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The current state of coalition negotiations

The first deadline for Likud leader Benjamin Netanyahu to put together a government is set to expire, but the end is not yet in sight. He has so far initialled an agreement only with Avigdor Lieberman’s Yisrael Beitenu party. His most likely route to a coalition remains in bringing in the right-leaning parties: the Sephardi religious Shas, the ultra-orthodox United Torah Judaism, the national religious Jewish Home, and possibly also the ultra-nationalist National Union. However, he has yet to fix terms with any of them. Netanyahu has the option of asking President Shimon Peres for extensions of anything up to a total of two weeks to finish the job, and it appears that he will likely request this. Given that no other candidate has a chance to form a coalition, Peres is likely to give him all the time he needs, since the only alternative is new elections.

In the meantime, back channel discussions are ongoing between Likud representatives and Tzipi Livni’s centrist Kadima party, as well as the left-of-centre Labour party under Ehud Barak. It remains in Netanyahu’s interest to try to keep as many options on the table for as long as possible. He maintains his leverage in negotiations with the smaller parties by keeping alive the possibility that he could abandon them and form a centrist national unity coalition instead. So far, there is still a real possibility that Barak may enter the governing coalition, though most of his party is opposed to this and it is conceivable that such a move could lead to the party officially splitting. Livni has shown no signs of budging from her position that the government guidelines must include a commitment to a two-state solution, and she also desires that the position of prime minister rotate between her and Netanyahu, which Netanyahu is so far unwilling to accept.

If Netanyahu does form a coalition with the right-leaning parties, his Likud party with 27 Knesset seats will be the undisputed leader of the coalition. Netanyahu tried to appeal to the centre ground in his election campaign, promoting his own personality and experience as the right man to meet Israel’s major challenges in the fields of security and the economy. He has promised a plan to meet the challenge of the global financial crisis and it is a clear statement of his priorities that he plans to keep the finance portfolio for himself. Another important policy he has outlined is his plan to work with moderate Palestinians to promote economic progress in the West Bank, but without the final status talks which his predecessor engaged in. At the same time, he has made clear his intention to avoid any compromise with Hamas.

From his Likud list, Netanyahu has indicated that he would like former IDF chief of staff Moshe Ya’alon as defence minister, while Gideon Sa’ar, a popular figure among Likud rank and file, may enter government for the first time as education minister. Yet Netanyahu is postponing firm decisions about the division of ministerial roles among his party colleagues in order to keep maximum flexibility in his talks with other parties. There is also speculation that former minister and law professor Yaakov Neeman will be brought in from outside the Knesset to take up the role of justice minister.

With 15 Knesset seats and five ministers in the government, Avigdor Lieberman’s Yisrael Beitenu looks set to be the number two player. Lieberman picked up votes during the election with tough rhetoric which was perceived to be challenging the loyalty of Israel’s Arab politicians and electorate – though in fact this was directed at all Israelis, including the ultra-orthodox, with Lieberman and many in his secular constituency questioning their loyalty to the state. It was a campaign that drew criticism both domestically and internationally. But in his previous spells in government, including as minister for strategic affairs in 2007, he proved a calmer and more responsible political player than when in opposition. The proposal to link voting rights to loyalty pledges was always more campaign rhetoric than serious policy proposal, and it is suspected that it has not found its way into the outlined government programme agreed between the parties. However, a proposal promoted by the party to introduce a form of civil partnership for Israelis without a religious affiliation will be carried forward, as will proposals to make conversion to Judaism easier. Both of these issues are of importance to Lieberman’s constituency, which includes many Russian immigrants who have Jewish ancestry but are not considered Jewish by the Rabbinate. Under the agreement between the parties, Yisrael Beitenu MK Yitzhak Aharonovitch is due to become internal security minister. The party will also receive the tourism, infrastructure and immigrant absorption portfolios.

With 11 Knesset seats, Shas are the next party that Netanyahu need to bring in. In a right-wing coalition, they would hold four ministerial positions. Historically flexible on issues relating to the peace process, their main priority will remain welfare and educational services which benefit their largely Sephardi religious constituency. A potential flashpoint within the government will be the conflict of interests between the religious Shas and the staunchly secular Yisrael Beitenu. There are also apparent objections from United Torah Judaism to Shas’s desire to have a representative as a deputy minister in the education department.

