Coalition parties widely expect new elections to be held in February or March, due to problems in reaching agreement over the 2013 budget. Officially, elections aren't supposed to take place until October 2013.
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Prime Minister Benjamin Netanyahu will hold a series of meetings with his coalition partners this week and next to see if agreement can be reached on the massive budget cuts he deems necessary for next year. This will be the first serious round of budget talks he has held - a fact that has contributed to the widespread view that he plans early elections, since early elections will be mandatory if the budget doesn't pass by December 31.
After these talks, Netanyahu is expected to decide whether he sees a reasonable chance of passing the budget. If not, the view inside the coalition is that he will call elections.
Netanyahu's speech to the United Nations General Assembly last week heightened speculation that early elections were likely because until now, he has been telling associates that Israel will have to decide whether to attack Iran's nuclear facilities by December or January. In his speech, however, he postponed the "red line" to spring or summer of 2013.
"There's no doubt Netanyahu would rather go to elections before the 'red line' deadline and change the campaign agenda from economic and social issues to security issues," a senior Likud official said. "Aside from Netanyahu, no prime ministerial candidate can show enough of a record to be suitable for war with Iran."
A senior minister from Netanyahu's Likud party who is considered close to the premier told Haaretz on Monday that barring some unexpected development, he expects the election to be advanced because the budget cuts will be "extremely problematic for the public."
"I don't see any logical reason to postpone the election until October," he said. "It would be more fitting to go to early elections - unless the prime minister decides he will pass a budget at any price."
But another senior Likud official said it's "doubtful that Netanyahu could pass the upcoming budget even if he wanted to."
Avigdor Lieberman, whose Yisrael Beiteinu party is Netanyahu's largest coalition partner, also thinks the election will be moved up. His party doesn't want early elections, he said, but he doesn't think it will be possible to reach agreement on the budget.
Atzmaut chairman Ehud Barak considers early elections likely as well, and has already begun campaigning via a series of statements aimed at presenting himself as more moderate than Netanyahu, especially on the Palestinian issue.
For the past few weeks, Netanyahu has tried through various channels to persuade coalition parties to support the necessary budget cuts and avoid early elections. While all the parties have agreed in principle, they have so far been unable to reach agreement on the details.
"Netanyahu could decide now to try to throw his whole weight behind passing the budget," one senior Likud official said. "After all, he's going to be the next prime minister too, so his requests of the various factions carry weight. But it's not at all clear that such a move would be to our advantage."
At a gathering he hosted for coalition members after last month's Rosh Hashanah holiday, Netanyahu said he would prefer passing the budget to early elections. And associates said he means it, because he believes the new coalition he will have to form after the elections won't be as stable and convenient for him as the current one.
But at the same time, Likud sources said, he realizes this may be impossible, so preparations are being made for early elections.
"It's not final, but the messages coming from his bureau in recent days are that the direction is early elections," another senior Likud official said.
Party functions, he added, are already "on a clear and tight schedule: The convention will be held in November, the primaries will be held in December, and in February, there will be elections for the Knesset." And Knesset members are already holding numerous political events for their supporters "on the theory that we're at the height of an election campaign," the senior Likud official said.
But a source in Netanyahu's bureau insisted that while the prime minister is expected to make a decision on early elections "in the coming days, no such decision has been made yet."