Israeli Mergers and Acquisitions

(Israel Policy Forum) — With the midnight Thursday deadline for Israeli political parties to submit their final Knesset lists in preparation for the March 23 election, the usual eleventh-hour freneticism is in full swing. The past week has seen both parties and individual politicians drop out of the race, new pairings pursued, and other combinations rejected. What makes this recognizable scene different from what we have been accustomed to seeing in the past is that there are varied forces that are pulling the relevant actors in different directions, and what might seem like an obvious move to strengthen one’s standing may end up having the opposite effect from what was intended.

On the pro-Netanyahu side of the spectrum, there are fewer parties or considerations to take into account. Likud is firmly behind Prime Minister Netanyahu and its Knesset list is set, and the Haredi parties – Shas and UTJ – are still publicly unwavering in their participation in the Netanyahu bloc. The only problem with which Netanyahu must contend is a familiar one, namely whether it is to his benefit to have the smaller parties to his right run separately or whether the whole is greater than the sum of their parts. With Naftali Bennett and Yamina seemingly determined to stand alone, Netanyahu had been desperately trying to convince Bennett’s erstwhile Yamina partner Bezalel Smotrich to combine his Religious Zionism party with Smotrich’s previous Jewish Home party, and to add Itamar Ben Gvir’s Otzma Yehudit (Jewish Power) party into the mix. If this seems like an incestuous Israeli political version of Groundhog Day, it is because Netanyahu has been deeply involved in these types of potential mergers throughout the previous three elections in this never-ending cycle, with Otzma Yehudit always playing a starring role due to its overtly racist platform and the resulting political taint that creates.

The dilemma Netanyahu faced was balancing the need to make sure that none of the votes that go to these parties are wasted by them not meeting the 3.25% threshold to enter the Knesset against the fact that Otzma Yehudit is so odious that it may repel voters who might otherwise vote for one of the other two parties were they to run without Otzma. The most recent polls had all three parties falling below the threshold on their own, with Smotrich’s Religious Zionism coming the closest to breaking through the barrier, but receiving five or six seats if they combined. But that math did not necessarily translate into an automatic merger; after the three parties ran together as a technical bloc that was the subject of controversy and condemnation in the April 2019 election, Otzma split away from the other two over a fight about allocation of Knesset seats and did not make the Knesset in the September 2019 election and was then frozen out of the creation of Yamina for the March 2020 election. Otzma’s sidelining was electorally risky based on the math and led to tens of thousands of wasted votes in both instances, yet was done nonetheless because of the reputational costs.

On Wednesday, part of the anticipated merger happened, and Smotrich will again head a party as he did during the first election that includes Otzma and its Kahanist acolyte Ben Gvir, who was given the third slot in the new technical bloc. Netanyahu’s pressure, while taking time to fully unfold, ultimately worked. The risk to Religious Zionism and Jewish Home was even greater than it had been in the past were they to run separately or together without Otzma, as was the resulting risk to Netanyahu, who is still staring at a best-case scenario of around 50 Knesset seats in the bloc he controls post-merger. And if Netanyahu is able to take advantage of his maneuver and capitalize on the unified party’s votes to somehow cobble together a government, relying on the racist neo-fascists of Otzma will cause an uproar both inside and outside of Israel that will redound to Netanyahu’s detriment in other ways. Netanyahu got what he wanted, but the potential benefits are not without a different set of headaches.

While Netanyahu’s maneuvering is a repeat of what we have seen in the past, the action in the anti-Netanyahu bloc is a lot more fast and furious. The landscape on this side includes Yair Lapid’s Yesh Atid as the standout, Gideon Sa’ar’s New Hope as the strong newcomer, the desiccated husk of Benny Gantz’s Kachol Lavan barely crossing the threshold, the suddenly resurgent Labor under new chairwoman Merav Michaeli, the perpetual presences of Avigdor Liberman’s Yisrael Beiteinu with its seven or eight seats and Meretz with its four or five seats, the Joint List wracked by infighting, and Naftali Bennett’s Yamina trying to be in both the pro and anti-Netanyahu blocs at the same time depending on which way the wind is blowing. But aside from this wide spectrum of parties that will all be in the mix come March 23, there is also a jumble of smaller parties that may or may not exist by the end of today, either because they will bow to the math and drop or because they will latch on to one of the bigger parties. The difficulty for the bigger parties, who were diligent up front about not wasting any votes between them, is whether they benefit more from gobbling up some of the remaining plankton or from pressuring them to disband entirely.