With five seats, the Ashkenazi ultra-orthodox United Torah Judaism is the next of the right-leaning parties that Netanyahu is seeking to bring in. Like Shas, they would be preoccupied primarily with the social affairs of their sector. They do not seek ministerial portfolios, but will ask for deputy ministerial positions and the chairmanship of the powerful Knesset Finance Committee.

With three seats, Jewish Home represents religious Zionists, including many of the settlers. They will be opposed to restrictions which halt the growth of settlements or threaten their dismantlement or security. Having performed badly in the elections, the party is troubled by internal differences about who will represent them in the Knesset and the government. Jewish Home Chairman Daniel Hershkowitz is refusing to accept demands from party members to resign from the Knesset to make room for popular parliamentarian Nissan Slomiansky.[1]

These parties together would make a coalition of 61, uncomfortably thin for Netanyahu. The majority would be healthier with the inclusion of the ultra-nationalist National Union. But they are the most hard-line grouping in the Knesset when it comes to the question of settlements in the West Bank and the peace process, and would limit Netanyahu’s policy options even further.

 

The prospects for the government

Having failed to achieve a decisive victory in the elections, and with many Israelis still harbouring bad memories of his last time as prime minister, Netanyahu will not have a honeymoon period. He will be leading Israel in a time of considerable economic and security challenges, with a coalition which has considerable structural instability.

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, a new election will be triggered by law. With the global financial crisis lapping at Israel’s shores, the country faces rapidly rising unemployment and 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.

On the security front, Israel is locked in a deeply uncomfortable standoff with the Hamas-run Gaza Strip. The international community are keen to find mechanisms to bring about Gaza’s reconstruction, but moderate Arab states, the international community, the Fatah-led PA and Israel fear could this could strengthen Hamas. The government will face tough decisions about how to handle this dilemma, which will become more acute if Palestinians agree on a unity government, with Hamas still refusing to recognise Israel and renounce violence. Netanyahu will also have to set a diplomatic course that can sit with his right-wing coalition partners and be squared with a US government that is keen to show it has a more determined approach to promoting the peace process. Equally serious threats lie over the horizon, including the ticking clock of Iran’s nuclear programme, which Israel and the international community are determined to see stopped.

The delicate internal dynamics of the coalition will also force the prime minister to conduct a constant political balancing act. The interests of his main coalition partner, the staunchly secular Yisrael Beitenu, are likely to conflict with those of the smaller religious parties. The religious parties’ interests in pouring money into welfare provision for their constituents is not likely to sit well with the prime minister’s preference to cut back spending. Netanyahu will try to keep his coalition partners in line by keeping alive the possibility that he could – if they make his life too difficult – reform the coalition around a more centrist axis with Kadima and/or Labour.

 

The Opposition

If Netanyahu does form a government with the right-wing parties, Israel will face the unusual situation of having the largest party in the opposition. Whilst she was unable to become prime minister, Livni will still be buoyed by her success in the elections, and will use her place in opposition to brand herself as the natural alternative to the current government. She has already staked out her territory, making clear that she sees herself as the next prime minister and refusing to enter a coalition with Netanyahu because he will not explicitly endorse the two-state solution. She will bank on the government foundering on its internal differences, and the pressure it will face internationally to adopt a more open stance towards the peace process. If his coalition with the right-wing parties falls apart, she will be ready either to mount a challenge to the government in a new set of elections, or to enter a national unity partnership government with Netanyahu on her terms. There is some scepticism about whether Livni would allow the government to collapse, as she has indicated that she may support the government even from the opposition if it moves forward with diplomatic steps towards a two-state solution.

Her main challenge will be to keep her faction united in opposition. Many of her party list come originally from the Likud, and could be susceptible to changing loyalties back to their former party. Israeli politics have a long history of party splits and realignments in the course of a Knesset period, such as when Ariel Sharon split the Likud to form Kadima. Given the overlaps and haziness about the ideological positions of the major parties and their members at present, similar such splits and realignments cannot be ruled out as events force the politicians to make choices.

Perhaps the party facing the biggest identity crisis is the beleaguered Labour party. If Barak takes the party into the coalition, there is a distinct possibility that the party could split. Assuming that they stay out of the government, the party must somehow reinvent itself, and find a new role and relevance in Israeli politics from the opposition benches. A leadership challenge to Ehud Barak seems likely at some point.

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[1] Gil Hoffman, ‘Habayit Hayehudi could split over ministry’, Jerusalem Post, 18 March 2009. www.jpost.com