34th Government of Israel. Part one.

During the last election campaign in Israel, it became clear that the electoral preferences are so different that neither right, nor left, if they win, have any real opportunity of forming a stable coalition of like-minded people.

As a result, despite the convincing victory of the Likud (30 seats) over the Zionist camp (24 seats), the right camp  could not gain a majority. So its representatives of Byte Yehudi got only 8 seats, Shas got 7 mandates, Yaadut HaTorah and Yisrael Beiteinu – 6 seats, leaving Likud with only 57 mandates. On the left wing, the Meretz Party won 5 seats, the United Arab List got 13 mandates. Centrists, without whom there is virtually no possibility of any form of left or right government, gained 21 mandates - Yesh Atid (11 seats) and  Kulanu (10 seats).

At the time, it was precisely the break between Netanyahu and Lapid, the leader of the party Yesh Atid, which led to the coalition crisis and early elections. Therefore, no one doubted that the party Yesh Atid would be invited to the negotiating table. As a result, the leader of the party Kulanu, Moshe Kahlon, became a wedding general, without which the right had no chance of forming a coalition. And he took advantage of this chance.

As already mentioned, usually a ‘core' term of accession to the various factions of the coalition is the number and "quality" of ministerial portfolios that a future Prime Minister will offer to his coalition partners. At the same time, among the parties in special 'authority' there are only five to seven of the twenty-seven ministerial portfolios. Basically, the ministries with biggest budget resources, which allow influence on certain groups of people and institutions, are of more value, as well as "status" ministries for Israel, which allow for higher positions to be applied for in the future, both in one's own party and in the government. Particularly attractive portfolios are the Ministers of Defense, Foreign Affairs and Finance, as they are considered to be springboards to the post of prime minister.

Moshe Kahlon began his negotiations with the requirement of the portfolio of the Minister of Finance. One of the main electoral themes of the Kulanu Party was the question of large-scale construction of affordable housing. However, the vast majority of government agencies responsible for the issues of construction are actually scattered throughout various ministries and departments. Due to this, Kahlon’s basic requirement was the unification of these structures under his leadership in the Ministry of Finance. As a result, breaking the resistance of the future coalition partners, in particular Shas, he achieved his goal. As a result of these permutations, Moshe Kahlon became the Minister of Finance and gained control over the management of construction planning and land management. The second person of the Kulyanu party, Yoav Galant, was promoted to Minister of Construction and became a participant-observer in a narrow military and political office. The party also received the portfolio of the Ministry of Environment, which is especially important in obtaining permits in the Regional Planning Commission.

On April 29, a month and a half after the start of coalition talks, Prime Minister Benjamin Netanyahu was finally able to sign the first coalition agreement with the head of the Kulanu party, Moshe Kahlon, and the leader of Yaadut HaTorah, Jacob Litzman.

As a result, the head of the Yaadut HaTorah blic, Yaakov Litzman, became a Deputy Minister of Health with the authorities of a minister. The representatives of his party just got the post of Deputy Minister of Education and head the Knesset Finance Committee. The requirements of the party, which has only 6 mandates, could be called more than modest, if it weren't for the fact that, in certain cases, the Knesset Finance Committee crushes the Ministry of Finance under its authority, in fact, deciding at the last moment the question of the transfer or blocking of previously approved budgets to the direct executors.

Understanding the crisis due to the limited possibilities for the formation of the coalition, all participants in the negotiations have significantly increased their financial appetites and demands. In the coalition agreement with the Kulanu, conscripts' monthly salaries were increased, business owners were given the right to receive unemployment benefits and the return of the biennial budget. There was also a decision to create a commission to verify the feasibility of the abolition of VAT on essential goods. According to analysts, this is what opens the way to a coalition for the Shas party, for which this point had been one of the main requirements of the election program.

The coalition agreement with Yaadut HaTorah provides for the abolition of penal sanctions for yeshiva students who evade military service. Reform in the system of conversion will be frozen, and the financing of educational institutions, where general subjects are not studied, to be returned, and a retroactive increase in child benefits to be implemented. According to various estimates, the total cost of the agreements with Yaadut-Torah is 4-5 billion shekels

Finally, after long negotiations with Shas, during which its representatives twice left them pointedly, on the evening of 4 May the coalition agreement was signed between the parties Likud and Shas. Shas initially refused the post of Minister of Internal Affairs, due to the loss of control of the planning and construction of land management, which had been transferred to the Ministry of Finance. However, as a consolation prize, the head of the Shas, Aryeh Deri, received the portfolio of Minister of Economy, and representatives of his party even received the Ministry of Religious Affairs and the Ministry of Development of Negev and Galilee.

