Netanyahu’s parting shot

Aug 10th 2005
From The Economist Global Agenda

Binyamin Netanyahu has resigned from his post as Israeli finance minister, just a week before the government starts to pull Jewish settlers out of Gaza. His opposition to the Gaza disengagement is well known, but the timing of the move suggests that it is a piece of political opportunism, designed to maximise Mr Netanyahu's chances of unseating Ariel Sharon once elections are called. From the Economist Intelligence Unit's ViewsWire

OPPOSITION to the Israeli government's Gaza disengagement plan was the stated reason for Binyamin Netanyahu’s decision to resign from the cabinet of Ariel Sharon. The outgoing finance minister’s budget for 2006 may provide him with the mechanism to engineer the downfall of Mr Sharon’s government, smoothing his own passage to the leadership of the Likud party and to victory in a general election. However, by delaying his departure for so long, Mr Netanyahu has opened himself up to charges of political opportunism, which could yet compromise his efforts to supplant Mr Sharon.

The Gaza plan has posed a dilemma for Mr Netanyahu ever since Mr Sharon announced it in early 2004. He quickly made clear his discomfort with the notion of making unilateral concessions to the Palestinians, but decided to address the issue from within the government rather than move into opposition. If Mr Netanyahu had bailed out earlier, it is doubtful whether he would have been able to stop Mr Sharon from forging ahead with the plan, even if he had been required to fight a fresh election to do this. In the meantime, Mr Netanyahu was able to enhance his reputation through his assured handling of the finance portfolio. He has presided over a period of robust growth in the Israeli economy, while pushing through reforms to the tax and welfare systems and ending the dominance of Israel’s big banks over the capital markets.

In his resignation statement, Mr Netanyahu was scathing about the Gaza plan. “I am not willing to be a party to a move that ignores reality and blindly advances toward the establishment of an Islamic terrorist base that threatens the state,” he said. The occasion for his move was a cabinet meeting called to approve the practical arrangements for the withdrawal from the first cluster of Gaza settlements on August 15th. Mr Netanyahu voted for the original cabinet decision to back the disengagement plan, in June 2004, and in subsequent votes he either supported Mr Sharon or abstained. Assuming that Mr Netanyahu had decided long ago to make a stand on the issue, the August 7th cabinet meeting was his final opportunity to do so.

Mr Sharon sought to reassure Israel’s financial markets that Mr Netanyahu’s departure would not result in any change in economic policy. He selected one of his closest allies in the Likud, Ehud Olmert, to replace Mr Netanyahu as finance minister. His first task was to present the 2006 budget to the cabinet, which approved it on August 10th. Mr Sharon and Mr Olmert are unlikely to face serious trouble in getting the budget through the cabinet, despite the strong reservations of Labour members of his coalition government. Labour, which is the second-largest party in the Knesset (parliament) after the Likud, is unwilling to do anything at this stage that might affect the progress of the disengagement plan.

However, when the Knesset reconvenes in November the situation will be different. With the Gaza withdrawal completed, Labour will be in a better position to contemplate bringing down the coalition and forcing fresh elections. Mr Sharon could forestall this by accepting Labour proposals for amendments to the budget. However, this would give Mr Netanyahu the opportunity to claim that Mr Sharon had jettisoned fiscal responsibility for his own political ends. An estimated 13 of the 40 Likud parliamentarians share Mr Netanyahu’s opposition to the Gaza disengagement, and if they all voted against the budget they would stand a good chance of bringing down the government. However, this could still be a long-drawn-out process, as the budget law requires three readings, and the government has until the end of March 2006 to get the legislation approved.

Another way for Mr Netanyahu to force the issue would be to mobilise his supporters in the Likud behind a no-confidence motion as soon as the Knesset reconvenes. If such a gambit were to succeed there would be the prospect of a general election taking place in late January or early February—there is a mandatory 100-day interval between the dissolution of parliament and fresh elections. In the event of a prolonged parliamentary battle over the budget resulting eventually in the fall of the government, the elections would take place in June or July. It is also possible that Mr Sharon will manage to keep his minority government together until the present Knesset’s term runs out towards the end of 2006.

By leaving the government, Mr Netanyahu has provided a clear signal of his intention to challenge for the leadership of the Likud once a new election is called. And two opinion polls this week suggest he would win that battle: Maariv, a daily, puts Mr Netanyahu on 42.1% and Mr Sharon way down on 27.7%, while the gap in a poll by Haaretz, another daily, is narrower, 35% against 29.1%. The conflict between the two dominant figures of the Israeli right should, in theory, work to the advantage of Labour. However, having registered its worst-ever showing in the 2003 election, the party has shown little sign of recovery, and has yet to decide on who will be its leader in the next election.

As well as making clear his opposition to the Gaza pull-out, Mr Netanyahu has stated his firm opposition to a substantial Israeli withdrawal from the West Bank and to providing any concessions to the Palestinians over Jerusalem. Mr Sharon’s position on the next steps in the peace process remains ambiguous. However, the success of his Gaza initiative will depend to a large extent on whether he can demonstrate that it has enhanced Israel’s long-term security. This will be difficult to achieve without the resumption of peace negotiations with the Palestinians over the final shape of a Palestinian state.

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