BICOM Analysis: Prospects for Israel’s new Coalition

Reposted From BICOM
Source

Britain Israel Communications and Research Centre
May 7, 2015

Key Points

• Prime Minister Benjamin Netanyahu has informed President Rivlin that he formed a coalition which will have a slender 61 seat majority in the 120 seat Knesset, following a last minute deal with the Jewish Home party.
• The government’s focus will be on domestic socio-economic issues, though Netanyahu will face challenges reconciling the agendas of Likud’s four small coalition partners: the ultra-Orthodox Shas and UTJ parties, the right-wing national religious Jewish Home party, and the secular, centrist Kulanu. Their first challenge will be to pass a budget within 100 days.
• Israel’s foreign policy priority will be the impending nuclear deal with Iran – an issue around which there is a broad consensus.
• On the Palestinian issue, Netanyahu has clarified that he still accepts a two-state solution in principle, but will find himself navigating between international initiatives to break the impasse, and members of his own party and Jewish Home opposed to compromise.
• There is widespread speculation that Netanyahu may yet seek to expand the coalition by including the main opposition Zionist Union party, however opposition leader Isaac Herzog has dismissed the idea and sharply criticised the new government.

What is the makeup of the new government?

• The new government, when it is approved by the Knesset next week, looks set to have a 61 seat majority in Israel’s 120 seat Knesset, based on a coalition deal between five Knesset factions (for a full list of ministers see below):
  • The right-wing Likud Party has 30 seats;
  • Moshe Kahlon’s centrist, socio-economic-focused Kulanu has 10 seats;
  • Naftali Bennett’s national-religious, right-wing, Jewish Home with eight seats;
  • Ultra-Orthodox parties Shas and United Torah Judaism have seven and six seats respectively.

What does the new government mean for Israel?

• This narrow coalition is likely to struggle to unite around significant policy reforms. Prime Minister Netanyahu will face a constant challenge to reconcile conflicting demands from his four small coalition partners, any one of which can collapse the government. The first challenge will be to pass a budget within the legally mandated 100 days, which will be no easy matter. The possibility of the coalition collapsing, or an alternative coalition being formed, will be ever present.
• Likud itself, led by Prime Minister Benjamin Netanyahu, has a broadly conservative approach to both diplomatic and economic affairs. It made few specific policy commitments in the election save for a general pledge to reform the system of government.
• Kulanu, the second largest coalition partner, campaigned chiefly on socio-economic issues – pledging to tackle the power of large monopolies and Israel’s housing crisis. Its leader and Israel’s new Finance Minister Moshe Kahlon has pledged to learn from what have been described as his predecessor Yair Lapid’s mistakes. Kahlon has won control of ministries and bodies to implement reforms, especially the Housing Ministry.
• Another significant change in the makeup of the new government is the inclusion – after a two year absence – of ultra-Orthodox parties Shas and United Torah Judaism (UTJ). Shas have demanded a cancellation of VAT on basic foods, and both parties have sought commitments for more money for ultra-Orthodox institutions and increased child benefits. Also as part of the coalition agreement, UTJ has received chairmanship of the influential Knesset Finance Committee.
• A key point of contention will be attempts by Shas and UTJ to water down legislation passed by the last government on ultra-Orthodox military conscription, including removal of criminal sanctions against ultra-Orthodox draft avoiders. They are likely to be met with opposition from Jewish Home leader Naftali Bennett who backed the new law. This is likely to be one of a number of clashes between the ultra-Orthordox parties and the national religious Jewish Home, who are also divided over the character of Jewish religious institutions in the state.
• Jewish Home’s other priority will be opposing compromises to the international community in the Palestinian arena and promoting settlement construction.
• Several Likud and Jewish Home ministers have also expressed interest in legislation to limit the power of the Supreme Court to block legislation, an agenda that has received a boost with the agreement that Jewish Home’s Ayelet Shaked will become Justice Minister. However, Kulanu have refused to commit to such legislation, sowing the seeds of another split. Moreover, efforts to advance the Nationality or “Jewish State” Bill, which was a source of considerable disagreement in Netanyahu’s last cabinet, are likely to be opposed by Kulanu as well as Shas and UTJ.