Around the Ministry of Religious Affairs there was a long struggle between Shas and Byte Yehudi. Religious Zionists threatened to derail the talks on forming a government if the Ministry of Religious Affairs would be given unilaterally to Shas. However, as a result, Benjamin Netanyahu gave the Ministry fully to the Shas party, refusing to appoint a deputy from Byte Yehudi. Another position that Shas received is Deputy Minister of Finance. The Shas representative, at least partially, will still monitor the activities of management of construction planning. Deputies from Shas also received the post of head of the educational committee of the Knesset and the post of deputy parliament speaker.

The most dramatic negotiations were between the Prime Minister and his, so to say, natural allies of the right wing representatives of the party Byte Yehudi. The party did not hide its disappointment at the election results, because Likud got almost five seats at the last minute actually due to the party Byte Yehudi, which during the entire pre-election marathon supported Netanyahu and the right wing.

As a result, the party's leader Naftali Bennett, almost breaking the deadline allocated for forming a coalition, received the maximum of what he had not originally even counted on. As a result, less than two hours before the expiry of the period allotted for Benjamin Netanyahu to form a coalition, he managed to negotiate with the party Byte Yehudi. On Wednesday, May 6, at about 23:00, Netanyahu told President Reuven Rivlin that he has a parliamentary majority of 61 votes.

Indirectly, Bennati's 'success' in the negotiations was  promoted by the intransigence of the Yisrael Beiteinu party's leader, Avigdor Lieberman, who just two days before the expiry of the talks announced that he would not join a Netanyahu government. In principle, after the coalition agreement was signed with Shas and Thor Yahud, Lieberman had no choice, since joining the government, which had already surrendered to the mercy of the ultra-Orthodox, would be signing the death certificate of the Yisrael Beiteinu party. After all, in fact, the new coalition agreement cancels all the secular reforms which were conducted by Yisrael Beiteinu and Yesh Atid during the last cadence.

After Yisrael Beiteinu’s leader Avigdor Lieberman announced that he would not join the coalition, Likud had signed a coalition agreement with Shas, passing the portfolio of the Ministry of Religious Affairs to the party. Byte Yehudi described Likud and Shas’s agreement as "humiliating religious Zionism," and put forward radically new requirements.

At the talks with Byte Yehudi thr stumbling block was the requirement of Naftali Bennett to pass over the portfolio of the Minister of Justice Ayelet Shaked, and bring it to the board of the first 18 ministers for approval, which does not require a change in the law. But, in the end, Netanyahu had to give up to Bennett, and they seized only one post from Shaked’s authorities – the committee to appoint judges of the rabbinical courts, but it will go to the Commission for appointment, together with a representative of the Likud party. The authority to appoint judges to rabbinical courts has been transferred to the Ministry of Religious Affairs.

In accordance with the coalition agreement, the Yehudi Byte party will also head the Ministry of Education and the Ministry of Agriculture. A representative of the party Yehudi Byte will hold the post of Deputy Defense Minister and will head the Knesset legislation committee.

The ITV 2nd channel quoted sources in the Likud party, stating that "Bennet pays dearly for his extortion, his term in government will be very short." In turn, in the Prime Minister Benjamin Netanyahu's circles it is claimed that they are seeking to expand the government, but not at the expense of existing partners.

Such a rapid share of the ministerial portfolios could not but provoke sharp criticism from the representatives of Likud, who also expected to get not just  ministerial portfolios, but precisely the ’solid’ ones. At the same time, the number of candidates for ministerial posts in Likud was obviously much bigger than the actual number of posts.

Considering this, Prime Minister Benjamin Netanyahu all the time demands an increase in the number of ministerial portfolios. It was finally agreed that the future government of Israel will consist of no more than 22 ministers. Thus, the number of portfolios will not increase compared to the previous government, but will be more than is agreed in the law enacted by the Knesset of the 19th convocation. According to this law, the number of ministers cannot exceed 18. For this purpose, Netanyahu issued a decree, the so-called 'oraat Shaa', which is freezing the implementation of the law. It will enter into force only in the Knesset of the 21st convocation. The Prime Minister has received consent to this move from all parties of the formed coalition.

Meanwhile, according to The Marker, the Finance Ministry technocrats warned that "generous" spreading of money in the formation of the government will lead to a doubling of the budget deficit. According to calculations of the Ministry of Finance in 2016, the deficit would amount to 27.5 billion shekels (2.5% of GDP). However, due to the 10 billion which were given by Netanyahu to his coalition partners (in addition to 8 billion to cover the structural deficit in the budget of next year and an additional 5.6 billion to the Ministry of Defense) the budget deficit will reach 51.1 billion shekels (5% of GDP). The requirements of the religious parties alone will cost the treasury about 3.5-4.5 billion. Zero VAT on basic food will take another 1 billion  from the budget, soldier's salary raises will add 1.3 billion more. Thus, to the "old" 23.6-billion debt will be added a "new" 27.5-billion one. In this case, tax increases and budget cuts for the social ministries will be inevitable.

But this will all happen only tomorrow, while today the 34th Israeli government began its first working day.