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As Israel’s elections drew to a close last night, incumbent Prime Minister Benjamin Netanyahu squeaked through to retain his position as the country’s most powerful official. In an election that saw voter turnout at over 66%, the highest since 1999, Netanyahu’s Likud won 31 seats, down from 42 last time, while Yesh Atid secured a surprising 18, Labour 17, Naftali Bennett’s HaBayit HaYehudi and Shas 11 each, Tzipi Livni’s Hatnua and the far-Left Meretz 7 each.

The results reiterate the truism many policy analysts, myself included, are prone to forget – that politics is about domestic concerns and even foreign policy must play second fiddle. Contrary to what the media played up – Iran’s nuclear quest and the squabble between Netanyahu and US President Barack Obama – Israelis threw up a surprise by voting for Yesh Atid in large numbers. Yair Lapid, the leader of the party and a former host of a popular TV show, campaigned solidly on economic issues concerning Israel’s large middle class. In his Yediot Aharanot column, he challenged the government, “This is the big question asked by Israel’s middle class, the same sector on whose behalf I am going into politics. Where’s the money? Why is it that the productive sector, which pays taxes, fulfills its obligations, performs reserve duty and carries the entire country on its back, doesn’t see the money?”

It is amusing to see Yair Lapid being proclaimed a centrist by the media. Lapid has consistently argued against the return of East Jerusalem to Palestine and the retention of large parts of the West Bank under Israeli control. Though Lapid claims to be open to a two-state solution, the truncated Arab state he envisions is clearly unacceptable to the Palestinians.

As many observers have said, the election results are protest vote against Netanyahu and his Likud partner, Yisrael Beiteinu. As the social protests of 2011 indicated, many Israelis are unhappy with the rising cost of living. Higher taxes, higher unemployment, and the rising cost of food, health, housing, utilities, and education have created strains in Israeli society. In addition, the budget deficit stood at 4.2% last year, double of what was projected. The Federation of the Israeli Chambers of Commerce has marked increased participation of minorities, stronger property rights, easing of stringent customer protection laws, and liberalising the economy as priorities for the incoming government.

Interestingly, despite the deficit, a poll found that Israelis supported increased public spending on healthcare, education, and housing, suggesting that cuts come primarily from settlement-building, followed by infrastructure and defense. Israelis also showed a preference for higher taxes on luxury goods, including alcohol and tobacco, and an increased capital gains tax, while lowering it on basic items.

On the whole, no one has been impressed by Netanyahu’s fear-mongering over Iran, but as public support of Mivtza Amud Anan in November 2012 showed, citizens do care about security. This is clear from the migration of many Likudniks to Yesh Atid, another Right party, than to the Left with Labour or even Hatnua. On Iran, however, the friction between the country’s civilian administration and security professionals has not gone unnoticed. Ex-Mossad chief, Meir Dagan, has repeatedly described Netanyahu’s posture on Iran as stupid, while current Mossad director, Tamir Pardo, insists that Iran is not an existential threat. Benny Gantz, the Army Chief of Staff, told journalists in April 2012 that latest reports indicate that Iran has not yet decided to build a nuclear weapon.

The Harpaz report, released just a few days ago by the State Comptroller, revealed the magnitude of the internecine conflict between the joint Minster of Defence and Deputy Prime Minister, Ehud Barak, and former military chief of staff, Gabi Ashkenazi. Worse, former Shin Bet director Yuval Diskin’s long interview in Yediot Aharanot paints a dismal picture of Israel’s top two leaders – Barak is arrogant and not interested in others’ opinions, while Netanyahu is indecisive, insecure, and more concerned about his image. Diskin is not the first to reveal the dysfunctional dynamic, but he is the senior-most official with most access to the establishment.

The high-stakes catfight in the top echelons of the country’s government has left many voters disgruntled and wondering if their leaders have not been blinded to the dreams and aspirations of the common man by the hubris of power. Last night’s vote was certainly a protest, but it was not a choice between security and economics. Lapid is hardly much softer on Palestine, and certainly not HaBayit HaYehudi (whose seat count also went up from 3 to 11) or Shas! If anything, Israelis are tired of having to choose between the economy and their survival…and they are also tired of the antics of the past three years. I am inclined to agree.

This post was published at Niti Central on January 23, 2013.