While Netanyahu’s maneuvering is a repeat of what we have seen in the past, the action in the anti-Netanyahu bloc is a lot more fast and furious.

The announcement of new elections prompted defections and retirements, sometimes the latter soon proceeding the former, across this bloc. Foreign Minister Gabi Ashkenazi announced his exit from Kachol Lavan and politics entirely, while his former Kachol Lavan cockpit co-pilot Moshe Ya’alon broke his Telem party off from Yesh Atid and then decided to leave the scene when he was languishing below 1% in polls. Another high-profile Kachol Lavan member, Justice Minister Avi Nissenkorn, gave up his cabinet post to defect to Tel Aviv Mayor Ron Huldai’s new The Israelis, before the party’s precipitous free-fall led to his retirement from politics too before even getting a chance to test the waters in Huldai’s new boat. Itzik Shmuli, who one year ago was seen as the future of Labor before deciding to go with Amir Peretz into the Netanyahu government, issued a mea culpa this week when he too announced that he would be sitting these elections out. Ofer Shelah, who spent a decade as Lapid’s right-hand man in the Knesset, left Yesh Atid alleging that it was run as a dictatorship and asserted that he could stand on his own, and is now scrambling to convince one of the larger parties to accept him and his 0% polling numbers along with his Tnufa party’s campaign debts. While Netanyahu has appeared for two years to be floundering, watching his bloc grow smaller and unable to form a government, the usual chaos that has characterized Netanyahu’s opponents for a decade remains in full bloom.

Lapid, Sa’ar, and Liberman were careful not to waste any stray votes between them, with Lapid and Liberman signing vote surplus agreements and Sa’ar and Bennett doing the same. Lapid and Michaeli now face the choice of whether to protect potential anti-Netanyahu votes from being wasted by welcoming into their parties politicians who could have run with them from the start but decided to fracture the anti-Netanyahu bloc into smaller parts by challenging them instead. In addition, the new parties have run up large campaign debts in order to get off the ground, and merging parties – rather than reserving a slot on the larger party’s list for the failed party’s leader – means accepting those debts. While there is a temptation to remove any opportunity for voters to cast ballots for a party that will not cross the threshold, it is not obvious that Huldai or Shelah even have a base of support that can be captured and that will get Yesh Atid or Labor even one marginal seat. If Huldai and Shelah are not able to convince Lapid or Michaeli to accept their members or even themselves into the Yesh Atid or Labor lists by tonight, they may drop out or they may run anyway, but unlike the situation on the right – where Smotrich and Jewish Home have demonstrable track records of attracting votes – the risk of having Huldai and Shelah in the race may actually be close to zero.

Lapid has a final consideration to factor in with regard to Netanyahu. Because the anti-Netanyahu bloc is not an ideologically coherent one, Lapid’s goal of knocking off Netanyahu is more directly tied to keeping Likud as small as possible rather than taking votes from the right generally. If Likud ends up as the largest party but with only 25-27 seats, it makes it easier to keep Bennett out of a possible Netanyahu coalition or even convince the Haredim to ditch Netanyahu for an alternative. But the stronger Lapid and Yesh Atid look in the polls, the greater the chance of right-wing voters gravitating toward a Netanyahu gevalt campaign, where he warns voters that they must support Likud rather than one of the smaller parties to his right because of a direct threat to Likud dominance. The strongest possible iteration of Yesh Atid likely leads to the strongest possible iteration of Likud, which creates a perverse situation in which Lapid may be better off with a seat or two fewer than he’d like if it translates into something similar for Netanyahu.

When the dust settles, Israel is likely to have fewer parties running for the Knesset but more bruised egos. Whether or not any mergers make clear mathematical sense, Israeli politics is in the rare position of having smaller parties eager to be subsumed and the even rarer position of having larger parties not sure if they actually want to clear the decks.

Michael Koplow is Israel Policy Forum’s policy director, based in Washington, DC. To contact Michael, please email him at mkoplow@ipforum.org.