Neill Lochery lectures at University College London, University of London, and is the author of The Difficult Road to Peace: Netanyahu, Israel and the Peace Process (Reading: Ithaca Press, 1999).

The Israeli elections had two distinct results: in the election for prime minister, they saw the defeat by Ehud Barak of Binyamin Netanyahu, 56 percent to 44 percent; in the parliamentary race, they saw the further weakening of the country’s two major parties (Labor and Likud).

Prime minister. As Table 1 (see page 44) shows, Ehud Barak won a Jewish majority of the vote, something neither Rabin nor Peres enjoyed. Netanyahu won a plurality of the vote in his traditional strongholds, Jerusalem (with its large ultra-orthodox population) and in new urban areas (with their large Sephardic and Russian populations). He won over three-quarters of the vote in Judea and Samaria. Interestingly, Barak out-polled Netanyahu in the Golan Heights despite being more (publicly) committed to Israel’s territorial withdraw from that region. This can be explained in part by the fact that the Labor Party started the Golan settlements and its members remain loyal to the party.

The election results reflect the deep divisions in Israeli society, particularly the religious-secular cleavage and Jewish-Arab divisions. Netanyahu won some 90 percent of the ultra-Orthodox Jewish vote, while Barak secured 94 percent of the mainly Arab minorities. The Russian immigrants supported Netanyahu, but in fewer numbers than in 1996. Indeed, their vote, which in 1999 represents nearly 20 percent of the total electorate, largely determined the outcome of the 1992, 1996, and 1999 elections.

Barak’s substantial majority increases the scope of his mandate, particularly when it comes to making difficult compromises in negotiations with the Arabs.

Parliament. In contrast to Barak’s clear-cut victory over Netanyahu, the left-of-center bloc in the Knesset (Israeli parliament) did not win anything like a majority of 61 seats out of 120 seats, but ended up with only 42 seats (One Israel: 26, Meretz: 10, Shinui: 6). This means that because the new prime minister has had to cobble together his coalition with twelve members of the centrist parties (Yisrael Ba’aliya: 6, Center Party: 6) and twenty-two from two religious parties (Shas: 17 and the National Religious Party: 5), the leftists in the Labor Party and Meretz will not dominate the coalition.

Netanyahu’s defeat resulted from both technical factors and deeper long-term trends. Regarding the former, the sudden withdrawal of three candidates for prime minister on the eve of polling meant that the first round of voting was decisive. This hurt Netanyahu because much of his electoral strategy was based on letting the many electors disillusioned with him cast a protest vote against him in the non-decisive first round, then counting on their return to his side in the second round,¹ a theory supported by polling and by political analysts. The Netanyahu camp invested much effort in insuring that the highly disciplined, ultra-Orthodox constituency (98 percent of whom supported him in 1996) would be mobilized to vote in the second round. It was also presumed that Barak would have trouble mobilizing the Israeli-Arab vote in the second round, when the Arabs lacked the incentive of Arab candidates for parliament to vote for. Seasoned commentators speculated that the outcome of the election would be determined by which of the two candidates would better turn out his constituencies in the second round.² So central was this tactic to Netanyahu’s campaign that his major aim in the one television debate with Yitzhak Mordechai of the Center Party was to secure a public promise from Mordechai not to withdraw his candidacy before round one. (He gave it but withdrew, anyway.)

Second, two of the prime minister’s key electoral constituencies, Russian immigrants and ultra-Orthodox Jews (Shas being the major political party of this group), began a fight with each other that made it difficult for Netanyahu to win the votes of both groups. The rift between them concerned the key interior ministry, which is central to allocating government resources and so a useful tool for parties to deliver benefits to their constituencies. Shas or one of its friends has occupied this post for much of the past fifteen years. The Russian rupture with the ultra-Orthodox went deeper, too, as the two sides become increasingly hostile over such issues as who is a Jew and religious observances of the Sabbath. The 1999 campaign saw these divisions boil over, damaging Netanyahu, who needed the support of both groupings.

The culmination of the seven-year trail of Aryie Deri, the leader of Shas, and his conviction on corruption charges in the middle of the campaign meant that Netanyahu was faced with a Catch-22 choice: continue to support Deri (central to mobilizing the ultra-Orthodox vote) and risk alienating Russian leader Natan Sharansky (who took a strong line against Deri). Clearly either way Netanyahu could not win and for once in his political life he was cornered into making a decision. Reluctantly, he backed the ultra-Orthodox (94 percent of whom voted for him in 1999) over the Russians (around 60 percent of whom voted for him in 1999). Netanyahu’s strategy had been to win around 70 percent of the Russian vote, and the missing 10 percent was vital to Barak’s victory.

