Israel set for snap election as budget deadline nears

JERUSALEM (Reuters) – Israel on Tuesday was on course for a fourth national election in two years after Prime Minister Benjamin Netanyahu and his main governing partner, Benny Gantz, failed to resolve a dispute over the budget.

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Parliament voted late on Monday against an attempt by both men to delay a deadline of midnight on Tuesday for approval of the fiscal package.

Under law, failure to pass it by then would mean Israel going to the polls in March, and neither lawmakers nor the cabinet have passed it yet, a process near impossible to complete in a single day.

Netanyahu, who heads the right-wing Likud party and defence minister Gantz, head of the centrist Blue and White faction, established a unity government in May after three inconclusive elections held since April 2019.

Their pact involved Gantz taking over from Netanyahu as prime minister in November 2021, and passing a bi-annual budget for 2020 and 2021.

But even as that power-sharing pact was being inked, many analysts argued that Netanyahu, on trial for alleged corruption which he denies, would not relinquish his powerful post, and Likud has since demanded to pass the budgets separately while Blue and White insisted Netanyahu stick to their deal.

Israel has so far this year managed its finances on the basis of a pro-rated version of the 2019 budget.

The current fiscal deadlock has plunged Israel into more economic uncertainty at the end of a year when a coronavirus-induced slump is expected to shrink gross domestic product by 4.5% with the jobless rate standing at 12.1%.

Israel, also preparing for a new U.S. administration led by President-elect Joe Biden, kicked off its vaccination campaign this week.

Analysts had seen Netanyahu pushing for an election in May or June next year, after the coronavirus crisis was expected to ease and the economy to begin to recover.

A March vote would be riskier for Israel’s longest serving leader, who has been facing a wave of street protests against his alleged corruption, which he denies, and his handling of the COVID-19 pandemic.

Though polls show Netanyahu’s party emerging as the largest faction in parliament, surveys also predict a strong showing for a bloc of factions from across the political spectrum seeking to unseat him.

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