Three Scenarios That May Set the Tone for Israel's Next Election

In the Knesset, observers see three scenarios playing out that could variously benefit Netanyahu or his arch-rival, Lapid - including the decisive factor of the budget.

Emil Salman

Sometime in the next few days, Prime Minister Benjamin Netanyahu will call the heads of the coalition faction to his office and urge them to work together to ensure the 2015 budget and Arrangements Law are approved by the Knesset in a quick and timely fashion.

His message is likely to fall on deaf ears. The leaders of his four coalition partners – Finance Minister Yair Lapid of Yesh Atid, Economy Minister Naftali Bennett of Habayit Hayehudi, Foreign Minister Avigdor Lieberman of Yisrael Beiteinu and Justice Minister Tzipi Livni of Hatnuah – want to know first whether there will be elections by the middle of next year.

The fact is that the budget as well as Lapid’s pet project, the zero-VAT law, will figure big in how long the government survives and under what circumstances elections will be called.

In fact, Netanyahu has said privately that he expects the coalition to break up sometime in the next few months and elections moved forward to 2015. That means the budget now on its way to the Knesset will be the last of the current government. Reports have it that the prime minister himself told the United Torah Judaism lawmakers Yaakov Litzman and Moshe Gafni that he was looking toward an election in the middle of next year .

One sign that Netanyahu is thinking about elections is that he is trying to move forward primary voting for his Likud party sometime before the start of December.

Netanyahu would rather be the one calling elections rather than Lapid or Livni, in the event that one of them bolts the coalition because the zero-VAT or conversion law fails to pass the Knesset. In any event, early elections would exploit the weak poll standings of rivals like Lapid.

Netanyahu is aware that the finance minister is in a politically difficult position because he has failed to deliver the benefits to Israel’s middle class he promised in the last elections. Last year Lapid vowed that within a year and a half to two years everything would be better – that young couples would be able to afford a home and that prices would fall.

None of that has happened, and opinion polls show Lapid’s Yesh Atid party losing nine of its 19 Knesset mandates were elections to be held today.

Netanyahu has another good reason, given the state of the economy and middle class angst, to move elections forward: to prevent giving his former communications minister, Moshe Kahlon, enough time to organize his new political party and score points with the public. Unlike Lapid, Kahlon is still admired for his shaking up the cellular telephony market three years ago to the benefit of millions of callers.

Early elections would also give Lieberman less time than he needs to strengthen Yisrael Beiteinu after it broke off its partnership with Likud.

With election fever rising, the coalition agreement calls for the budget to reach the Knesset by November 10 – 10 days later than the legal deadline. The first of three readings is supposed to take place within the week, although the opposition is expected to mount a filibuster. Only after that first vote will the zero-VAT law go to its second and third votes, becoming law.

In the Knesset, the talk is of one of three scenarios playing out.

The first sees an orderly process: The budget passes the first reading November 12, after which zero-VAT legislation will follow and be voted into law. The budget will be similarly passed before the end-of-the-year deadline. Netanyahu takes advantage of the political quiet to call elections at his choosing.

The second scenario sees zero-VAT winning Knesset approval in its second and third readings, but the 2015 budget doesn’t even pass the hurdle of the first reading. Lapid quits because he has gotten his zero-VAT, the coalition breaks apart and elections take place in the middle of 2015. Under this scenario, Lapid would be the big winner because he gave voters the lower home prices he promised.

In the third scenario, neither the budget nor zero-VAT clear the Knesset by the end of the year. The government will continue operating on the basis of the 2014 budget on a month-to-month basis. If by the end of March, there is still no 2015 budget, the Knesset by law must disperse – unless lawmakers approve legislation saying otherwise.

In such a case Netanyahu benefits on several levels: He stopped Lapid’s zero-VAT and will have the 3 billion shekels ($800 million) thus saved to redirect to social spending or for defense. It also means he won’t be presiding over a budget he never much liked to begin with. After elections, he can revised the 2015 budget and telescope in the 2016 spending package as well.