Third, the outside world, and especially the U.S. government and the Palestinian Authority, made life difficult for Netanyahu. Although the Clinton administration in private made it clear that it was not the Netanyahu government that was stalling the implementation of the Wye memorandum (but rather the Palestinians), it publicly blamed the Netanyahu government for just this. And Arafat met in all-night session with his advisors in December 1998 to discuss the Israeli elections, resolving on an “anyone but Netanyahu” strategy. Toward this end, Arafat took three steps to create a climate in which either Barak or a centrist candidate would prevail: he postponed a unilateral declaration of independence for Palestine, struck a deal with Hamas to prevent suicide bomb attacks on Israelis during the campaign, and mobilized the Israeli Arab vote against Netanyahu.

Clinton and Arafat both learned from their mistakes in 1996, when they had openly endorsed the Labor Party candidate. This time they employed more subtle and effective methods to damage Netanyahu.

The Netanyahu factor. Netanyahu’s leadership skills and personality were an ever-present issue in the campaign. This focus on personality (rather than ideology or party politics) is one result of the direct elections for prime minister that was instituted for the first time in 1996. Key sectors of Netanyahu’s supporters in 1996 did not back him in 1999 because of his perceived personal failings, notably the impression that he put his own self interest ahead of the country’s and the lack of confidence in his leadership skills.

Socioeconomic issues. Key socioeconomic issues and the peace process damaged Netanyahu more than they should have. Netanyahu talked about a Thatcher-style revolution to liberalize and privatize the highly centrally-controlled Israeli economy that would improve the economic well-being of not only the already wealthy coastal plain but also the development towns inhabited mainly by poor Jews of Sephardic origin (whose residents are traditional Likudniks). Instead, the economy stagnated and unemployment rose during his tenure, particularly in poorer neighborhoods. In fact, the Netanyahu government engaged in a relatively sound management of macro-economic policy, particularly in its tightening of fiscal policy, and it made an attempt at budget reductions.³ However, the perpetual need to pay off coalition partners made it difficult to sustain a program of budgetary restraints.

In the end, Netanyahu did not improve the economic lot of the poor in Israel. His three years in office saw Israel’s high-tech industries flourish, many with foreign investment. But the promised economic revolution did not materialize and by early 1999 it was clear that Netanyahu was vulnerable to attacks from the opposition in this area, as evidenced by the fact that Barak and his American spin-doctors concentrated their attacks on the prime minister’s socioeconomic record. One of Barak’s most memorable slogans asked: “Bibi promised your kid a computer in 1996—has your kid got one today?”

Netanyahu’s failure in this area was nothing new and reflected the increasing difficulties of governments of all political colors in Israel to manage the economy successfully . In essence, no government feels strong enough to absorb the short-term political damage that accompanies the introduction of a fast-track program of economic reform. The Arab-Israeli conflict further complicates matters by making it impossible to privatize some of Israel’s most lucrative companies because they cannot be allowed to fall into potentially hostile hands (either directly or indirectly through subsequent takeovers and buyouts). Ehud Barak’s government is likely to find these challenges no less difficult than did its predecessor.

Peace process. The peace process damaged Netanyahu’s electoral career in two ways. First, he was the victim of his own success; by nearly ending Palestinian terrorism in Israeli cities, the issue of Israeli personal security did not dominate the campaign as it did in 1996, and so Netanyahu lost an issue that had been of major benefit to him. Worse, Netanyahu did not recognize this change and mistakenly based much of his campaign rhetoric on negative themes. He presented his leadership as critical for terrorism to abate, saying, in effect, “if you think things are bad now, without me they will be worse,” at a time when the public was quite cheerful about its security. Against the advice of his aides, Netanyahu ran television ads in the three weeks prior to election day showing images of suicide attacks in early 1996. With this, Netanyahu merely reminded the wavering center-ground voters of a painful period of Israeli history and missed a chance to present positive messages.

Second, despite the many similarities of view on the peace process between Barak and Netanyahu, the sceptical and all-important center-ground voters perceived Barak as the candidate better able to advance the process. The lack of international goodwill (especially from the Clinton administration) toward Netanyahu and the disillusionment over the government’s perceived stalling of the Wye memorandum were central to this feeling.

