BICOM Analysis: Where are Israel’s coalition talks headed?

Key Points

  • Kadima and Labour have signed a coalition agreement following a weekend of substantial progress in negotiations.
  • Whilst the agreement falls short of Labour’s demands, which envisaged a dual leadership, Labour Party chief Ehud Barak will have an enhanced role in future peace talks with Syria and the Palestinians. He will be afforded greater formal influence in cabinet under the title of Senior Deputy Prime Minister (there are numerous deputy/vice prime ministers in Israel but Barak will be the second most senior minister after Livni).
  • Labour is particularly concerned to have the authority to curb the powers of Israeli Justice Minister Daniel Friedmann. Friedmann views the Supreme Court as having too intrusive a role in Israeli society. Whilst Labour will not get a representative on the committee for judicial appointments, proposed changes to the legal system will require the party’s consent in the new government.
  • Labour’s initial demand for increased public spending to the tune of 2.5% of the 2009 state budget as a condition for joining the coalition has not been met. Instead, the budget will be restructured with more generous provisions for pensioners and university students.
  • The Kadima-Labour deal is a crucial stepping stone towards finalising the coalition, but Livni still needs to agree terms, probably with at least two other Knesset factions, in order to successfully form a new government.


Since winning leadership of the Kadima party on 18 September, Tzipi Livni’s immediate political concern has been assembling a new governing coalition that would enable her to replace Ehud Olmert as Israel’s prime minister.  Livni was initially willing to explore all options, including that of a National Unity government with Likud and Labour.  However, Likud leader Benjamin Netanyahu flatly rejected any prospect of Likud joining the new government, which effectively means that Labour’s participation is crucial for early general elections to be avoided.

At present, Livni has until 20 October to form a new coalition, though the president can, and probably would grant an additional fortnight if she cannot do so within the initial 28 days allocated, taking the deadline to 3 November.  However Livni would probably like to have the coalition in place before the Knesset returns for its winter session on 27 October. Shoring up Labour’s support enables Livni to enter the final phase of negotiations with other parties.  The most likely scenario remains that Livni’s government, if she forms one, will be similar or identical to the existing 67 seat coalition, which comprises Kadima (29), Labour (19), the ultra-orthodox Shas Party (12) and the Pensioners, now split into two factions (seven).  Another possibility is a coalition including the secular leftist Meretz faction, which has five seats, though that could lead to a narrower majority in the Knesset and a less stable administration.[i]  This brief outlines the shape of the Kadima-Labour deal and looks ahead to possible scenarios for the final phase of coalition-building.

The Kadima-Labour coalition pact

Negotiations between Kadima and Labour have been the focus of coalition talks since Tzipi Livni won the Kadima primaries.  They have proceeded in a somewhat stop-start fashion, with several scheduled meetings being cancelled by Labour negotiators at the last minute.  Talks have been conducted for the most part cordially, though Barak’s team criticised Livni for failing to posit serious proposals, whilst Kadima accused Barak of naked political gamesmanship.  For instance, the Labour leader’s choice of meeting first with Likud rival Benjamin Netanyahu, before sitting down with Livni, signalled his desire to play hardball in the ensuing coalition talks.

Neither Livni nor Barak are in as powerful a position as they would have hoped.  Livni secured the Kadima chairmanship by a much narrower margin than predicted.  Barak is performing poorly in political polls, indicating that Labour might fare catastrophically were elections to be held now.  However, as one columnist put it, “[w]ithout Barak there is no government”,[ii] so to a large extent the two are mutually dependent at present.

In light of this political reality, the parties have negotiated on two levels: first, through direct discussions between Livni and Barak, and second, between senior negotiators appointed by each.[iii]  This has suited the issues being deliberated, which range from broad understandings about how the business of government ought to be conducted to the more detailed substance of security and economic policy.

Livni took the initiative by offering Barak “full partnership” in her administration, which Barak subsequently interpreted when speaking to supporters as “everything that there was in the national-unity governments of the 1980s except for a rotation at the Prime Minister’s Office.”[iv]  Yet whilst Livni is keen to mark a shift from Ehud Olmert’s style of government by introducing greater transparency and accountability into Israeli politics, she is not willing to give Barak a free hand.  Barak will continue to serve as Defence Minister and will also become Senior Deputy Prime Minister.  He will obtain a consultative role in the government’s agenda and a genuine hand in diplomatic developments with the Palestinians and Syrians.  However, Barak will not be permitted a veto over matters beyond his security remit or overall control of the Turkish-mediated peace talks with Damascus, as he previously demanded.

The coalition deal contains understandings on at least two other matters about which Barak and Livni have been at odds in recent weeks.[v]  The first concerns Labour’s influence in the legal system.  Justice Minister Daniel Friedmann has tried to introduce legislative reforms to weaken the powers of the Supreme Court and the attorney-general.  His attempts have largely been blocked by Labour, but Barak is concerned about Friedmann’s political agenda. As such, Barak has been using his leverage in the coalition talks to try to rein in the justice minister.[vi]  His demand for a Labour representative on the committee for judicial appointments has been turned down.  Whilst Livni’s voting pattern in Olmert’s cabinet indicates that she agrees with Labour’s opposition to such reforms, her assessment about the extent to which Friedmann is a political asset or liability may factor into her thinking as much as her ideological sympathies.  This in turn influences how easily a mechanism for curbing the justice minister’s powers can be agreed between the parties.  The coalition agreement contains mutually acceptable language for doing so in principle, in a clause which indicates that changes to the legal system will require Labour’s consent.  I! n practice, this issue may prove to be a real source of friction for the government in coming months.

