Israel: General election unlikely to lead to significant shift in economic policy
March 27, 2019
On 9 April Israelis head to the polls to choose the 120 members of the Knesset, the country’s unicameral parliament. Incumbent Prime Minister Benjamin Netanyahu is currently the favorite to form a government despite ongoing corruption scandals, which would provide policy continuity. Benny Gantz from the new Blue and White coalition is the other realistic candidate to become prime minister; given the coalition’s moderate economic policy stance, this would be unlikely to mark a major departure from Netanyahu’s premiership. Whether the next government is headed by Netanyahu or Gantz, it will likely be composed of various political groupings, which could generate political instability and complicate the passage of substantive reforms.
Benjamin Netanyahu’s Likud party should benefit from the support of several other right-of-center groupings, making Netanyahu the most likely PM even if his party does not win the elections outright. Such an outcome should lead to a continuation of current policies, with an ongoing focus on keeping taxes low and boosting competitiveness.
Benny Gantz’s Blue and White coalition—an alliance formed earlier this year between the Israel Resilience, Yesh Atid and Telem parties—is also expected to do well in the polls and could even gain the most votes, although it is less clear whether it would be able to garner enough support from other parties to secure a majority in parliament. Available signs indicate that a Blue and White-led government could adopt a slightly more centrist economic stance, with a greater focus on social equality and additional investment in public services such as education, healthcare and transport. However, a significant shift in economy policy would be unlikely.
Whoever heads the next government could have difficulty enacting comprehensive reforms due to the fractured nature of parliament. The next administration could also struggle to last for its full four-year term; after all, Israeli governments have historically lasted for less than four years, in many instances due to political disagreements within the governing coalition.
Author: Oliver Reynolds, Economist