Israel Headed to Elections: Lapid Rejects Netanyahu's Terms for Saving Coalition

Prime Minister had demanded Finance Minister back nation state bill, drop 0% VAT plan; Shas chair to faction heads: Set date for elections.

Yair Lapid and Benjamin Netanyahu at a cabinet meeting in October.Reuters

Finance Minister Yair Lapid late Monday rejected Prime Minister Benjamin Netanyahu's ultimatums presented to him in a meeting billed as a last-ditch attempt to preserve the coalition.

Netanyahu demanded that Lapid stop “sabotaging the work of the government,” retract his opposition to Netanyahu’s version of the Jewish nation-state bill, and freeze the zero-VAT plan, the flagship of Lapid’s economic agenda.

At the end of the hour-long meeting, Lapid told the prime minister that he could not accede to these demands – paving his way out of the coalition.

Moments after the meeting, Shas Chairman Aryeh Deri calls on all faction heads to "meet at once and to reach an agreement for setting a date as quickly as possible for elections." Shas' move brings forward elections, as Netanyahu will not be able to form an alternative coalition without the Haredi parties.

“If the unprecedented behavior of some government ministers continues, there will be no choice but to go to elections again,” Netanyahu said in a statement after the meeting. No reaction from Lapid was forthcoming by press time.

Netanyahu also demanded that Lapid transfer NIS 6 billion to the Defense Ministry for training and equipment, and free the funds necessary for the Israel Defense Forces to move its training bases to the Negev.

The meeting was the first between the two men since the crisis between them erupted a few weeks ago. The meeting was aimed at deciding whether the two could continue working together or whether new elections should be called.

Netanyahu’s associates said prior to the meeting that he hasn’t yet decided whether to continue the current coalition or call new elections, and his decision will rest largely on the outcome of the meeting with Lapid. Lapid’s Yesh Atid party is Netanyahu’s largest coalition partner.

“The prime minister doesn’t want elections at any price,” one Netanyahu associate said. “If he did, he’d have done it last week already. But he’s determined not to continue running the coalition the way it has operated to date.”

Sources in Netanyahu’s Likud party said they believe they have managed to block all possible avenues by which Lapid could replace Netanyahu with an alternative government without holding elections. This assessment is based on promises by the two ultra-Orthodox parties not to cooperate with such a move and conciliatory statements made recently by Foreign Minister Avigdor Lieberman, who heads another coalition party, Yisrael Beiteinu.

A few hours before meeting with Lapid, Netanyahu attacked the finance minister without mentioning him by name. Speaking at the start of a Likud faction meeting, he said he would call new elections if the ministers who have been attacking him don’t stop.

“I believe a government must work in harmony,” Netanyahu said. “In an effort to reach [such harmony], I’ve supported measures I didn’t completely agree with, like the zero-VAT bill. Unfortunately, I haven’t enjoyed the same support or fulfillment of even the most basic obligation – the loyalty and responsibility of ministers to the government in which they serve.”

The zero-VAT bill, which would eliminate value-added tax on the purchase of first homes, is Lapid’s pet project. Lapid, for his part, vehemently opposes a bill to define Israel as the Jewish nation-state, which is currently Netanyahu’s pet project.

Netanyahu also accused ministers of attacking his diplomatic policies. “Even construction in Jerusalem has become a controversial subject for them,” he said, adding that their criticism “strengthens international criticism of Israel.”

Certain ministers are trying to replace both the government and him, Netanyahu charged. “They are violating agreements that have been reached, such as increasing the defense budget and moving army bases to southern Israel.”

“I demand that they close ranks behind the correct policy for leading the country – for its security, its economy and lowering the cost of living,” he added. “If they agree to do so, we can continue to work together. If they refuse, we’ll draw conclusions and go to the voters.”

Lapid, for his part, urged Netanyahu not to call elections. “There’s still time to mend [the rift],” he told a meeting of his own faction earlier yesterday. “The public expects statesmanlike behavior from us.”

“The cabinet approved this budget, as well as the zero-VAT law,” he noted. “The prime minister supported both of them. He sat next to me, voted for both of them and promised me he would work to pass them both.”

“Elections now will paralyze the economy, delay programs meant to benefit the public and disrupt work plans,” Lapid added.