The most interesting change in this election around Netanyahu’s fourth term is the changes in the parties around Netanyahu and Likud. Labor as the Zionist Union continues its rebuilding, once again headed for opposition, the Arab Joint List has emerged as a powerful faction but the party could break apart as the range of political views are disparate and it will likely be a pariah so long as anti-Israeli Haneen Zoabi and her Qatari funded Balad party are members. Now that the Arab parties are united can the Arab Joint List become both patriotic and effectual at representing the needs of Israeli Arabs? A few election cycles may be required to see how the List and Arab politics generally develops but the new party could be the start of a more comprehensive engagement of Israeli Arabs into society. A genuinely effective and patriotic Arab party might be able to bridge the gap between Israelis and West Bank Arabs to make peace possible between Jerusalem and Ramallah. Kulanu has emerged as a centrist party and Netanyahu rival Moshe Kahlon is being called a king maker by pundits. Meanwhile, Likud itself continues to be somewhat creaky and strained by the stress of the election with the hurt feelings over internal competition. Most parties agree on the issues, what seems to have resonated with voters was not so much the issues but Netanyahu’s prioritizing of them.
The public, despite feeling economic pain seems to agree that security is the first priority and the economy is the second priority yet the economy is too urgent a problem to be treated as merely secondary. Likud’s coalition will have to take action and get the budget out quickly. While voters see security must come first, the cold weather pattern that turns the political tornado which made these snap elections necessary is nonetheless the economy. At the macroeconomic level, Israel is in for some real turbulence, the rising US dollar will make borrowing more expensive, Israeli assets easier to purchase by foreigners, delays in natural gas development alongside the fall in prices means the energy sector will start off well-tempered and healthy but have little impact on the economy for the next few years. Israeli technology exports should offset some economic challenges.
The biggest drag on the economy is security, Israel needs to be ready to fight ISIS, Hamas, Syria, Iran, possibly the West Bank and be prepared for the far less likely military conflicts with a collapsed Jordan or an emboldened Turkey. The present economy was primarily built on Netanyahu’s work as Finance Minister where he savaged the military budget for a peace dividend after the Lebanon and Gaza pullouts. Inadvertently, this made The Second Lebanon War possible and more difficult to win due to an underfunded military yet it created a robust business and tech sector and though the Israeli military has since recovered, it will need large investment to meet the new challenges. The challenge to the Israeli public is to accept some economic pain for security. The world economy will see international investment capital heading back to the US on a rising dollar as US stimulus programs come to an end just when Israel must spend more on security but feels political pressure to increase spending on the domestic economy; the conundrum of economics, “Guns versus butter” has never been truer than in Israel.
Netanyahu correctly pointed out that Israel needs a political leader that will hang tough, this comes easily to Bibi despite having been Ambassador to the UN and Foreign Affairs Minister, has always been a poor diplomat and poor diplomats need to be unyielding. Only Bibi could take a two state solution off the table during an election and thus take the coming blame and ire of the US and Europe when it is painfully obvious that the PA has no intentions of negotiating anything when it believes a unilateral appeal to the UN will nullify Israel’s rights in Judea and Samaria. A good diplomat could find some way to be conciliatory with the US and Europe on the PA, especially when factoring in the PA intransigence towards negotiations, a long standing PM could find the political capital to describe the situation rather than make a scapegoat of himself. This stance did help Netanyahu win the election, Erekat snapped up the rhetoric to make an ironic complaint the Palestinians have no partner for peace. There are no hopes of peace talks while Abbas and Erekat lead the PA so taking a Palestinian State off the table doesn’t affect the PA. Israel will need European and US support and/or forgiveness as it moves to a strike Iranian nuclear facilities when either a deal is reached and broken or when negotiations with Iran fail thus the need to be conciliatory when possible. Israel must anticipate a conflict with Syria and Lebanon as proxy war remains Iran’s only weapon against Israel until it produces nukes. Currently, Israeli polling suggests President Rivlin’s suggestion of a unity government will not be well received due to fears of deadlock and both Likud and Zionist Union have abandoned the idea. The country is more centrist than it was but remains right of center making Likud the most appropriate party to form the next government and deal with long term issues.
While Israel remains right of center, at least so long as war with a number of parties seems likely, the country is overall growing more centrist. What the next government is unlikely to accomplish in one term is fixing the economy, making peace, making Natural Gas sales a profitable contribution to the economy, ending the threat from Iran and Isis but the government will be poised to make some progress on most of these issues and this may be an election we look back on for the changes that are inaugurated.