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What happened: Negotiations continued throughout the night in an effort to reach an agreement to form a new government.

• Yair Lapid, who has the mandate to form the government, has been in intense negotiations with  Naftali Bennett from Yamina, in an effort to appoint Bennett as prime minister first in a rotation agreement, while Lapid will serve as foreign minister.
• In addition, Lapid is also still looking to close a deal with Gideon Saar the leader of New Hope who is looking to be appointed justice minister and Benny Gantz of Blue and White who is keen to retain his role as defence minister.
• Speaking earlier this week Naftali Bennett said he would do everything within his power to form a government with Lapid in order to save the country from turmoil and put it back on track. He said that Lapid had shown generosity and leadership, and even though they disagreed on some core issues, they shared a love of the country and willingness to act on its behalf.
• The sides appear focused on finding appropriate portfolios that will satisfy all the coalition partners.  It is understood that most of the senior government roles have been agreed, with several issues outstanding (see context).
• In an effort to block the formation of a new government the Likud has appealed to Knesset and presidential legal advisers to ascertain the legality of Lapid (with the mandate) transferring it to a second candidate – Bennett.  The President’s legal adviser responded this morning, that Lapid serving as alternate prime minister would be legal.

Context: The potential coalition agreement was revived on Sunday, after Naftali Bennett convened his Yamina faction, who agreed to pursue an agreement with Yesh Atid in order to avoid a fifth election.

• Yamina won seven seats in the election, however one MK – Amichai Chikli, has already refused to join, leaving the faction with six votes.  Crucially, Ayelet Shaked, the party’s number two now supports the deal, even though she had expressed preference to be part of a right wing government.
• Lapid has been prepared to allow Bennett to serve first as prime minister to enable both right wing parties –  Yamina and New Hope to join a coalition with left wing and centrist parties.
• Lapid has already signed three coalition agreements with Yisrael Beiteinu, Meretz and Labour.  The focus is close deals with Yamina, New Hope and Blue & White, which would give them 57 seats, close but still no majority.
• The three agreements already signed leave a range of issues among the other potential partners, that need to be resolved in order to finalise any agreement. Some of the issues include:
  • Shaked is demanding the second government place on the Judges Selection Committee that has been assigned to Merav Michaeli, the leader of the Labour party (the other government representative on the committee goes to the justice minister, who is expected to be Gideon Saar).
  • Yisrael Beteinu leader Avigdor Lieberman is expected to be appointed finance minister.  Some potential partners are concerned his party has also been given the chair of the Knesset’s Finance Committee, giving him too much control of the government’s budget.
  • There is also competition between Yisrael Beiteinu and Blue & White over which party can hold the ministry of agriculture. There are similar disagreements over other ministries including communications and development for the Negev and Galil.
  • Labour are looking to appoint MK Gilad Kariv, a Reform rabbi, as minister for diaspora affairs, this could be controversial for religious orthodox partners.
• One issue that appears to have been resolved; Meir Cohen from Yesh Atid is expected to serve as Speaker of the Knesset for the duration and not be included in the rotation agreement.
• To reach 61 seats they will need to agree an additional agreement with Raam, the Islamic – United Arab List, which will support the government from outside with a confidence-and-supply  voting agreement.
• Overall the new government, if it does get formed, is expected to focus on consensus issues; passing a budget, rehabilitating the economy post coronavirus pandemic and healing the rifts within Israeli society.

Looking ahead: The deadline to inform the president that a government can be formed is midnight Wednesday night.   Though Lapid hope to be able to make an announcement later today.

• Following the announcement, they then have seven days to present the coalition for a vote in the Knesset.
• The timing of the vote is at the discretion of the current speaker Yariv Levin from Likud, he could delay this vote to allow more pressure to be exerted on the MKs from Yamina and New Hope not to join the government.