Netanyahu Coalition's Final Weeks Trigger Economic Risks and Political Chaos

In the final weeks before the Knesset's dissolution, Prime Minister Netanyahu's coalition is engaged in intense political brinkmanship, risking billions in economic damage. The coalition, described as a rapidly spinning washing machine reaching a stage of extortion, faces internal pressure from various factions, including the ultra-Orthodox parties and far-right ministers like Finance Minister Bezalel Smotrich. These groups are pushing for controversial legislation on issues such as media regulation, religious education, kosher laws, and establishing a state inquiry committee, but most initiatives are unlikely to pass due to the tight timeline and anticipated reversal by the next government.

Smotrich has openly criticized a legal opinion from the Finance Ministry's legal advisor warning that the proposed Basic Law on Torah Study could have severe economic consequences, including a potential 16% tax increase. He dismissed the opinion as unprofessional and politically motivated, accusing government legal advisors of incompetence and bias. The coalition's concessions to ultra-Orthodox parties, particularly Shas leader Rabbi Yitzhak Yosef's directive to support key legislation to avoid jeopardizing the Basic Law on Torah Study, have intensified the political bargaining.

The government's refusal to comply with Supreme Court rulings, aiming to intimidate regulatory and law enforcement bodies, is viewed as a direct threat to Israeli democracy and the judiciary's independence. This defiance risks further downgrades of Israel's credit rating, increased borrowing costs, and investor flight, undermining the country's economic stability. Bank of Israel Governor Amir Yaron has emphasized the necessity of obeying Supreme Court decisions to maintain economic confidence, but his warnings have been largely ignored.

Despite the turmoil, Netanyahu is reportedly assembling a far-right "dream team" for the upcoming elections, hoping to regain political dominance. However, the coalition's ongoing failures and political extortion tactics may prolong instability and lead to multiple election cycles. The article suggests that Netanyahu's focus on judicial reform is partly an attempt to divert public attention from the October 7 terror attack and other government shortcomings.

Overall, the coalition's last-minute legislative push and political infighting are creating a dangerous environment of constitutional chaos and economic uncertainty, with significant implications for Israel's governance and financial health.