Netanyahu Accord on New Israeli Coalition Expected Today

Israeli Prime Minister Benjamin Netanyahu’s Likud party signed coalition deals with two other factions today that will enable him to form a new government next week just before the arrival of President Barack Obama.

The agreements with the Jewish Home and Yesh Atid parties were signed this afternoon, said a member of Netanyahu’s staff, speaking anonymously because he was not authorized to speak on the record. Likud party spokeswoman Noga Rappaport had earlier said that if the documents were signed today, a new government would probably be sworn in on Monday.

Obama is scheduled to begin a three-day visit, his first trip to Israel as president, on March 20.

The new government, comprised of Likud, Yisrael Beitenu, Yesh Atid and Hatenuah, will hold 68 seats in Israel’s 120-member parliament, the Knesset. The coalition’s makeup would enable the incoming government to make the budget cuts necessary to keep spending in check, after last year’s deficit came in above target. Ultra-Orthodox parties that had supported the previous government in exchange for hundreds of millions of shekels in subsidies for their community have been elbowed out.

The shekel rose 0.5 percent against the dollar at 6:20 p.m. in Israel. While Israel’s stock and bond markets were closed, the Bloomberg index of Israeli stocks traded in the U.S. declined 0.3 percent.

Netanyahu called for early elections last year after his coalition partners refused to approve 14 billion shekels ($3.8 billion) in budget cuts to meet a deficit target of 3 percent of economic output.

‘Hardline Hawks’

The premier’s coalition partners would also support his previously failed efforts to limit the number of military draft exemptions given to ultra-Orthodox men so they can pursue religious study.

“In terms of advancing on domestic issues, this is probably as good a coalition as Netanyahu could have asked for,” said Avraham Diskin, professor of political science at Hebrew University of Jerusalem. “On the peace process, the government has parties and politicians ranging from hardline hawks to real doves, and is going to come into conflict when it comes to removing even the smallest West Bank settler outpost.”

Yesh Atid, Hebrew for “There is a Future,” campaigned as a champion of middle-class concerns and won 19 seats. Its leader Yair Lapid, a former television interviewer new to politics, will serve as finance minister.

More Settlements

The third-biggest party in government would be Jewish Home, with 12 seats. Its leader Bennett, a former technology entrepreneur, would take over the Ministry of Industry, Trade and Labor. Jewish Home supports building more West Bank settlements and opposes a Palestinian state.

Foremost among the coalition members that want to advance the peace process is the six-seat Hatenuah party, a new faction headed by former Foreign Minister Tzipi Livni, who is set to be justice minister and chief negotiator with the Palestinians.

Netanyahu is holding the foreign minister’s job for Avigdor Liberman, leader of the Yisrael Beitenu party, who resigned in December after being indicted on charges of fraud and breach of trust. Liberman continues to serve in the Knesset through his trial, which is set to resume in April.

Before it's here, it's on the Bloomberg Terminal.