The New Israeli Government

Although the new Netanyahu government seems fragile with only 61 of 120 Knesset members, past governments (Menachem Begin/Yitzhak Shamir, 1981-84; Yitzhak Rabin, 1992-95) survived similar circumstances. The government is nevertheless certain to confront a host of formidable domestic and international challenges that will keep it under sustained pressure:

Economic challenges: In the immediate future, the government can fall if the November 5^th budget-approval deadline is not met. Further down the road, it will need to

Prime Minister Benjamin Netanyahu (right) consults with Finance Minister Moshe Kahlon.

• Rein in the deficit (including defense budget cuts) - crucial for the sustenance of Israel’s current prosperity;
• Secure an equitable arrangement for the exploitation of the newly discovered offshore natural gas reserves - a highly contentious public issue;
• Ensure the success of Finance Minister Moshe Kahlon’s ambitious economic reforms, likely to be challenged by some coalition members (e.g., ultra-Orthodox insistence on more generous social benefits; the commitment of Naftali Bennett’s The Jewish Home party to settlement expansion).

“Social basket” issues: The coalition parties will have to overcome their divisions over such issues as conscription of the ultra-Orthodox for military or national service; Jewish conversion processes; control of religious institutions; and the future of the Chief Rabbinate.

The Palestinian problem: The continued internationalization of the Palestinian problem and the attendant intensification of the de-legitimization campaign will continue to be major challenges. The settlement issue, in particular, will come under intense international scrutiny, with Prime Minister Netanyahu likely to block building activities outside the settlement blocs and Jerusalem.

U.S. Relations: Despite constraints on U.S. spending, and President Obama’s personal aversion to Netanyahu, the administration and a sympathetic Congress will continue to support Israel’s national security needs in the areas of armaments and defense.

Netanyahu’s credibility: The prime minister must reestablish his personal credibility, dented during the election campaign, by ruling out the formation of a Palestinian state under his watch. In prior governments, politicians like Ehud Barak, Tzipi Livni, and Yair Lapid helped boost Netanyahu’s credibility with the Europeans and the U.S. administration, but there is no such “force multiplier” in the current right-wing government.

It may well be that Avigdor Lieberman’s party will join the government at some point, giving it a 67-53 majority. The most likely change, though unlikely now, would require a willingness by Yitzhak Herzog and Tzipi Livni to go against their colleagues, should the prime minister and Kahlon decide to invite the Zionist Union to join the government.

Nonetheless, the new government will likely survive despite its razor-thin majority, and Netanyahu will remain prime minister in the face of the looming challenges.