Australia / Israel Review

Israel’s narrow and constrained new government

Amotz Asa-El

Having surprised everyone with a decisive electoral victory in March, Binyamin Netanyahu seemed to have all but lost its fruits by May.

In what will surely be recalled as one of the most unpredicted moves in the history of Israeli politics, Netanyahu’s former aide and longtime ally Avigdor Lieberman announced out of the blue on May 4 that his coalition negotiation with Netanyahu had failed, that he was resigning immediately as foreign minister, and that he and his faction were heading to the opposition.

Lieberman emerged from the last election with a mere six lawmakers, or 5% of the national vote. However, the prospective Netanyahu-led centre-right coalition that, with Lieberman’s party would have comprised 67 lawmakers, and therefore a 14-vote majority in the 120-seat legislature, has now shrunk to a mere 61 legislators, meaning a majority of merely two votes, the slimmest possible.

Lieberman, a generally enigmatic politician, explained his move as driven by his nationalism and secularism. Netanyahu’s fiscal concessions to the ultra-Orthodox parties, he said, were “derelict,” and his failure to promise the passage of a bill that declares Israel legally the Jewish homeland meant that this will not be a truly “national government,” he claimed.

Many found these explanations disingenuous, recalling that Lieberman sat with the ultra-Orthodox in the 2009 Government under terms not very different from the ones Netanyahu had now offered them. In this critical view, Lieberman was motivated not by ideas, but by emotions, following his electoral trouncing by Netanyahu and Likud, as Lieberman’s following – which last decade peaked at 15 lawmakers – was cut by nearly two-thirds.

Yet Lieberman, now a marginal member of the Labor-led opposition, is no longer the story.

Instead, the story is the prospective delivery of Israel’s young government and the situation of its leader as he enters his fourth Prime-Ministerial term in 19 years.

Israel’s 34th government is a compact, centre-right configuration of five parties which between them are built to harmonise. That, indeed, was Netanyahu’s original aim last year when he called Israel’s earliest election in more than half-a-century.

Back then, Netanyahu actually enjoyed a comfortable majority. However, within his coalition he felt almost like a stranger, constrained by the liberal parties of then-Finance Minister Yair Lapid and Justice Minister Tzipi Livni, and by the smallness of his own party, which at the time represented less than a third of his coalition.

In this regard, Netanyahu’s gamble worked.

In the new coalition Likud’s dominance is decisive, comprising 30 of its 61 lawmakers, with the second-largest party but one-third Likud’s size. Likud’s dominance is not only numerical, but also ideological. Lapid and Livni, who continuously challenged Netanyahu to be more initiating and generous toward the Palestinians, are now in the opposition, and the new government lacks a dovish component with similar views.

This is not to say that the abstract idea of land for peace does not have its supporters in the government. The two ultra-Orthodox parties in principle favour it and one of them – Shas – sat in Yitzhak Rabin’s government when he signed the Oslo Accords. Similarly, the coalition’s ten-member Kulanu faction includes several doves, most notably former ambassador to Washington Michael Oren, who thinks Israel should consider unilaterally retreating from most of the West Bank.

However, the ultra-Orthodox parties never initiate diplomatic moves, while the coalition’s few other doves are neither positioned nor inclined to challenge Netanyahu the way Lapid and Livni did.

Then again, movement on the Palestinian front would have been unlikely even if this government had been built differently, because the current mayhem across the Middle East makes it pretty much impossible for the Palestinian leadership to strike a deal with Israel, which would provoke the Islamist extremists who challenge it daily.

Instead, the new government’s main challenges will be economic and political.

Had its majority remained as solid as seemed likely until Lieberman’s departure, the new government’s main business would have been the economy.

Challenged by an acute housing shortage, Netanyahu vowed to reboot the property market by offloading state-held real estate. It is a goal shared by the new Finance Minister, Moshe Kahlon, a former Likud minister who created his own party promising a domestic agenda focused on the cost of living.

Combining pro-market economics and a humbly-born political activist’s social compassion, Kahlon promised to raise the supply of new apartments, cap bank fees for low-income depositors, increase competition in the banking sector, lower tariffs on imported food, and abolish value-added-tax on food and first-apartment purchases.

These and other such economic reform policies were expected to decide the new government’s failure or success – assuming their parliamentary passage would be smooth, as the election’s results seemed to imply they would be. But their passage will not be smooth.

