Netanyahu Fails to Form Government, 3rd Election Prospect Looms

Ivan Levingston
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Netanyahu Fails to Form Government, 3rd Election Prospect Looms

(Bloomberg) -- Israel’s Prime Minister Benjamin Netanyahu failed to form a government again, paving the way for a more centrist rival to try his hand or even possibly a third election in less than a year.

The unprecedented political quagmire marks a setback for the country’s longest-serving prime minister, who is awaiting a determination on whether he’ll be sent to trial on corruption charges. However, rival Benny Gantz of the Blue and White bloc appears to have no easier path to forming a government, raising the prospect of yet another revote that might save Netanyahu’s political hide.

In a video on his Facebook page, the prime minister tried to pin the blame for the continued political turmoil on Gantz, saying he worked “openly and behind the scenes” to try to form a “broad national unity government” but was repeatedly rebuffed by Blue and White.

Gantz, a former military chief who entered politics less than a year ago, has said he won’t sit in a government led by Netanyahu as he faces possible indictment. He’s also accused the prime minister of negotiating in bad faith by insisting the coalition also include religious and nationalist parties that have been Netanyahu’s traditional governing allies.

Netanyahu sent the country to a revote on Sept. 17 after failing to marshall a governing majority following the April election. The election’s inconclusive result presaged his second failure, and investors shrugged it off on Tuesday, with the shekel little changed.

While the prime minister’s Likud party remains publicly supportive of him, pressure on him to step aside could conceivably mount. At least one leading Likud member has said he is prepared to challenge him for the party leadership.

Gantz faces an equally difficult task in putting together a majority government unless he unites his party with Likud -- so far, a non-starter -- or win over surprise defectors. Legally he could propose a minority coalition resting on the support of outside factions like the Joint List of Arab parties, or former Defense Minister Avigdor Liberman’s nationalist Yisrael Beitenu, whose surprise refusal to join a Netanyahu-led government after the April vote catalyzed the September balloting. But such a government would be on shaky footing from the get-go.

The Blue and White bloc, in a laconic statement after Netanyahu gave up his coalition-building efforts, said it is “determined to form a liberal unity government under Benny Gantz, who the nation elected a month ago.”

President Reuven Rivlin has three days to inform Gantz of the decision to tap him next to form the government, and must first give all parliament factions a chance to convey their position on his decision, Rivlin’s office said on Monday.

If Gantz can’t form a government, then a majority of parliament members could nominate someone from their ranks -- a move without precedent. If all those options fail, then the country could head to a third round of elections, further delaying its ability to tackle a budget deficit, among other decisions.

“While most of the Israeli public and many political leaders abhor the idea, the likelihood has increased since September,” the Eurasia Group wrote in a note. “The subject is no longer taboo, and some factions -- including, potentially, Likud -- may end up benefiting from a rerun.”

The fiscal consequences “are not trivial,” the note added. “Israel would face the prospect of at least five consecutive quarters without a formal budget at a time when the deficit continues to widen.”

There’s no indication a third election would change the balance of power between parties, though by that time it would be clearer whether Attorney General Avihai Mandelblit will go ahead with his plans to charge Netanyahu with bribery and fraud as he’s signaled he might do. Netanyahu’s lawyers pleaded his case against indictment at a hearing earlier this month, and Mandelblit is expected to make a decision by the end of the year, Israeli media have reported.

To contact the reporter on this story: Ivan Levingston in Tel Aviv at ilevingston@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Amy Teibel, Paul Abelsky

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