Australia / Israel Review

Amotz Asa-El

Back when it arrived unscheduled in December, many expected Israel’s 20th general election to focus on domestic issues.

Triggered by the finance minister’s dismissal and animated by a 6.5% climb in housing prices during the outgoing government’s brief incumbency, many braced for an election dominated by prices, budgets, welfare and jobs.

In practice, the economy has been elbowed aside by a diplomatic row in Washington over a proposed address to Congress by Israeli Prime Minister Binyamin “Bibi” Netanyahu.

The diplomatic affair is about an invitation Netanyahu received from House Speaker John Boehner to speak to a joint session of Congress about a possible deal between the P5+1 powers and Iran. Scheduled for March 3, two weeks before the March 17 election, the speech was immediately alleged to be an election ploy.

Worse, after he accepted the deal, it was alleged that Netanyahu did not properly inform the White House about his visit (though it has since been confirmed that the White House was made aware of the invitation before Netanyahu accepted it) thus creating the impression he was out to drive a wedge between President Barack Obama and the Congress.

The sense of crisis intensified when it was announced that Obama will not be meeting Netanyahu during his visit, and it then accelerated when 12 Democratic lawmakers said they would not attend the speech, as did Vice President Joe Biden, while American Jewish leaders called on Netanyahu to either postpone or relocate the speech.

Netanyahu’s main challenger, Labor (renamed the Zionist Camp after its merger with former Justice Minister Tzipi Livni’s small Hatnua party) leader Isaac “Buji” Herzog, charged the prime minister with damaging Israel’s most vital alliance for the sake of impressing the Israeli voter with an offshore speech.

The speech thus became a central campaign issue, with Netanyahu’s main ally, national-religious Bayit Yehudi Party leader Naftali Bennett, backing it, while Labor-ally Meretz appealed to Election Committee Chairman Justice Salim Joubran to define the speech as electioneering and ban its broadcast.

While the tone of this bickering creates the impression of a deep division, the fact is there is no substantive policy controversy behind it. All major parties agree that Iran’s nuclear program is a major threat to the Jewish state, that the P5+1 talks with Iran might produce a bad deal from Israel’s viewpoint, and that the alliance with Washington is Israel’s most precious geopolitical asset.

Rather, the speech issue is part of a broader effort to focus on Netanyahu’s conduct rather than on his policies, an attitude that has led the Prime Minister’s opponents to his household and his wife, Sarah.
Challenged by a former manager of the Prime Minister’s Residence for allegedly pocketing thousands of bottles’ worth of recycling refunds, the Israeli equivalent of a first lady produced a receipt for a NIS 4,000 payment (A$1,325.00) she had made in lieu of those cash refunds.

Attempts to turn the headlines over the issue into legal charges have so far not materialised. The same is true for other revelations about other assorted expenses reportedly charged to the government, from an annual NIS 10,000 (A$3,300) bill for pistachio ice cream to a NIS 20,000 (A$6,600) bill for a breakfast with then-US Defence Secretary Robert Gates and his entourage, and a State-Comptroller report about excessive maintenance expenses at the PM’s residences.

The electoral impact of all this has so far been negligible and even counterintuitive. When it emerged that the story about the bottles was being legally reviewed by the Attorney-General, Netanyahu actually rose in the polls while Herzog declined.

Even so, Netanyahu chose not to ignore the effort to focus the election on his household, and responded in two ways – one defensive, the other offensive.

On the defensive, Netanyahu asked the media and the politicians to leave his private life alone and keep his wife out of the fray. On the offensive, the Prime Minister charged media mogul Noni Moses, publisher of the mass-circulation daily Yediot Aharonot, with orchestrating a personal campaign against him.

That charge immediately became news in its own right, and for several days dominated political discourse.
In short, the election has come to be dominated by what outsiders would view as esoteric cockfights, the latest of which involves the Israel Prize for literature, with several judges at one point resigning from its panel, and several authors withdrawing their candidacies, charging that Netanyahu interfered in the process of nominating the winner.

The fact that such relatively marginal issues have come to be at the centre of the electoral contest reflects its lack, so far, of a big substantive issue – with the exception of the debate over the speech in Congress, which is also largely about personal conduct rather than national policy.
Yet this does not mean the issues aren’t there.

The economy is the main issue for one party which might emerge as a central member of any coalition – former Communications Minister Moshe Kahlon’s Kulanu (“All of Us”).

Having implemented, as Minister, a reform that slashed cell phone rates, the former Likud member promises to reduce housing prices by breaking monopolies in the construction industry, merging government agencies, introducing rent controls, and encouraging the construction of 250,000 new apartments via market mechanisms.

With polls predicting he will win up to a tenth of the electorate, Kahlon also promises to reduce food prices and bank commissions by intensifying competition in both industries.

Though his forecast electorate is sizeable, Kahlon seems to have already failed in his original hope to be considered a prime-ministerial contender. Despite recruiting several high-profile candidates, most notably former Ambassador to Washington Michael Oren and retired general Yoav Galant, Kahlon’s domestic issues focus for now seems mistimed.

