Australia / Israel Review

By Amotz Asa-El

One year after returning to Israel’s helm, Binyamin Netanyahu remains firmly in the saddle.

Politically, what initially seemed like an inconclusive election that might result in parliamentary paralysis has instead produced a stable coalition and a feeble opposition, at least up until now. The wild card Netanyahu played a year ago, when he hitched the centre-left Labor party to a collection of right-wing coalition partners, has worked wonders for the Israeli Premier. This has allowed him not only to leave Kadima, the Knesset’s largest faction, out of power, but also to weaken it.

Kadima, founded by former PM Ariel Sharon, is losing its cohesion, and its leader, Tzipi Livni, is trailing Netanyahu in all the polls. Meanwhile, the Prime Minister’s popular support remains both steady and considerably larger than it was a year ago. Pundits believe that Netanyahu will sooner or later lure several defectors from Livni’s faction, likely led by Shaul Mofaz, her number two and former defence minister, who keeps challenging her publicly.

With Labor aboard his ship and Kadima’s leader outflanked from the left, the Opposition has not only shrunk, but also lost its focus. With the diplomatically flexible Labor leader Ehud Barak at Netanyahu’s side, Livni’s political strategy of playing the peace card has lost firepower.

At the same time, Netanyahu has also balanced the partners he has positioned to his left with a set of nationalist partners to his right. Led by the outspoken Foreign Minister Avigdor Lieberman, he has been effective in keeping the right generally quiet, even while Netanyahu made diplomatic overtures that were, to them, very disagreeable.

The stability afforded by the tight political rein Netanyahu holds in one hand is complemented by the effective economic rein he has in the other.

In a fitting endnote to a particularly impressive macro-economic year, the Central Bureau of Statistics reported that the economy grew by 4.4 percent during the last quarter of 2009, which means that the economy into which Netanyahu entered at the height of the global crisis has long emerged from what in Israel was but a brief recession.

Netanyahu’s role in weathering the global meltdown is considered central despite his arrival at the premiership well after its outbreak – he was the treasurer who oversaw the conservative reforms that inspired financial caution when, elsewhere in the developed world, governments, corporations, and households embarked on financial adventures that ended disastrously.

Netanyahu also earned credit for the positive role played by the man he had appointed as Bank of Israel Governor, Stanley Fischer, whose professionalism, impartiality, poise and reputation have proven priceless as the global crisis unfolded.

The less celebrated appointment of Dr. Yuval Steinitz as finance minister has also proven plausible so far. Though he lacked ministerial experience and economic training, Netanyahu’s longtime protégé, who has a PhD in philosophy, pushed through at the Treasury an important reform, moving the budget from an annual to a biannual basis. The result was a relaxation of the political tensions with which the budget legislation process had been traditionally fraught and instilling a further sense of stability in the system, just when it was needed most because of the global crisis.

All these, coupled with Labor’s position within the coalition, have kept happy all major economic players, from investors and entrepreneurs to bankers and unions.

And yet, firm though Netanyahu’s position on the saddle seems, it isn’t clear just where the horse under it is heading.

Netanyahu’s delivery of actual change has been slow at best. Unlike his stint as treasurer earlier in the decade, when he arrived at his job with plans which he lost no time putting into practice, this time he has been slow to act. His election promises to cut taxes have been largely delayed, a land reform with which he hoped to help reduce housing prices has been seriously diluted by Labor, and his much-heralded, multi-billion dollar plan to crisscross Israel with a network of new highways and railways has not been brought to the Cabinet for approval during his first year in office. It is now likely to be considerably trimmed due to misgivings in the Treasury.

On these and other domestic issues, it seems Netanyahu’s quest is to reach his goals with minimum acrimony, even if it means that his visions will be realised more gradually and less completely. Then again, on these fronts his goals are at least clear – which is more than can be said of his diplomatic goals.

Netanyahu’s main diplomatic move, his acceptance of the two-state formula in a speech last June at Bar-Ilan University, remains an enigma. Few people can say whether it would have been made without the prodding of President Barack Obama’s speech shortly beforehand in Cairo, where he scolded Israel for building in settlements in the West Bank.

Even fewer can tell whether Netanyahu intended for the speech to actually jumpstart a process at the end of which Palestinian statehood would become a reality. The only thing that is clear is that the gesture was not reciprocated, and diplomatic reality did not change in its wake. Netanyahu’s subsequent pledge, to halt new construction in the West Bank for 10 months, was also all but ignored by the Palestinian Authority.

Most pundits now predict that during his term’s second year, negotiations between Netanyahu and Palestinian President Mahmoud Abbas will finally commence. That said, no one knows what both men actually want to deliver from that process. Indirectly, the two have been cooperating through their security forces on halting the Islamist Hamas movement from raising its head in the West Bank, where Abbas’ troops have a reasonable grip on the Palestinian population.

Netanyahu’s official quest, to seek a deal with the Palestinians, is openly rejected by his foreign minister, who says peace with the Palestinians is not obtainable since their minimum demands are much higher than Israel’s maximum concessions. Given Netanyahu’s need to occasionally clean up after Lieberman and his deputy Danny Ayalon (most notably following the latter’s deliberate, televised humiliation of the Turkish ambassador), many in Jerusalem predict a fallout down the road between Netanyahu and his right flank should negotiations with the Palestinians ensue.

In such a case, Netanyahu might also feel pressure from within his Likud party, where his espousal of the two-state formula and his freezing of West Bank construction have not been popular.

Netanyahu may also see the media’s relatively warm welcome upon his return to power gradually erode. Netanyahu’s aides feel that mass-circulation daily Yediot Aharonot, Israel’s biggest newspaper, is out to get the PM, feeling threatened by a rival daily that was launched by American billionaire and Netanyahu-supporter Sheldon Adelson. Whether or not Yediot has any such editorial intention, there is no arguing it has trumpeted much more loudly than others a suit filed against Netanyahu’s wife, Sara, by a former maid for allegedly having being underpaid and maltreated. For now, Netanyahu has kept above this fray, but the more there is a sense that he is not making things happen, at least domestically, the more the media will grow restless and potentially return to treat him as negatively as it did during his first premiership in 1996-99.

And yet, all these fronts are but a sideshow to the main stage – Iran.

It is no secret that Israel, and the rest of the West, are all eagerly hoping for the Islamist regime’s removal by the kind of people-power that unseated the Shah in 1979. Yet since no one can afford to predict this kind of scenario materialising anytime soon, Netanyahu will continue to pressure for increased sanctions on Teheran by the international system, as he did in February during meetings with Russian leaders Dmitry Medvedev and Vladimir Putin in the Kremlin. At the same time, the IDF will continue preparing for assorted scenarios.

Any turning point in Iran, whether negative or positive, will likely reshuffle the deck of cards Netanyahu faces. If the regime falls, regardless of Israel’s role in such an eventuality, Netanyahu will benefit from the renewed optimism it will likely generate. If a bomb is obtained, Kadima is likely to join an emergency coalition as Israel considers its moves. And if the crisis continues to muddle on – so will Netanyahu.