Barak and the Labor Party. The Labor Party emerged from the elections in the same kind of dazed confusion as Likud in the 1996 elections—elated by the election of its leader as prime minister but despairing at the worse-than-expected performance of the list. One Israel expected to win 32 to 34 seats; the 26 it did actually win means that the Labor Party itself has a mere 20 members. The party’s poor performance results in large part from an election system that encourages voters to cast their parliamentary votes for parties which mirror their ethnic, religious, economic, or single-issue concerns—and not for the two national major parties (Labor and Likud). The new electoral system has the effect of eroding support for the two major parties, making it all the more difficult for the elected prime minister, even if he wins a clear personal mandate, to form a stable coalition. Barak found this out with alacrity; less than two days after he presented his new government, two members had already set up a new party and threatened to abandon the coalition.

Another similarity: Barak spent much of the campaign putting distance between himself and the Labor Party, and in his victory speech he mentioned the party only once while using the personal pronoun “I” in every other instance. Just as Netanyahu faced Likud critics disgruntled about his 1996 election victory being achieved at the expense of the party, so do many Labor Party figures feel the same about Barak’s victory.

Ehud Barak is by nature cautious and will try to move negotiations with the Arabs forward without returning to the highly polarized debate characteristic of the Rabin-Peres era. Arab-Israeli negotiations have their own logic. The Rabin-Peres era brought dramatic breakthroughs; Netanyahu consolidated; and Barak is charged with securing final deals with the Palestinians, Syrians, and Lebanese. Many obstacles, however, may restrict Barak’s ability to deliver. The poor performance of his One Israel list and the fragmentation of Israel’s parliament mean he has to form a coalition that includes nine parties⁴—an even larger number than the one Netanyahu found so difficult to manage and that eventually brought down his government in December 1998. The coalition partners do accept the consensus approach to negotiations with the Arabs, but many tensions in other areas (writing a constitution or religious-secular divisions) will make life difficult for the prime minister. Barak will have to maneuver carefully to avoid the internal party and block dissent that defined and then ended the Netanyahu era.

Netanyahu and the Likud Party. If Likud is to rebuild it has four clearly identifiable areas to work on: leadership, technical changes, ideology, and socioeconomic.

(1) Leadership. For now, the magnitude of Netanyahu’s defeat means that he will go into the political wilderness. By resigning so quickly as leader of the Likud and even leaving his parliamentary seat, however, he may have preserved his long-term political future. In the meantime, the Likud needs to rebuild its leadership. During its heyday in the 1980s, the party excelled in its young second-tier national elite— figures such as Dan Meridor, Ehud Olmert, Ronnie Milo, and Netanyahu made a stronger team than their Labor counterparts. The potential return of some of the Likud leadership who deserted during the Netanyahu era could help in the rebuilding process. In particular, should the Center Party not hold together, it is possible that at least two senior Likud figures could be looking to come home.

(2) Changes in the electoral law. If Likud is to regain anything of its old stature, it must win support for changes in Israel’s electoral system to return to the more usual parliamentary vote, without the direct vote for prime minister. In 1999 Likud was competing for the same votes as Shas (Sephardim, low income) but without being able as directly to stress the ethnic and religious roots as Shas. A Likud MP, Ruby Rivlin, puts it this way:

This scenario is likely to be repeated for any candidate of the Right in forthcoming elections making it difficult for Likud to improve its Knesset position.

(3) Policy and ideological change. Some in the Likud view the abandonment of the party’s ideological commitment to “Greater Israel” and its subsequent embrace of territorial compromise for peace as the reason for the party’s decline. They are partially correct, but not because the old views are a vote winner, as the terrible performance of the advocates of Greater Israel in 1999 suggests—they won only four seats—but the embrace has helped to dislocate the Likud from parts of its constituency. It is likely that the Likud will find its future niche by accepting territorial concessions to the Arabs but more cautiously than Labor and demanding more compliance with written agreements.

(4) Socioeconomic. Likudniks who are looking to areas other than foreign policy to rebuild their party tend to focus on socioeconomic issues. The priority must be to rebuild bridges with those Sephardim who deserted to Barak and Shas. But this will not be easy, for years of not delivering to key economic constituencies will take a long time to repair. Here Likud is in an unusual bind for, unlike most conservative parties, it primarily represents lower income groups in Israel. This has created a permanent tension between the need to deliver benefits to this group and the need for economic liberalization (which would initially hurt lower-income groups). The Netanyahu government attempted a fudge that did not work.

