- Title: VARIOUS/FILE: New Israeli government faces political and economic challenges
- Date: 1st April 2009
- Summary: JERUSALEM, (FILE - JULY 2008) (REUTERS) NETANYAHU MEETING THEN U.S. DEMOCRATIC PRESIDENTIAL CANDIDATE BARACK OBAMA
- Embargoed: 16th April 2009 13:00
- Keywords:
- Topics: Domestic Politics
- Reuters ID: LVAC58R1MY09EE4PF95M92BUIWO8
- Story Text: Political and economic analysts comment on the challenges faced by the new Israeli government headed by Benjamin Netanyahu's rightist Likud party.
An Israeli government headed by Benjamin Netanyahu's rightist Likud party is due to be sworn in on Tuesday (March 31) after Netanyahu won praise from President Shimon Peres for a government policy that stops short of directly endorsing a U.S.-backed goal of Palestinian statehood.
Netanyahu enlisted the centre-left Labour party last week into a broad-based administration that could help him avoid friction with Washington over peacemaking with the Palestinians.
The hawkish Likud leader was asked to form a government after a February 10 election produced a strong rightist bloc in parliament.
Though voicing objections to withdrawing from occupied land in exchange for peace, Netanyahu, as Israeli prime minister in 1996, pulled forces out of part of the West Bank town of Hebron under an interim peace accord. An early election triggered by a further U.S.-brokered deal with Palestinians ended his term in 1999. As finance minister in 2003, Netanyahu implemented market reforms credited with stimulating economic growth despite a Palestinian uprising. He quit his Cabinet post in 2005 in protest against a withdrawal from Gaza.
He has failed to enlist the centrist Kadima party, which won 28 seats to Likud's 27 in the election, but managed to form a coalition that numbers 69 out of the 120 members of parliament.
The Labour party is now led by Defence Minister Ehud Barak, who served as prime minister from 1999 to 2001. During that period he pulled Israeli forces out of south Lebanon and held peace talks with the Palestinians and Syria, but failed to clinch deals. His handling of the Gaza war won praise in Israel, but did not help his party at the polls. Barak is to stay on as defence minister under Netanyahu, but faces anger from many in his own party who preferred to go into opposition.
Netanyahu has also signed a coalition pact with Avigdor Lieberman, who heads the far right Yisrael Beitenu party.
Lieberman's policies towards Arabs, which some critics call racist, has won him a wider electorate, coming third ahead of Labour.
Lieberman says land where many of Israel's 1.5 million Arabs live should be "swapped" for West Bank Jewish settlements in a peace deal with the Palestinians. He also wants a loyalty test for Israeli Arab citizens, but does not oppose in principle establishing a Palestinian state.
In January 2009, ahead of a hearing in Jerusalem's Supreme Court filed by Lieberman's party regarding a petition against the participation of Arab parties in the elections, he was filmed in a verbal clash with an Israeli-Arab parliament member.
"We will stay here, we were here and we will stay no matter how angry you are, and despite the rejection of all the Faschists in the state," Israeli-Arab member of parliament Taleb Al-Sana told Lieberman, who retaliated: "We will treat you as the Hamas treated you. You are a terrorist. You are a terrorist."
A preliminary coalition pact with Netanyahu making Lieberman foreign minister has annoyed Arab governments.
Israeli Channel 1 political correspondent Ayala Hason told Reuters that Netanyahu's government is much more moderate than expected.
"Ultimately, it's not the government that he expected to have. He preferred unified government with Kadima, much wider government. But given the results of those elections, he has now a better government than he was expected to have. He could have had easily right wing government with Lieberman and the other factions and he fought a lot to have the labour party within the government. Is is done now, and it's much more moderated government than it was expected," Hason said.
On the economic front, Netanyahu's government and newly appointed Finance Minister Yuval Steinitz have many challenges to face.
Eitan Avriel, an analyst and chief editor of a leading economic Israeli website, told Reuters that Netanyahu "will have to pray" in order to deal with the global crisis.
"Israel's economic situation is tied to the global economic situation so the current government is just going to make more difficult to the new government to budget its finance. It's starting already with a deep budged deficit and that deficit is only going to be bigger now that he (Netanyahu) has pledged over a billion dollars, four billion Shekels to his coalition partners. So he's really starting with a difficult situation, he does not have much room to manoeuvre, he might be forced at the end to make some cuts in the actual budged and this will have to come from somewhere," Avriel said.
Netanyahu pledged on Monday (March 30) to make every effort to achieve peace with Israel's neighbours and the Arab world, but again made no mention of Palestinian aspirations to statehood.
He has shied away from declaring support for the establishment of a Palestinian state in the West Bank and Gaza Strip, focussing instead on his plan to shore up their economies.
Under under the coalition deal with Labour, Likud agreed to respect all of Israel's international agreements -- a formula that includes accords envisaging Palestinian statehood. - Copyright Holder: FILE REUTERS (CAN SELL)
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