What about the peace process?

• After his election victory, Prime Minister Netanyahu sought to clarify his position, saying that while he wanted “a sustainable, peaceful two-state solution … circumstances have to change” for that to happen. This followed an interview late in the campaign in which agreed with an interviewer who suggested a Palestinian state would not be formed under his leadership. He will likely continue to highlight the security challenges involved in territorial compromise in the West Bank in the context of great regional instability.
• However, of his coalition partner, only Jewish Home is explicitly committed to opposing the creation of a Palestinian state. Netanyahu’s own Likud Party has a range of views on the two-state solution.
• That said, there seems little chance of final status negotiations resuming with the Palestinian Authority (PA) still locked theoretically to a unity agreement with Hamas, and pursuing attempts internationalise the conflict and isolate Israel, including through the International Criminal Court.
• Facing these Palestinian moves and new attempts expected to bring the issue to the UN Security Council, Netanyahu will find himself navigating between international initiatives to break the impasse and those members of his own party and Jewish Home who are opposed to compromise.
• In the first year of his last two administrations, under US pressure, Netanyahu made concessions to the Palestinians to facilitate a renewal of talks. It remains to be seen if Netanyahu will make any diplomatic moves in the coming year, for example trying to develop ties with pro-Western Arab states, as he suggested in recent speeches.
• In any event the new government will seek to maintain ground level security cooperation with the PA in the West Bank. Indeed, recent measures were taken to reduce tensions, including resuming the transfer of taxes by Israel to the PA, and connecting the new Palestinian city of Rawabi to water.

What about Iran and other pressing national security issues?

• With Netanyahu remaining prime minister and former IDF chief of staff Moshe Yaalon as defence minister, the key decision making positions on national security remain unchanged. Yaalon is widely seen as a pragmatist on the right, as illustrated by his opposition to a wider ground offensive to destroy Hamas during last summer’s Operation Protective Edge.
• The impending nuclear agreement between Iran and the P5+1 powers – an issue which dominated much of Prime Minister Netanyahu’s rhetoric in the election – is likely to be the biggest foreign policy topic on the incoming government’s agenda. However, it is also an issue around which there is broad consensus, with government and opposition parties are likely to support Netanyahu in opposing what he has called a “bad deal”.
• Also of great concern are the increasing efforts of Hezbollah and Iran to establish the capability to attack Israel from the Syrian side of the Golan Heights, in part to deter Israel from occasionally bombing convoys of more advanced weaponry being transferred to Hezbollah in Lebanon.
• The standoff with Hamas and other armed groups in the Gaza Strip also remains extremely tense. Meanwhile the presence of Sunni Jihadist groups in both the Sinai Peninsula and the Golan Heights will remain a source of concern, as will the wider threat to the stability of Israel’s neighbours posed by ISIL and its affiliates.

Provisional list of portfolios (ministerial appointments where available according to latest reports)

Likud 

• Prime Minister: Benjamin Netanyahu (who will also hold the Foreign Minister portfolio)
• Defence Minister: Moshe ‘Bogie’ Yaalon
• Interior
• Communications
• Internal Security
• Immigration and Absorption
• Tourism
• Science
• Strategic Affairs

Kulanu  

• Finance (including Lands Authority): Moshe Kahlon
• Housing: Yoav Galant
• Environment
• Another deputy minister (TBC)

Jewish Home

• Education: Naftali Bennett
• Diaspora Affairs: Naftali Bennett
• Justice: Ayelet Shaked
• Agriculture: Uri Ariel
• Deputy defence minister

Shas

• Economy: Aryeh Deri
• Religious Affairs
• Negev and Galil
• Deputy finance minister

United Torah Judaism

• Deputy Health Minister: Yaakov Litzman (not serving in cabinet)
• Deputy Education Minister (TBC)