some Labour activists believe that the party should spend a period in opposition, in which it could develop a clear identity as a social-democratic party, standing for an alternative socio-economic vision relevant to the current difficult economic period. Clearly, this argument was not sufficient to persuade the Labour’s Central Committee.

A number of factors should be borne in mind in explaining Labour’s decision. Firstly, Labour leader Ehud Barak and those around him believe that Israel is currently in a situation of strategic vulnerability, given the advancement of the Iranian nuclear program.  In such a situation, a broad coalition is of national importance. Secondly, related to this issue is the Israeli Labour Party’s long-standing self-image as a party of the establishment, for whom involvement in decision-making and national responsibilities are of cardinal importance. The Israeli Labour Party developed as a party of government, holding uninterrupted power in the period 1948-77. Because of this core identity in the party, arguments relating to national responsibility will always have particular purchase. Thirdly, there are hopes in Labour that their centrist rivals Kadima will not survive a period out of government. Many in Labour believe that Kadima is an improvised party, lacking a clear direction, that will wither in opposition. Barak was in consultation with Netanyahu even before the elections about forming a coalition that would leave Kadima out in the cold. Fourthly, Labour’s decision suggests that the party’s leadership believe that PM-designate Netanyahu stands for a centrist position with which they can work in the present climate. It is also based on a calculation that Avigdor Lieberman is likely to be more pragmatic in government than his fierce rhetoric would suggest. The coalition agreement between Labour and Likud includes acceptance of all prior agreements in the peace process. This presumably includes the Roadmap, which sets out steps towards the creation of a Palestinian state.[iii]  

The government’s platform and potential sources of friction

While Netanyahu has succeeded in building a workable coalition, there are clear obstacles ahead in terms of keeping the coalition together. On the diplomatic process, three of the main partners – Labour, Yisrael Beiteinu and Shas – have differing positions.  The formula of committing to previous agreements in the government guidelines will be sufficient for all parties to sign. But it is possible to conceive of many situations in which the sharply differing outlooks of Labour on the one side and Shas and Yisrael Beiteinu on the other will cause friction. This will be the case particularly if the US Administration takes a pro-active approach on the process, exerting pressure on Israel to make concessions in the peace process.

A second potential source of division in the new Cabinet will be on religious-secular matters. Yisrael Beiteinu and Shas differ sharply on the role of religion in public life in Israel, with the former taking a firmly secular stance.

A third element of friction may be over economic policy. Netanyahu’s desire to keep a tight hold of the Finance Ministry, and to keep a tight reign on spending, may cause friction with Labour or with smaller coalition partners seeking funding for the sectoral or social interests that they represent.   

A fourth element which may lead to discontent in the new coalition is the anger within the Likud itself at the high price paid by Netanyahu in ensuring the support of Labour and Yisrael Beiteinu. This has resulted in a dearth of remaining Cabinet positions to be offered to senior Likud figures. Former Finance Minister Silvan Shalom, who controls a powerful bloc within the Likud, is understood to be furious at the failure to offer him a senior post. Shalom is insisting on the finance ministry and the deputy prime ministership. Ten Likud MKs are understood to have expected to be awarded ministerial portfolios and  some are now certain to be disappointed. Despite the fact that with 30 ministers, this will be one of the largest Cabinets in Israel’s history, only six ministerial portfolios now remain to be allocated.[iv] There is a distinct possibility of discontented Likud MKs making life difficult for Netanyahu in the Knesset and Cabinet further down the line.[v]

Conclusion

Yesterday’s editorial in the Hebrew language daily Maariv newspaper noted that, “The nation wanted the centre, and the nation received the centre.”  The emerging guidelines of the new government will accurately reflect the prevailing view among the Israeli centre ground, by defining a cautious yet pragmatic attitude to the diplomatic process, and a focus on the Iranian danger. The special circumstances in which Labour joined the coalition mean that the social democratic concerns of Histadrut leader Ofer Eini and his followers within Labour will have considerable influence in the new coalition.

The paradox, of course, is that a government of the centre will not include Israel’s self-proclaimed party of the centre, the Kadima party. Rather, Kadima leader Tzipi Livni will head the opposition. Livni’s position as Kadima leader seems secure thanks to her success in delivering the largest number of Knesset seats to her party, and there seems little prospect of a split in the near future.

The elections and subsequent coalition negotiations have thus produced a broad coalition bringing together centre-left, centre-right and right-wing forces. Potential cracks which have been smoothed over by vague wording in the government guidelines may surface as the new coalition tries to govern. Nevertheless, Netanyahu’s success in bringing Labour into the coalition avoids the scenario he sought desperately to avoid, of a narrow, right-wing and religious coalition.

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[i]  Sadie Goldman, “Netanyahu stuck between backroom deals,” Israel Policy Forum, March 19.  http://www.israelpolicyforum.org

[ii] Mazal Mualem, “Likud, Barak draft economic plan as part of coalition deal,” Haaretz, March 24. http://www.haaretz.com

[iii] Jeffrey Heller, “Netanyahu enlists Labour Party into Israeli governing coalition,”  Reuters, March 24. http://www.haaretz.com

[iv] Gil Hoffman, “The expected Netanyahu Cabinet,” Jerusalem Post, March 30.  http://www.jpost.com

[v]  Gil Hoffman, “Shalom supporters in Likud to declare war on Netanyahu,” Jerusalem Post, March 30.  http://www.jpost.com