Israel Politics

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Israel: Benjamin Netanyahu set to take on fourth term as PM

April 14, 2015

The right-wing Likud party led by incumbent Prime Minister Benjamin Netanyahu won the 17 March snap elections with a voter turnout of 72%, thus indicating no major changes in the direction of economic policymaking for the next four years. The Likud party secured 30 seats in the next parliament, or Knesset, which was a much better result than what had been foreseen in opinion polls. Isaac Herzog, Netanyahu’s main competitor and the leader of the left-wing Zionist Union, managed to win 24 seats—a result that was broadly in line with the pre-election ballots. Surprisingly, the Joint List union, an alliance of four Arab-dominated parties, took third place with 13 seats.

Israeli election procedures require the country’s president to consult with the leaders of all the parties elected in the next Knesset regarding which candidate they recommend to take the office of PM. Netanyahu’s strong support among the center-right leaning parties gave him an advantage over Herzog and President Reuven Rivlin officially designated Netanyahu Prime Minister late last month. Netanyahu now has until the first weeks of May to form a coalition government.

In the most likely scenario, the governing coalition will consist of the Likud party and the right-leaning Jewish Home and Yisrael Beiteinu parties, the ultra-orthodox United Torah Judaism and Shas parties, as well as the center-right Kulanu party. This combination will give Netanyahu control over 67 seats in the Knesset, 6 more seats than necessary for a majority. The new government can only take office after it secures a vote of confidence in Parliament.

Netanyahu’s continuation of leadership will likely not spell any major changes to the direction of economic policymaking. Matt Spivack, Israel analyst at Frontier Strategy Group comments:

“Investors seem confident that Prime Minister Benjamin Netanyahu's victory ensures certainty on domestic policies, the budget in particular. For example, both energy and pharmaceutical stocks saw an uptick after the Likud victory. Energy is an important sector for investment given development of offshore oil resources. Pharmaceuticals are expected to benefit from the next budget, as health spending was a top priority entering the election campaign.”

Conversely, more uncertainty is expected on issues regarding foreign policies. The PM’s recent hawkish statements on the creation of a Palestinian state could lead to a derailing of the peace process. In addition, the potential closure of a historic deal between the West and Iran could exacerbate relations between Israel and the Obama administration.


Author:, Senior Economist

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