Israeli election has global implications, but will turn on domestic issues

The Israeli electorate goes to the polls tomorrow in a ballot that has attracted unusually high international attention. This is largely because Benjamin Netanyahu, Israeli’s polarising and second longest-serving prime minister, appears vulnerable to defeat against a ‘Zionist-centre’ alternative which would seek to repair ties with the administration of the US President Barack Obama, and resume peace talks with the Palestinians.

Latest polls appear to show momentum moving towards the Zionist-centre, which is a pact between the Labor Party, headed by Isaac Herzog, and former justice minister Tzipi Livni who leads the Hatenua party. However, even if this centrist bloc wins more seats than Netanyahu’s conservative Likud party, it would still need to overcome the hurdle of forming a coalition with a variety of nationalist and religious parties to secure the requisite 61 seats in the Knesset.

While international issues, including the potential forthcoming US-led nuclear deal with Iran are forming the context to the election, domestic economic issues are uppermost in many Israeli minds. Specifically, the rising cost of living, including housing costs. Last month, for instance, a report by the Israeli state comptroller put “substantial blame” on the Netanyahu government for a greater than 50 per cent rise in house price over the past five years, in part because of the bureaucratic delays holding back the speed of house building.

Moreover, according to the Bank of Israel, a basket of basic products was 12 per cent more expensive in Israel last year than the Organisation for Economic Co-operation and Development (OECD) average. And official statistics indicate more than 40 per cent of Israelis are in a constant state of overdraft.

While the Israeli economy has performed better than most OECD countries since 2007, growth slowed last year. Exports and tourism weakened and the Gaza war also undermined economic activity.

However, there are signs that the economy is rebounding with data from the final quarter of 2014 showing the fastest quarterly growth, at an annualised 7.2 per cent expansion, in nearly eight years. This follows a similar economic rebound, following the Lebanon war in 2006.

After serving some nine years, in total, as prime minister, Netanyahu has made many domestic opponents, and some now sense there is opportunity to unseat him. However, he remains a formidable dealmaker and his ability to forge a potential coalition across the fragmented political landscape should not be underestimated.

While the Zionist-centre’s focus is primarily on the economy, the prime minister is placing greater emphasis on reaching out to ultra-orthodox and nationalist constituencies. One of his key messages is his assertion that he is the only figure who can maintain the safety of the country at a time of international danger.

It remains possible that this ‘security card’ could yet help enable him a fourth term of office, but his credentials here have been undercut by a chorus of critics.

This includes former Mossad chief Shabtai Shavit who asserts that Netanyahu has actually undermined Israeli security with a number of his foreign policies.

Shavit is been particularly critical of the prime minister’s Iran policy which has caused significant tension with the Obama administration, threatening a significant breach in the traditional pattern of bipartisan support for Israel in Washington. Earlier this month, for instance, Netanyahu addressed the US Congress in one of the most controversial of more than 100 joint session addresses that have been given by world leaders and dignitaries to the US legislature since the 19th century.

The reasons for the controversy are at least threefold. Firstly, at a time when the relationship between the prime minister and US President Barack Obama was already rocky, the speech was arranged by House of Representatives Speaker John Boehner, a leading Republican, without prior knowledge of the White House.

Secondly, the address came just two weeks before the Israeli election. Numerous Democrats indicated their concern that Netanyahu was being given such a prominent platform so close to the ballot, which might have given him domestic electoral advantage.

Thirdly, the prime minster used his speech to bolster his fierce criticism of Obama’s Iran policy, whereby a breakthrough deal may be emerging which would curb Tehran’s nuclear programme for at least a decade with gradual easing of economic sanctions and constraints on its uranium enrichment.

Indeed, Netanyahu has become the White House’s most vocal international opponent on this issue which many in Israel feel is unwise.

While the prime minister has significant support from Republicans in Washington, he would need — should he be re-elected — to work with the Obama administration until it leaves office in January 2017. Yet, especially after his Congress speech, he will have even less support within the Obama team.

Indeed, a US-led framework deal with Iran this month may only exacerbate the rift in bilateral relations if Netanyahu is re-elected. Especially in these circumstances, a unilateral Israeli strike against Tehran’s nuclear programme facilities could not be ruled out.

Netanyahu has also alienated many in Europe too with certain of his policies. And the European Parliament and several European national parliaments have voted to recognise a Palestinian state.

It is in this context that the Zionist-centre has said it would seek to improve ties with the Obama administration, and Europe. It would also try to rejuvenate negotiations with the Palestinians, although prospects for a breakthrough should not be overestimated.

Taken overall, the election outcome is highly uncertain and much will come down to post-election deal-making in which Netanyahu has excelled in the past. Thus, even if Likud wins less seats than the Zionist centre, he could yet remain in office.

At a moment when the country faces key international challenges, an unstable coalition is thus more likely than a decisive victory. Especially given the fragmentation of the Israeli political system, this could mean not just further political uncertainty but also complicate the new government’s task of developing a clear, coherent domestic and international agenda.

— Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics, and was formerly a UK Government Special Adviser