The new government’s razor-thin majority will invite frequent parliamentary ambushes and chances are some of its ambitious economic reforms might never get a chance to either fly or crash, because the legislature will prevent their takeoff.

That is why Netanyahu’s agenda, as he explained while introducing his fourth government to the Knesset, will be readjusted, in two ways: first, he will seek the coalition’s expansion, and second, he will seek political reform.

Expanding the coalition most likely means luring Labor to join. That is why Netanyahu left the Foreign Ministry in his own hands, and that is why he inserted into the coalition agreements a special clause whereby his partners agree that the portfolios they get now might have to be returned later, should the coalition expand.

For his part, Opposition Leader Isaac Herzog, in a nationally televised speech during the government’s introduction at the Knesset, asked Netanyahu to appoint a foreign minister explaining that he, Herzog, does not intend to join this government.

It is a statement most pundits take with a pinch of salt, alleging that Herzog would actually like to join the government but at this point is constrained from doing so by some of his Labor party colleagues.

For now, circumstances appear unfavourable to the creation of a broad government of the sort Israel has had several times over the decades. What could make it happen is an external event that creates a sense of emergency, or conversely, a diplomatic initiative that will appeal to Labor while pushing overboard the new government’s most hawkish element, the eight-member, modern-Orthodox “Jewish Home” (Bayit Yehudi in Hebrew) faction.

Such developments remain for now theoretical – unlike the flaws in Israel’s political system, whose damage Netanyahu decried in his inaugural speech and whose burden he felt during six weeks of tormenting coalition talks.

“The voters made a choice and the choice was distorted,” said Netanyahu in an allusion to Lieberman’s absence from the conservative coalition where most of the latter’s voters indeed doubtless expected him to land.

Damage, from Netanyahu’s viewpoint, came not only from Lieberman’s absence. The Bayit Yehudi party, which lost a third of its following, mostly to the Likud, emerged with disproportionate leverage despite that setback, and made full use of it.

Besides obtaining the Education Ministry, whose NIS 47 billion (A$15.25 billion) budget is second only to the Defence Ministry’s, the party also won two portfolios it never previously held: the Agriculture Ministry, through which it is expected to economically benefit the settlements in the West Bank where many of its voters live; and the Justice Ministry, through which it hopes to reduce some of the Supreme Court’s power vis-à-vis the executive branch.

All together, for a party that won less than 7% of the electorate, this is a political bonanza.

Netanyahu would therefore like to change Israeli politics’ longstanding ways and norms, and has therefore told Herzog from the Knesset’s podium: “We must team up and change the system.”

On this front, the two major parties indeed share an interest, as they both would like to weaken the smaller parties they have both met repeatedly as hungry, and often biting, coalition partners.

Just what kind of reform Netanyahu might want, and prove able to pass, remains to be seen. Likud legislators say they want a law that further empowers the largest party, whether by automatically making its leader the prime minister or by giving it bonus seats in the Knesset.

Labor can be counted on to broadly back such ideas, but to make them law both major parties would still need to collect an additional five votes from the parties that such legislation would seek to disempower.
The road to political reform, it follows, will be at least as arduous as the long and painful coalition negotiations Netanyahu has just endured.

Meanwhile, Netanyahu will be facing not only a strong opposition but also a disgruntled ruling Likud party whose already-soured spoils of victory proved smaller than its many aspiring ministers expected.

By the time the government was sworn in it turned out Netanyahu had antagonised one of his most loyal confidants, outgoing Interior Minister Gilad Erdan. Erdan, a Likud party rising star, expected a promotion and decided to stay outside the government and serve as a regular backbencher instead of taking Netanyahu’s offer of continuing in his previous role, but with one key function transferred to the Treasury.

Netanyahu also angered former justice minister Tzahi Hanegbi: first, by leaving him out of the cabinet while appointing 12 other Likud lawmakers, and then by announcing Hanegbi’s agreement to chair the coalition in the Knesset and the Knesset Foreign Affairs and Defence Committee – an agreement Hanegbi immediately denied having given.

Netanyahu, in sum, begins his fourth premiership politically embattled and personally weakened. The early election he called when the previous Knesset had hardly reached its midpoint today seems more like a failed gamble than the brilliant gambit it appeared to be a mere six weeks ago, when Netanyahu celebrated his unexpectedly emphatic election win.