Earlier this decade, after Israelis took to the streets in protest at the cost of living, an economic agenda looked like a political trump card. That is how the centrist Yair Lapid emerged as the last election’s big winner. Now, after Lapid’s stint as Finance Minister, the energy of the protest movement appears to have largely spent itself.

Moreover, though he lost his job before he could implement his plans for reducing housing prices, Lapid left the economy in reasonable shape. While GDP growth declined in 2014 from 3.2% to 2.6%, unemployment dropped from 6.2% to 5.9%, one of the world’s lowest rates; the budget deficit slid last year from 3.2% to 2.8% of GDP, even after the unexpected costs of the summer’s fighting in Gaza; and the trade deficit shrank by 37% to a negligible NIS 11.8 billion (A$3.9 billion).

In such an environment, the economy cannot decide the election. The best proof of this is Labor’s choice to field as its candidate for finance minister Prof. Manuel Trajtenberg, a Harvard-trained economist whose faith in low deficits and monetary discipline is unflinching. His views are anathema to the party’s diehard socialists, led by Herzog’s predecessor, Shelly Yachimovich.

Like the economy, the Palestinian conflict is also a relatively marginal issue, not because it isn’t on voters’ minds, but because the big parties realise that no matter what arguments they bring and what promises they make, chances are low they will sway voters to cross the Right-Left partition in either direction.

Where these issues do come up is in the debates within the large blocs, where satellites are seeking to lure voters away from Likud and Labor – most notably with Foreign Minister Avigdor Liberman’s Yisrael Beitenu demanding the defence portfolio and vowing to fight terror harder than Netanyahu. In the same vein, Bennett is demanding the Justice Ministry, through which he promises to influence the High Court’s composition and remove obstacles to further settlement in the West Bank.

Traffic is also slow within the two big blocs.

As the campaign entered the last of its three months, polls indicated that the balance of power was leaning toward Netanyahu – not because he has significantly broken clear from Labor, but because the no-man’s land between them has fragmented and narrowed.

Polls currently indicate that Lapid stands to lose roughly half the votes he collected last time around when he won an astonishing 19 seats, while Liberman, Meretz, and a new party formed by previous Shas leader Eli Yishai are all teetering on the brink of failing to meet the electoral threshold for representation in the Knesset, raised last year from 2% to 3.25%.

Bennett has also lost altitude since the beginning of the campaign, declining from a forecast 16 seats to 12, after he stunned many in his mostly observant party by trying to insert a secular and undereducated soccer legend into the party’s list of candidates.

Four weeks before the election, polls suggested Likud would get roughly 27 seats, four fewer than what it won two years ago when it ran on one ticket with Liberman, while Labor and Livni are predicted to garner some 25, four more than the combined votes they won when they ran separately in 2013, with most of their added votes siphoned off from Meretz and Lapid’s Yesh Atid party.

What this means is that, despite the sense of momentum their alliance initially generated, Herzog and Livni appear unlikely to be in a position to form a governing coalition. A clear indication of this came when Liberman said he would not join a Labor-led coalition, as did Aryeh Deri, leader of the ultra-Orthodox Shas faction, which is forecast to win about 5% of the vote.

Labor’s only arithmetical chance appears to lie in the possibility that Kahlon will snatch from Likud several more seats than polls currently suggest. With Kahlon and Lapid relatively easy for them to harness, and with Meretz anyhow part of Labor’s orbit, Herzog could then theoretically complete a coalition with the two ultra-Orthodox parties. Yet that would require straightjacketing together ultra-secular Meretz and ultra-Orthodox United Torah Judaism, in addition to making Shas renege on its vow to join Likud.

It follows, then, that Netanyahu will most likely emerge from this election a fourth-time prime minister, but probably with a rather different coalition – one that would include Kahlon, Bennett, Liberman and the ultra-Orthodox parties while leaving Lapid to languish in the opposition.

This is Netanyahu’s best-case scenario. However, this too might prove unattainable, especially if Liberman fails to reach the electoral threshold. If so, forcing the liberal secularist Lapid and the ultra-Orthodox parties into one coalition, as such a constellation would then require, looks as impractical as coupling them with Meretz.

That is why many believe that this election will end up producing a Likud-Labor “national unity” coalition, likely flanked by the ultra-Orthodox and Kahlon, and leaving out Bennett and Lapid.

In such a coalition, Likud and Labor may pass electoral reforms that will give voters strengthened incentives to vote for the two large parties rather than for their satellites, for instance by introducing legislation that will require the President to automatically crown the leader of the single largest party as prime minister.

In such a unity coalition, the Treasury might go to Kahlon and the Foreign Ministry to Herzog, while Likud’s Moshe Ya’alon could retain Defence. Kahlon and Herzog would be agreeable to Netanyahu in these roles. Moreover, Kahlon would be welcomed by the financial markets, while the pragmatic Herzog would be welcomed by Europe, Israel’s neighbours, and by both sides of the Congressional aisle in Washington – not to mention by the US President.