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What happened: The Likud and Blue and White have agreed to form an “emergency national unity government.” Benjamin Netanyahu will serve as prime minister for the first 18 months, after which Blue and White leader Benny Gantz, who will first serve as defence minister and deputy prime minister, will automatically rotate in to become prime minister.

• The government will initially have 32 ministers, divided equally between the Netanyahu-led and Gantz-led blocs. The Likud and its right-wing partners will receive the Finance, Health, Internal Security, Construction, Transportation and Education portfolios. Blue and White will receive the Defence, Foreign Affairs, Justice, Economy, Communications and Culture portfolios. The Knesset speaker will be a member of the Likud for the whole duration of the government. Blue and White member Gabi Ashkenazi  will serve as foreign minister for the first 18 months before being replaced by someone from Likud.
• The coalition is initially expected to include 72 MKs: Likud with 36 MKs, Shas with 9, United Torah Judaism (UTJ) with 7, and Orly Levy-Abekasis. Blue and White have 15 MKs, as well as Derech Eretz’s Zvi Hauser and Yoaz Hendel, and Labour’s Amir Peretz and Itzik Shmuli, for a total of 19 MKs.
• The rotation of prime minister will happen automatically, without requiring a separate vote or decision. Each man will be the other’s “acting prime minister.” An official residence will be provided for the acting prime minister.
• The government will focus almost exclusively on handling the coronavirus crisis for the first six months.  In that time, the sides will negotiate a broader legislative agenda and will also refrain from making major appointments, including the attorney general and police commissioner.
• The sides agreed that as of 1 July 2020, the government and/or the Knesset can vote on annexing parts of the West Bank, on the basis of the Trump plan.
• The Israeli ambassador to the US will be appointed by whoever is prime minister. Other senior ambassadorial positions, including the UK, will be appointed by Netanyahu and will not change when Gantz takes over.

Context: The new government will finally replace the caretaker government that has been in place since an election was called in December 2018.

• The coronavirus provided the crucial impetus for Benny Gantz to break his election promise to not sit with Netanyahu whilst under indictment. His decision last month to try and form a unity government with the Likud split his party, resulting in the 16 MKs of Yesh Atid-Telem remaining in the opposition.
• At the initial stage the coalition does not appear to include the right-wing Yamina party. The education ministry is currently being held for them, but its leader Naftali Bennett was hoping to remain defence minister with Ayelet Shaked looking to return to the Ministry of Justice. Instead, Avi Nissenkorn from Blue and White is tipped to be the next justice minister.
• This will be the largest government in Israel’s history, with an initial 32 ministers, rising to 36 after six months. It is the first time in 36 years that Israel will have a rotating prime minister.
• According to the agreement, the adoption of the Trump plan for Israeli-Palestinian peace will be done in coordination with the US. The joint US-Israel committee, set up following the release of the Trump plan in January 2020, is expected to complete their mapping of the West Bank soon. According to the agreement, they will also “engage in dialogue” with the international community “with the aim of preserving security and strategic interests including regional security, preserving existing peace agreements and working towards future peace agreements”.
• The ultra-Orthodox parties will keep their current portfolios, with Aryeh Deri of Shas holding the interior ministry, and Yaakov Litzman from UTJ, although much criticised for his handling of the coronavirus, remaining as health minister. In a significant victory for the ultra-Orthodox, the government (not the Knesset) will control the quotas for IDF conscription among ultra-Orthodox males. This was one the main issues that led to the breakup of the government in December 2018.
• Due to the lack of trust between both Likud and Blue and White, careful legal procedures have been put in place to ensure that were either side to dissolve the Knesset or not vote in favour of the state budget, the prime minister from the other party will assume office of a transitional government and only after six months would elections be held. Similarly, were the Supreme Court to disqualify Netanyahu from serving (due to the indictments he is facing) within the first six months, new elections will automatically be held.
• One of the major points of contention was over the make-up of the judges selection committee. A compromise was found whereby Zvi Hauser, a conservative minded MK and former cabinet secretary under Netanyahu, will be appointed to the panel instead of a seat customarily reserved for the opposition, giving the right-wing the potential power to veto an appointment. Although Hauser is against judicial activism, he has also been critical of attacks on the courts and is considered by Blue and White to be a defender of the court’s independence.

Looking ahead: The new government is expected to be sworn in only after Israel’s Independence Day at the end of next week. The Knesset is first expected to confirm the rotation agreement and enshrine it in legislation that also includes the newly formulated status of the alternate prime minister.

• Immediately following the announcement of the agreement, several petitions were submitted to the Supreme Court asking it to rule that Netanyahu cannot serve as prime minister because he is under indictment. The court has asked the state to respond to the petitions by Thursday afternoon, but refrained from issuing a temporary injunction. It is unlikely that the court will intervene over political agreements.