Israel’s Squabbling Leaders in Last-Ditch Bid to Avert Election

Israel’s two largest political parties are making a last-ditch effort to avert a fourth election in two years, with a midnight Tuesday deadline looming.

If a budget isn’t passed by that cutoff, then parliament automatically dissolves while the country is in the midst of a coronavirus-related health and economic crisis. A March 16 election date has been preliminarily approved.

Prime Minister Benjamin Netanyahu has balked at honoring his coalition agreement to approve a spending plan through 2021. A budget for this year alone would give him leeway to bring down the government over the 2021 spending plan, before Defense Minister Benny Gantz takes over as premier under their power-sharing agreement.

But no one is printing ballots just yet. In August, parliament averted a similar crisis by legislating a new deadline, and it could do the same this week. What’s more, a new challenger with a strong following has given both Netanyahu and Gantz a strong incentive to salvage their bickering seven-month-old government.

Netanyahu Faces Emerging Threat as Rival Starts New Party

Polls show that Gideon Sa’ar, who recently defected from Netanyahu’s Likud party to form his own faction, might win enough support to lead the next government. That could discourage the prime minister from going to the polls at this time, risking the loss of power as his corruption trial resumes in February.

The Sa’ar challenge would also be expected to hurt Gantz’s Blue and White. Some polls show it hovering dangerously close to the threshold for entering parliament.

Likud spokesman Naor Ihia wouldn’t discuss details of the negotiations but said Sunday that there’s hope for a compromise. Blue and White said it “will not compromise on a functioning government, while also protecting democracy and the rule of law, and ensuring a state budget to address the economic pandemic.”

Israel’s Central Banker Sounds Alarm as Budget Deadline Looms

The country’s central bank chief Amir Yaron has warned that failing to pass a budget could paralyze parts of the economy in the middle of a deep crisis. And geopolitical risk consultancy Eurasia Group downgraded Israel’s short-term trajectory to negative from neutral last week.

“Domestic politics will be totally consumed by political maneuvering, soaking up whatever limited bandwidth existed for coherent fiscal policy and governance more broadly,” senior analyst Henry Rome wrote in the report.

Reuven Hazan, a Hebrew University political scientist, said Sa’ar’s entry into the race has turned the tables, giving the negotiations a chance of succeeding.

“It’s 50-50, they’re actually talking,” Hazan said. “Netanyahu’s goal of using the budget to bring down a government to force an election that he would be able to come out of stronger vis-a-vis his court case has now flipped 180 degrees.”

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