The second matter has through force of external circumstances been diluted to some extent.  Since the coalition talks began, Labour has been demanding changes to the 2009 state budget, which was only recently approved by the cabinet.  Labour’s amendments essentially amounted to a 2.5% increase in defence spending, benefits for pensioners, and more money for education.  However, the global financial crisis has inevitably led to ongoing reassessments of Israel’s domestic economic forecast.  Barak is taking care to present his number one priority as economic stability in the face of new uncertainties.  This may have influenced his thinking in dropping demands for expenditure hikes for the time being, but the coalition deal does contain provisions for restructuring the budget to account for some of Labour’s social welfare agenda.

Towards a new government

Whilst an agreement for Labour’s entry into the coalition is essential for Tzipi Livni to have any chance of forming a government, rounding off the new administration will still not be straightforward for the prime minister-designate.

The party being most closely observed is the ultra-orthodox Shas faction, which has tended to wield disproportionate power in modern Israeli politics through its ability to hang coalitions on a knife-edge.  Shas has been demanding budgetary concessions as a core clause of its participation in the government, though unlike Labour, it is less amenable to show flexibility on this issue in light of new economic conditions.  Indeed, Shas chair and Minister of Trade, Industry and Labour Eli Yishai stated his view that the global credit crisis actually clarifies the need for greater help for the most vulnerable.[vii]  His primary aim is to secure a child allowance formula which assists ultra-orthodox Jews with large families, and whilst Shas might concede on the format of this initiative, the party will still need to be induced through an economic mechanism of some kind.  Furthermore, Shas has reiterated its red lines vis-à-vis talks with the Palestinians by trying! to secure guarantees from Livni that she will not negotiate the future status of Jerusalem.

Ultimately, Shas could find itself in a position where it must choose whether or not to maintain influence within a government which might, in theory, be formed without them by a narrow margin.  If Livni can secure support in principle from other smaller parties, including the leftist Meretz faction (five seats), and the Pensioner’s Party (two factions totalling seven seats), she will have greater bargaining power against Shas.  But despite Labour’s commitment to the coalition, Barak has expressed reservations about how the coalition might look without Shas.  He would rather not serve in a narrow coalition and said on Sunday that the key challenge now was to establish an administration “that was not a minority government in a partnership that was not short term.”[viii]  Kadima representatives will continue to try to conduct simultaneous talks with all parties until a workable formula for government is reached.


Labour’s agreement to join a coalition led by Tzipi Livni will provide the lifeline required by the new Kadima chair to form a new government over which she will preside as prime minister.  However, Israeli governments are invariably characterised by fragility.  A Livni coalition on the back of Prime Minister Ehud Olmert’s mid-term resignation could be especially so.  This is due both to the size of the majority she seems likely to secure and because general elections must be held in Israel by 2010.  There will be pressure, especially from the opposition Likud party, to hold them sooner.

Livni’s priority now is to wrap up the remaining coalition negotiations as quickly as possible so that she can return to the business of government.  Her subsequent aim will be to garner legitimacy for her premiership in the eyes of the Israeli public.  She hopes to achieve this, in part, by drawing on the excellent diplomatic relations she made as foreign minister to deal with key security challenges, including Iran’s nuclear ambitions, Palestinian statehood, and peace talks with Syria.



[i] ‘Livni invited to form government’, BBC News, 22 September 2008.

[ii] Yossi Verter, ‘Not an easy customer’, Haaretz, 12 October 2008; IBA Television News, 12 October 2008.

[iii] The senior Labour negotiators include former coalition chairman Efi Oshaya and Histadrut (trade union federation) chief Ofer Eini.  Kadima is represented by former cabinet secretary Yisrael Maimon and attorney Yoram Raved.

[iv] See Yossi Verter, Mazal Mualem and Barak Ravid, ‘Livni offers Barak ‘full partnership’ in coalition’, Haaretz, 22 September 2008; Gil Hofman, ‘Kadima-Labor talks fly, then falter’, Jerusalem Post, 26 September 2008.

[v] ‘Real progress in Kadima-Labor talks’, Jerusalem Post, 12 October 2008.

[vi] According to Haaretz, in coalition talks with Livni, Barak stated: “Look, I’d be very uncomfortable declaring my confidence in the Knesset as a minister in your government alongside Daniel Friedmann…I’m not demanding that you fire Friedmann, but find a way to work it out” (Yossi Verter, ‘Not an easy customer’, Haaretz, 12 October 2008).

[vii] ‘Crisis pushes Barak, Livni together’, The Marker, 7 October 2008.

[viii] Mazal Mualem, ‘Labor Party, Kadima close to signing coalition agreement’, Haaretz, 13 October 2008.

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