Election in Israel leaves Netanyahu without a majority and paves the way for long negotiations or new vote

After counting votes in Israel, neither Prime Minister Benjamin Netanyahu's party nor the main opposition bloc won enough seats for a majority in Parliament. The final count is expected early next week, and the impasse could lead to difficult coalition negotiations or a new election, Bloomberg Television reported.

According to Ethan Bronner, head of Bloomberg's Israel bureau, the parties will now go to President Isaac Herzog to indicate who has the best chance of forming a government, and it will be up to him to decide. The process, the broadcaster said, could drag on for months. To reach a majority, it is necessary to gather 61 of the 120 seats.

Broken promises and few options

In Bronner's assessment, whoever forms the government will have to break a promise made to voters. If the opposition allies with Netanyahu in a government of national unity, it will violate its commitment to never serve alongside him. If it turns to Arab parties, it will contradict opposition leaders who have ruled out this arrangement. Netanyahu, in turn, must try to attract members of the opposition, on a path that Bronner described as difficult for all sides.

The election was the first test of the polls since October 7, 2023. For the analyst, Netanyahu lost support in relation to the 2022 election, but survived politically, which indicates that part of Israelis, not necessarily the majority, sees security as a central issue and considers him the most capable of guaranteeing it. Bronner recalled that he is 77 years old, faces legal proceedings and has health problems whose severity is unknown.

If no one manages to form a government, Netanyahu would remain interim prime minister, and a new vote could take place around April. Bronner assesses that he could reach this election stronger, since the mobilization of Israelis abroad and the Arab electorate, who traditionally do not vote in large numbers, could be repeated with less intensity.

Arab vote and risk of new action against Iran

Arab parties won 19 seats, according to the analyst. Around 20% of the Israeli population is non-Jewish, and participation grew after the war in Gaza and in the face of dissatisfaction with crime in these communities. The majority of votes went to anti-Zionist parties. The political weight of this performance, Bronner said, is yet to be defined.

The theme with the greatest potential for the market is Iran. For Bronner, the probability of a new joint military operation by Israel and the United States is reasonably high, probably after the American legislative elections, with around a 10% chance of occurring before. He suggested that an Iranian attack in response could prompt opposition leaders Gadi Eisenkot and Naftali Bennett to enter an emergency government with Netanyahu, although he stressed that this was his hypothesis.

Bronner also assesses that Netanyahu's power to lead the country to war would remain practically intact, while domestic agendas, the center of the dispute against him, tend to be slowed down. Iran, Gaza, Lebanon and Syria must move forward according to the prime minister's plan.

For investors, the picture is one of prolonged political uncertainty in a country central to the geopolitics of the Middle East, with the risk of military escalation that usually influences oil, interest rates and risk appetite on the stock markets. The transcript does not contain market projections, and the outcome will depend on coalition negotiations and President Herzog's decision.

Automatically translated from Portuguese.