A snap parliamentary election will be held on March 17, triggered by the collapse of Prime Minister Benjamin Netanyahu’s ideologically eclectic coalition less than halfway through its four-year mandate. The political marriage in which Netanyahu’s center-right Likud teamed up with both moderate nationalists and staunch right-wingers was troubled from the start by disagreements over budget issues, and was left weakened in the aftermath of a 50-day military operation in the Hamas-controlled Gaza Strip.

The divorce became official in early December, when Netanyahu sacked Finance Minister Yair Lapid, the leader of the centrist Yesh Atid, and Justice Minister Tzipi Livni, a former Likud member who currently heads the centrist Hatnuah, citing public criticism that undermined his authority as grounds for his actions.

Livni has formed an electoral alliance with the Labor Party, and various polls indicate that the so-called “Zionist Camp” will win 22-25 seats in the 120-member Knesset, while Likud could win as few as 20 and as many as 27. Given the projected numbers for the two front-runners, forming a majority government is all but certain to pose significant difficulties for the winner.

There is a strong possibility that a coalition of Likud and the parties to its right will not win the combined total of 61 seats required to form a majority government, but Netanyahu could be hard-pressed to find any willing partners to his left. And even if he managed to woo a centrist or center-left party into a mostly right-wing government, the coalition would almost certainly be troubled by the same inherent tensions that doomed the last government.

Security threats to Israel will be very much in the minds of voters when they go to the polls in March.

The political calculus is even more daunting for the Zionist Camp. Whether Labor leader Isaac Herzog gets the opportunity to form a government may come down to the assessment of some small section of the electorate as to whether he has what it takes to be the prime minister of Israel under current conditions.

Security threats to Israel will be very much in the minds of voters when they go to the polls in March, and to the extent that any of them consciously weigh the qualifications of Netanyahu and Herzog to ensure that they remain protected, the former will likely be at an advantage.

Regardless of the degree to which the stalled peace process with the Palestinians and the risks associated with aggravated tensions with Hamas and Hezbollah might be weighing on the minds of voters, those risks have long been taken into account by investors, for whom the bigger concerns are the increase in the budget deficit ceiling for 2015 from 2.5 percent of GDP to 3.4 percent of GDP and a possible reversal of the declining trend in the public debt burden.

As usual Likud is not campaigning on a detailed economic-policy platform, but can be expected to maintain greater fiscal prudence than a Labor-led government that depends on left-leaning parties for its majority.

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The PRS Group
About The Author The PRS Group
The PRS Group is a leading global provider of political and country risk analysis and forecasts, covering 140 countries. Based on proprietary, quantitative risk models, the firm's clientele includes financial institutions, multilateral agencies, and trans-national firms.




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