Israeli Prime Minister Benjamin Netanyahu in Jerusalem, December 19 2018. File picture: REUTERS/AMIR COHEN.
Israeli Prime Minister Benjamin Netanyahu in Jerusalem, December 19 2018. File picture: REUTERS/AMIR COHEN.

Tel Aviv — The fight to dislodge Benjamin Netanyahu as prime minister of Israel just got a lot harder.

Former military chief Benny Gantz started on Wednesday with a midnight deadline and two problematic routes to a coalition government that would send Netanyahu packing after a decade in power. By midday, both seemed closed, and the prospect of a third election in less than a year loomed large.

Gantz can still team up with Netanyahu’s Likud party in a national unity government and cave in to the prime minister’s demands to hang on to power even if he’s taken to court on corruption charges. But the odds of that happening seemed slim after their meeting last night broke down in mutual recriminations.

His other alternative — forming a minority government — was shot down by political kingmaker Avigdor Liberman, whose party he would have needed to get there.

“Short of one or both of the leaders coming down a little bit further from their tree, or perhaps a game-changing decision from the attorney-general,” who will soon decide whether to indict Netanyahu on corruption charges, “we’re going to third elections,” said Ashley Perry, a political strategist and former Liberman adviser.

While Netanyahu and Gantz stare each other down, the country has been run by a series of caretaker governments with limited ability to fix urgent problems like the budget deficit, an antiquated transportation system and overcrowded hospitals. The political paralysis has also frustrated efforts by the Trump administration to unveil its Middle East peace plan.

“It could really hurt the economy,” said Alex Zabezhinsky, chief economist for Meitav Dash Investments. “If you don’t have a government for a long period of time, like about a year, you feel substantially the impact of this on investment, infrastructure, in many industries.”

Israel’s shekel weakened 0.3% to 3.4723/$ at 2.19pm in Tel Aviv.

No agreement

Liberman — a former defence minister whose refusal to team up with one-time ally Netanyahu after the April 9 election set the September 17 re-vote in motion — blamed both Gantz and Netanyahu for failing to come together when Israel is facing security threats from Iran and growing budgetary issues.

“There’s no other option other than a unity government,” Liberman said at a press conference.

Should Gantz come up short, the ball goes to parliament’s court, where any member — including him and Netanyahu — can try to form a majority government. If that doesn’t work out, Israel would schedule a third vote in less than a year, with polls showing yet another deadlock between Netanyahu and Gantz.

Voter sentiment could change, however, depending on how attorney-general Avichai Mandelblit proceeds with Netanyahu’s three corruption cases. While bribery and fraud charges are widely anticipated, an actual indictment could hurt the prime minister at the polls. Netanyahu would likely cruise to another term if cases are dropped.

Israeli media have reported that a decision by Mandelblit could come as soon as next week and by mid-December at the latest.

Though Netanyahu denies wrongdoing, he’s angling to change Israeli law to grant sitting prime ministers immunity from prosecution. For this reason, he has been less willing to compromise than Gantz, analysts say.

Bloomberg