Netanyahu Plots Comeback Even Before New Government Sworn In

(Bloomberg) -- Benjamin Netanyahu, unseated after a bruising, two-year battle to hold on to his job, is already plotting a comeback.

The once-invincible Israeli leader was voted out of office on Sunday after 12 uninterrupted years in power, replaced by a shaky governing alliance beset by deep internal divisions.

When Netanyahu addressed parliament in his waning moments as prime minister, there were no pro forma well wishes for his successor, religious Jewish nationalist Naftali Bennett, but rather a pointed warning, delivered in his U.S-accented English: “We’ll be back -- soon.”

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The new coalition will govern with the slimmest majorities -- commanding 61 of parliament’s 120 seats -- and runs the gamut of Israeli politics: secular and religious factions, hawks and doves, free marketeers and social democrats, and an Arab party for the first time in Israeli history.

Survival could prove a challenge, given the conflicting ideologies. At the same time, the alliance coalesced around a desire to oust Netanyahu, who’s standing trial on corruption charges -- and that might prove to be the glue that holds it together to block any comeback bid he might make.

Under a power-sharing agreement that allowed the new government to get off the ground, Bennett, a 49-year-old former Netanyahu ally, will serve until August 2023. He’ll be replaced by centrist Yair Lapid, who was the main architect of this unlikely coalition and will lead the country through November 2025. Stocks and the shekel were little changed early Monday.

Netanyahu -- still Israel’s most popular politician -- made it clear that he’d waste no time trying to reclaim his old job.

“If we’re destined to be in the opposition, we will do it with our heads held high until we topple this dangerous government and return to lead the country in our way,” he said in a speech preceding parliament’s vote of confidence in the new government, which passed by a hair -- 60 to 59, with one abstention.

After four elections in two years and one short-lived and dysfunctional government, the disparate new coalition plans to focus on issues where common ground can be staked out. One of the things it’s pledged to immediately pursue is a term-limit law to ensure another run like Netanyahu’s never happens again. In all, Israel’s longest-serving prime minister governed for 15 years, including a three-year stint in the late 1990s.

The new government also aims to approve a national budget -- last done in 2018 -- within 145 days, with a focus on reducing inequality, and boosting employment in the nation’s booming tech sector. It will be much harder to find agreement on diplomatic and security issues like the conflict with the Palestinians and how to deal with the Iranian nuclear program.

The coalition must steer away from issues that divide it and concentrate instead on matters where they can find consensus, such as upgrading infrastructure, and investing in the health system and Israeli Arab communities, said Gideon Rahat, a senior fellow at the Israeli Democracy Institute research center in Jerusalem.

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“They have to concentrate on the things that unite them and continue to feel that Netanyahu is out there waiting for their failure,” Rahat told Bloomberg TV on Monday.

Ultimately, the fate of any comeback could depend on whether allies see Netanyahu as impeding the right wing’s return to power, he said in a separate interview on Sunday. “That could be his end,” he said.

Goldman Sachs International economists, in a note late Sunday, said the wide range of political views means the new coalition’s long-term stability remains uncertain.

“Nevertheless, we continue to think that the impact of political uncertainty on Israeli asset prices remains limited,” they said. If a national budget is passed, “this could provide a more positive backdrop for the economy,” they added.

Netanyahu, 71, finds himself outside the halls of the power after former nationalist allies turned against him following more than two years of political turmoil closely linked to his legal woes. A world-lauded coronavirus vaccination drive couldn’t save him. Neither could diplomatic deals with four mostly Muslim states in the Persian Gulf and Africa, or close ties with former U.S. President Donald Trump that yielded gifts including U.S. recognition of contested Jerusalem as Israel’s capital.

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He possesses an especially strong incentive to try to get back to the prime minister’s office. A return to power gives him the chance to suspend his graft trial by passing legislation shielding a sitting leader from prosecution.

He’s accused of illicitly accepting gifts from billionaire friends and trying to win sympathetic press coverage by shaping regulation to benefit media moguls -- charges he denies.

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