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A supporter of the Jordanian Muslim Brotherhood holds up a Palestinian flag during a rally in Amman, celebrating what Hamas say is its victory in Gaza, August 29, 2014. Tens of thousands of the Brotherhood's supporters took part in the celebrations after an open-ended ceasefire, mediated by Egypt, took effect on Tuesday evening between Israel and Palestinian militant groups in the Gaza Strip. Hamas presented the truce as a victory for the Palestinian people. REUTERS/Muhammad Hamed (JORDAN - Tags: POLITICS CIVIL UNREST CONFLICT TPX IMAGES OF THE DAY) - RTR44ABJ
Reuters/Muhammad Hamed
Around 70% of the UN recognizes Palestine now.
UNINTENDED CONSEQUENCES

Palestinians will ride Netanyahu’s coattails right into statehood

Riccardo Fabiani
By Riccardo Fabiani

Senior analyst, Eurasia Group

The strong performance by Prime Minister Binyamin Netanyahu’s Likud party in elections on March 17 took everyone by surprise, both inside and outside of Israel. In the last 48 hours of campaigning, the prime minister managed to convince reluctant right-wing Israelis to give him another chance, despite palpable skepticism within his traditional constituencies.

His last-minute maneuvering drained support from other right-wing parties and allowed him to overtake the center-left Zionist Union. This result now paves the way for a center-right government that will include nationalist (Jewish Home, Yisrael Beiteinu), ultra-Orthodox (Shas and United Torah Judaism) and centrist parties (Kulanu). This coalition will give him a majority of around 65 seats out of a total of 120.

Given this thin majority, it will not be an easy ride for Netanyahu. The next government is likely to be weak, unstable and ineffective. The high number of political parties that will be part of the government mean that the prime minister will head an unwieldy and fractious government coalition, regardless of its final composition.

In particular, each of the parties making up the ruling coalition will be in a position to bring down the government single-handedly, thus limiting significantly Netanyahu’s room for maneuver. This means that any measures that could divide the coalition, such as laws concerning the status of the ultra-Orthodox community, are unlikely to make much progress, while the prime minister will have to spend considerable political capital to negotiate among the various parties.

In this context, the government will be under considerable pressure from civil society groups and centrist voters to act on the issues of the cost of living and to increase government spending. Over the past few years Israelis have mobilized to protest against soaring prices in consumer markets and, most importantly, the real estate sector–two issues that have dominated the election campaign. Moreover, there is a growing movement within Israeli civil society in favor of stricter rules on foreign investment in the natural resource sector (mainly natural gas and phosphates).

A key development in this respect could come from the possible appointment of the head of Kulanu, Moshe Kahlon, as the next Finance Minister. From this position, Kahlon would likely target monopolies across the economy, starting from the banking and food/retail sectors. Another priority for him would be to tackle the housing crisis by relaxing rules in this sector and boosting construction activity. However, this will not translate into direct state intervention into the economy–something that Netanyahu refuses to take in consideration. Overall, the new government is likely to maintain the current market-friendly policy environment for foreign and domestic companies.

From a foreign policy perspective, Israel will face an increasingly hostile environment both regionally and internationally. The re-election of Netanyahu and the markedly right-wing nature of his next government are likely to exacerbate diplomatic tensions with Europe and to a lesser extent Barack Obama’s administration, while aggravating the already tense relations with the Palestinian population.

The right-wing majority is likely to pursue a series of controversial policies, such as the adoption of the Jewish nationhood bill as well as the construction of Jewish settlements in East Jerusalem and the West Bank. These decisions will exacerbate already heightened tensions with the Palestinian leadership as well as the current US administration and most European governments.

In turn, this will only accelerate the Palestinians’ plan to obtain unilateral statehood at the UN and boost recognition among European countries. Moreover, the risk of a “Third Intifada” will also increase. Although over the past months violence in East Jerusalem has failed to spill over into the West Bank, the Arab population is losing its remaining confidence in the Israeli authorities’ ability to solve the underlying causes of their discontent. Economically, this government will continue to implement market-friendly policies and will only increase welfare spending marginally to appease the ultra-Orthodox constituencies.

Netanyahu may have triumphed at the polls. But with a fractious, controversy-prone coalition, his victory is likely to be fleeting.

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