Netanyahu Boxed In by Pressure Over War, Politics, Budget

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(Bloomberg) -- When Israel’s Supreme Court late Monday struck down a judicial overhaul law of Prime Minister Benjamin Netanyahu, his Likud party assailed the justices for ruling during the war on Hamas, when national unity is paramount.

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But the response to that backlash was telling: It was the overhaul that led to disunity and the war, a growing number of critics are saying. As chief military spokesman Daniel Hagari put it, the sense that Israel was divided and weakened over the court plan may have played a role in Hamas’ decision to attack in October.

The chorus of voices that’s seizing on the link between the war and the populist attempt to weaken the judiciary reflects a growing and intense set of constraints on Netanyahu — military, diplomatic, budgetary and judicial — as he begins his second year presiding over the most right-wing and religious coalition in Israel’s history.

Whether his government will survive 2024 is a renewed topic of debate that will now play out against the backdrop of Israel’s worst armed conflict in half a century.

“There is a real dissonance between his control of parliament and the strong mistrust by the public — and it’s a dissonance I don’t think can last,” said Amichai Cohen, a senior fellow at the Israel Democracy Institute, a liberal think tank.

Others argue that as long as he keeps his coalition partners happy with budgetary largesse, Netanyahu will remain in office. At the same time, critics that include the central bank are calling for fiscal adjustments such as spending cutbacks to get a grip on Israel’s growing debt burden.

Gaza, Economy

There are many factors at work as Netanyahu plots his way through the upheaval.

Hours before the high court’s ruling, the military said it was pulling thousands of troops from Gaza as it starts moving toward a more targeted phase of combat. It’s doing so, by all accounts, due to US pressure to reduce casualties and start planning for the day after in Gaza.

It also needs to return reservists to their day jobs, filling a void that’s paralyzed swathes of what had been one of the most dynamic high-tech economies in the world. Apart from its sheer human toll, the war will come at a price to the budget that the central bank estimates at around 210 billion shekels ($58 billion).

In addition, next week South Africa is taking Israel to the International Court of Justice in The Hague, accusing it of genocide in Gaza. Israel rejects this as a blood libel, a centuries-old antisemitic slur, and plans a vigorous defense, according to the prime minister’s office.

But officials say that’s another reason to downgrade the war just now — pictures of 2,000-pound bombs exploding over civilian areas won’t help Israel’s case.

Attack and Aftermath

The war began on Oct. 7 when several thousand Hamas operatives infiltrated Israel from Gaza, killing 1,200 and kidnapping another 240. More than 100 hostages remain in Gaza and freeing them is one of the war’s aims.

Israel’s counter-attack has killed more than 22,000 Palestinians, according to the Hamas-run Health Ministry in Gaza. Much of the enclave’s north has been reduced to rubble and the United Nations says disease and hunger are spreading.

Israel says it’s destroyed a great deal of Hamas military infrastructure and killed 8,000 militants. Hamas is designated a terrorist organization by the US and the European Union.

For many in Netanyahu’s coalition, this is no time to yield to international demands and reduce the war’s pace.

Danny Danon, a senior Likud lawmaker, spoke for others on Monday when he accused the prime minister of “bowing down in the face of American pressure.” The far-right coalition members are even more adamant and speak publicly about moving nearly all of Gaza’s 2.2 million inhabitants to other countries.

That isn’t the government’s policy — although what it plans to do with the hundreds of thousands of homeless remains unclear.

US Secretary of State Antony Blinken is due in Israel on Friday with the goal of helping the government move fully to its next and more targeted phase of the war. He will also listen to Israel’s emerging plan to use local Gazan leaders as temporary administrators for aid and rebuilding purposes.

Israel is intent on uprooting Hamas and not handing over the keys to the Palestinian Authority, which remains the US’s preferred route.

Government Reboot

As the war shifts in coming weeks, it’s widely expected that Benny Gantz, an opposition leader who joined the emergency war cabinet, will leave the government along with his close colleagues.

Since Netanyahu is widely held responsible for the security breach that led to the Oct. 7 attack, some argue that the clock will begin ticking for new elections. Gantz is leading all polls for prime minister.

“Within weeks of Gantz leaving, the public will start to protest and call for the government to go,” Cohen, the Israel Democracy Institute fellow, said.

The Israeli daily Yedioth Ahronoth points out that in none of the nearly 100 recent polls from March 16 has the governing coalition been projected to win a majority.

But Yoel Esteron, founder and publisher of the business daily Calcalist, says this lack of popularity only makes Netanyahu “more desperate and more dangerous.”

Grip on Power

“He’ll cling to his seat of power and do everything he can to avoid going to elections,” Esteron said.

Once Gantz leaves, the old coalition will move back in, with its 64-member majority of the 120-seat Knesset and three years still to go. Five of its members would have to bolt for the government to fall.

No one is counting on Netanyahu to leave voluntarily, as then Prime Minister Golda Meir did in 1974 after the intelligence failure that led to the 1973 Middle East war.

Netanyahu doesn’t blame himself for Oct. 7, saying the entire security establishment believed Hamas had been deterred and wouldn’t dare try to strike in the way it did.

Other factors could also interfere, notably tensions with Hezbollah in Lebanon.

Low-level fighting continues there, and one reason some brigades are leaving Gaza is to ready them to be moved north later this year if the Lebanon front explodes. US special envoy Amos Hochstein is due in Israel on Thursday to seek a diplomatic solution.

On Tuesday, a top Hamas official, Saleh Al-Arouri, was killed in an explosion in Beirut widely assumed to be an Israeli attack. This seems likely to complicate Hochstein’s mission.

Merav Michaeli, who leads the opposition Labor Party, told reporters on Tuesday that Netanyahu’s difficulties are “huge and dire.” She added, “That said, it doesn’t mean that his political abilities and his determination to stay in power can’t keep him prime minister.”

--With assistance from Gwen Ackerman.

(Adds killing of Hamas official in Beirut in 31st paragraph.)

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