Prime Minister Netanyahu and Kadima party leader Shaul Mofaz have agreed to form a unity government. This means that elections, scheduled for September of this year, are cancelled. The deal puts Labor party leader Shelly Yachimovitch in the position of Leader of the Opposition. The status of Avigdor Lieberman and the Yisrael Beiteinu party is unclear at the current time.
As more details of and reaction to the deal come out, analysts will be able to get a clearer picture of the next chapter of Israeli politics. Until then, here are some immediate reactions to what remains a dynamic situation.
Implications for the United States
1. Labor matters again. It has gone from becoming a small coopted faction after the last round of Israeli elections in 2009 to the lead opposition party in the Knesset. Shelly Yachimovitch, the party's new leader, will have a much higher profile in Israeli politics, and is therefore more likely to be taken seriously by more traditional pro-Israel groups here in Washington. Analysts should keep a close eye on Yachimovitch in order to determine whether she poses a real threat to the new government or not, and adjust Israel policy accordingly.
2. Prime Minister Netanyahu will likely be the Israeli premier to face a second term Obama. Since there is no longer a need to campaign, however, Netanyahu will not have to balance between mobilizing his conservative party base and alienating the United States further. Kadima, like Yisrael Beiteinu, supports West Bank settlements. However, its leader Shaul Mofaz is the ex-IDF Chief of Staff and is likely more pragmatic than Avigdor Lieberman on the issue. This means that Netanyahu will be under less pressure from his own government to tow a hard line on settlements, which is good news for a hypothetical second Obama administration. Mofaz is also likely to be pragmatic on Iran, and has supported President Obama on the issue.
3. Iran politics will remain as they are. Yachimovitch said last week that Prime Minister Netanyahu was "mistaken" on Iran. However, given the real fear among Israelis of Iranian nuclear capability, she is unlikely to use this issue to gain political leverage. Continuing to push economic issues is much more likely to mobilize her party base. Kadima party leader Shaul Mofaz is pragmatic but has said Iran "must stop" its nuclear program. Ultimately, there is not likely to be significant change in the Israeli position on Iran, and U.S. policymakers should plan accordingly.
4. The policy calculus for US-Egypt relations has stabilized. Given violence in the Sinai, the rise of Islamist candidates into politics, and an Israel terrified of both, the US has had to walk a very careful line in its support for democratic transition in Egypt. Since Mofaz has a defense background and likely has extensive knowledge about the Egypt security situation, Israeli policy is likely to remain pragmatic on that front for the forseeable future. This is good news for the U.S. considering that the Egypt side of the equation is about to destabilize in the wake of protests last week in the Abbasiya neighboorhood of Cairo. Additionally, policymakers in Washington have been concerned about an Israeli incursion into Sinai based on a threat the government made last month which could severely destabilize the Middle East. That Mofaz likely understands the high risk of an Israeli incursion should be heartening to analysts in DC.
The news of the new coalition government is unexpected. However, that does not mean that its implications are necessarily significant. A unity government will be more centrist than the current coalition. However, on the major issues of interest to the United States - settlements and Iran - U.S. policymakers are unlikely to see major change in the Israeli position.