Coalition squabbling brings Israel to brink of fourth election since April 2019

A new round of balloting would only deepen the political paralysis that's hamstrung policymaking. PHOTO: AFP

JERUSALEM (BLOOMBERG) - Israel's weeks-old coalition government, formed to avoid a fourth back-to-back election in the age of the coronavirus, appears to be hurtling exactly in that direction.

From its inception in mid-May, the power-sharing agreement between Prime Minister Benjamin Netanyahu and his bitter rival Defence Minister Benny Gantz has been a recipe for disputes and paralysis over issues as wide ranging as handling a resurgent coronavirus outbreak, annexing West Bank land, and outlawing gay conversion therapy.

The partnership was on shaky ground to begin with, due to distrust over whether Mr Netanyahu would hand over power to Mr Gantz as he is supposed to in November 2021.

While the bickering has sent talk of early elections simmering for weeks, it went full boil after the Haaretz newspaper reported late on Wednesday (July 22) that Mr Netanyahu plans to use wrangling over the budget as a pretext to bring down the government and hold elections in November.

The real reason, the newspaper said, is he wants to take over the Justice Ministry from Mr Gantz's Blue and White party to derail any efforts to force him to step aside while his corruption trial proceeds.

His Likud party dismissed the Haaretz report as "spin" by Gantz allies. But that didn't quell the churn over the possibility Israel would face its fourth vote since April 2019.

"Take yourself in hand!" President Reuven Rivlin appealed to the government on Thursday. "Put an end to the early elections talk. Back off from that terrible possibility in times like these."

A new round of balloting would only deepen the political paralysis that's hamstrung policymaking since December 2018, when Mr Netanyahu called the first of three elections. It would also cost hundreds of millions of shekels at a time when the government is already committed to a 190 billion shekel (S$76.8 billion) economic rescue plan.

"Fourth elections would add to the uncertainty caused by the coronavirus and only hurt the economy," Bank of Israel Governor Amir Yaron warned in an interview with Army Radio. The shekel was little changed mid-morning, and the benchmark stock index was up as much as 1 per cent.

The tussle over the budget is as much politics as economics.

Mr Gantz insists on sticking to the two-year budget called for in the coalition agreement because it would deny Mr Netanyahu the ability to bring down the government over next year's spending plan before the defence minister can take power.

Netanyahu ally Finance Minister Israel Katz is preparing a one-year plan in defiance of the pact, reasoning that officials have to move quickly to anchor the virus-battered economy.

Under Israeli law, if a budget isn't passed by a stipulated date, Parliament is dissolved and new elections are called. The 2020 spending plan is supposed to be approved by next month.

There's also the possibility that Mr Netanyahu is just planting the threat of new elections as a tactic to pressure Mr Gantz to relent on the budget, fully aware that an early elections gamble could backfire.

A bungled reopening of the economy has sent coronavirus case numbers more than tripling, while unemployment remains mired at 21 per cent. Swelling anger at Mr Netanyahu has extended down to his base, with protests drawing thousands several times a week.

Surveys show his Likud party winning as few as 33 of Parliament's 120 seats, versus 41 just one month ago. While that's far more than any other party, the nationalist and religious bloc Mr Netanyahu leads would command only 62 seats - a slim margin that the prime minister couldn't depend on for re-election.

"The budget is being used for political reasons in order to evade a legal predicament," said Hebrew University political scientist Reuven Hazan. "We're definitely heading towards a government that is imploding. The question is how fast."

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