The Right is currently in a turmoil caused by Netanyahu’s larger-than-expected defeat and the poor performance of the Likud and the National Union. Likud now must choose between regaining its ideological purity and in all likelihood returning to its pre-1977 position as the perennial party of opposition or continue the policies outlined by Binyamin Netanyahu and then hijacked by Ehud Barak.

For the first time since 1977, the peace process did not dominate the 1999 election campaign; Barak and Netanyahu did not have major policy differences on this issue. Almost unnoticed, a national consensus in Israel has emerged on relations with the Arabs. It contains several major elements: Yes, to a continuation of the Oslo Accords with the Palestinians; yes, to a demilitarized Palestinian state in the West Bank and Gaza; yes, to territorial compromise with Syria over the Golan Heights; and yes, to a withdrawal of the Israeli army from Southern Lebanon. There is also a consensus on the red lines that Israel will not cross: No return to the pre-1967 borders; no formal re-division of Jerusalem; and no abandonment of strategic Jewish settlement blocks. In other words, Labor and Likud in principle both accept territorial withdrawal in exchange for peace.⁶ The election did not represent a major realignment on the peace process. The revolution had in effect already taken place with Netanyahu and the Likud’s decision to embrace the concept of territorial compromise and the Oslo accords in 1996. There are differences between the parties, to be sure, but these concern details, and not ideological issues, as was the case before 1996. Likud has essentially accepted a functionalist solution of the Palestinian problem that resembles the Labor Party position; at the same time, Labor has accepted the implementation along the lines Netanyahu mapped out: Arafat must make a maximum effort to prevent terrorist attacks by Palestinian groups against Israel. It bears noting that Barak, in his very first meeting with Arafat on July 11, 1999, reiterated this point and even stated that he would be tougher on terrorism than Netanyahu had been.⁷

Evidence that a consensus exists around these points is found in a variety of polling data conducted for the Israel media during the election campaign⁸ and in detailed questions asked by the Tami Steinmetz Center for Peace at Tel Aviv University (Table 2).⁹ Further, the election results themselves confirm these positions, as the new parliament contains only a few members who actively oppose this consensus (around eleven of the 120 members). In 1996, The Third Way (which campaigned on a single issue, that of maintaining Israeli control over the Golan Heights) won four seats; in 1999, the party failed to win even a single seat and disappeared from sight. Regarding Jerusalem, it is noteworthy that one of the central issues of the 1996 campaign—Netanyahu’s charge that Labor would divide Jerusalem—failed to resonate. If anything, Netanyahu’s credentials came under scrutiny after revelations that one of his ministers had secret talks with Palestinian Authority (PA) officials in the city.¹⁰

This national consensus means that the highly polarized Israeli political society characteristic of the Rabin-Peres era is no more. Ironically, though Netanyahu himself is highly controversial, he leaves Israeli society far less divided than he found it; this may prove to be his lasting legacy. Netanyahu can take solace from the fact that historians are likely to judge him more favorably than his political contemporaries. Yes, the electorate grew very tired of Netanyahu’s negative messages and his erratic modus operandi, but it accepted the overall framework of his foreign policy.

Commentators who claimed that the election marked a significant shift in Israeli national positions on the peace process ignore the fact that the Israeli electorate did not reject the overall parameters of the Netanyahu-led government’s policies on the peace process. In fact, the 1999 elections were not decisive. Barak has been given a strong personal mandate to cut a deal on the Arabs—but within the framework that Netanyahu (and not Peres) has mapped out.

¹ Interview with David Bar-Illan, director of Policy Planning and Communications, Prime Minister’s Office, Jerusalem, Apr. 13, 1999.
² For example, The Jerusalem Post, May 4, 1999.
³ Amotz Asa-El, “Bibi’s Balance Sheet,” The Jerusalem Post, Apr. 26, 1999.
⁴ Remembering that One Israel itself consists of three hitherto separate parties (Labor, Gesher, and Meimad).
⁵ The Jerusalem Post, June 4, 1999.
⁶ Ibid., Apr. 29, 1999.
⁷ Associated Press, July 11, 1999.
⁸ For example see the Gallop poll published in Ha’aretz, Mar. 23, 1999.
⁹ The Peace Index (Tel Aviv: Tami Steinmetz Center for Peace, Tel Aviv University, Mar. 30, 1999).
¹⁰ Interview with David Bar-Illan, Apr. 13, 1999.