Israel’s finance minister gets second chance

Finance Minister Moshe Kahlon is bitter over what he sees as voter disloyalty, but his party still has four Knesset seats that will enable him to keep his job.

al-monitor A campaign billboard depicting Moshe Kahlon, Israeli finance minister and leader of the Kulanu party, is seen in Tel Aviv, Israel, April 8, 2019. Photo by REUTERS/Amir Cohen.

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israeli elections, israeli government, likud, kulanu, benjamin netanyahu, israeli politics, moshe kahlon

May 3, 2019

Kulanu, the party headed by Finance Minister Moshe Kahlon, didn’t do well in the April 9 elections, winning only four seats — the minimum required to enter the Knesset.

“In pre-election polling, we saw that we were losing support because of our defense of the Supreme Court, something to which voters did not relate,” an associate of Kahlon told Al-Monitor on condition of anonymity. “Kahlon’s principled defense of the judiciary ticked off the Likud, which took revenge against Kulanu. At the same time, some leftists voted for Orly Levy-Abekassis and her social issues agenda and others for the center-left Blue and White Party because Kulanu refused to rule out a government partnership with Prime Minister Benjamin Netanyahu," said the source.

Center-right Kulanu, the Cinderella of the 2015 elections, lost 60% of its voters in its dismal showing this year. Once a powerful, influential party with 10 Knesset seats, it's now a minor player.

Kahlon must have found the campaign frustrating. He crisscrossed the country in his typical energetic fashion, trying to translate his economic achievements for the country’s middle-income and poor citizens into votes, to no avail. Even his expectations of public support for his staunch defense of Israel’s judiciary against the aggressive, relentless government in which he served was proven misplaced. His former voters scattered, leaving Kahlon helpless to stop the electoral hemorrhage.

On paper, Kahlon has an impressive record. He brought down taxes, raised the minimum wage, curbed bank managers’ pay, reduced duties on mobile phones and clothing and launched a major affordable housing program that provided first-time home buyers with apartments at a relatively sane price. He was a socially conscious finance minister, wielding the independent political power and influence to lead reforms. He was also the most moderate and dignified minister in government, the only one who stood by the Supreme Court against attempts by the ruling coalition to curb its powers and the only senior minister to have a warm and close relationship with Palestinian Authority leaders.

The question of why, with this list of achievements, he barely made it into the Knesset troubles him. Since the elections, he has sounded embittered and frustrated by what he views as public disloyalty. His populism might have served him poorly. He courted the public, handing out generous budgetary support, but failed to burst the real estate bubble. At the end of his four-year tenure, it suddenly transpired that the budget deficit had grown to billions of shekels, which will force the next finance minister to impose deep budget cuts.

The Kulanu chair is a sober politician who understands the limits of his power. Yet, with four Knesset seats, he will probably be able to hold onto a minister job. According to recent reports, Netanyahu has offered Kahlon the Foreign Ministry, and the Finance Ministry to ultra-Orthodox Shas head Aryeh Deri, who turned it down. However, Kahlon will be able to stay on in as finance minister if he chooses, and he appears to be leaning toward that option. Despite his frustration with the election, he is aware of the power the job holds and knows an additional term could allow him to improve his performance.

Kahlon is conducting his coalition negotiations directly with Netanyahu. Following a period of troubled ties, their current relationship is said by associates to be good. They are also reportedly discussing a proposal for Kahlon to return to the Likud, of which he was a longtime member. However, Kahlon does not intend to sell himself at end-of-season clearance prices and his demand for significant representation in the Likud institutions is too high, in Netanyahu’s view. Given this state of affairs, Kulanu is more likely to remain independent, a wise course for Kahlon that will leave him free to maneuver.

On the other hand, like many of his fellow politicians, Kahlon will find himself eventually facing legal and moral questions related to the prime minister’s legal problems. Whereas Netanyahu’s so-called natural partners — the ultra-Orthodox parties, Yisrael Beitenu and other right-wing parties — have declared their support for Netanyahu even if he is indicted on criminal charges, Kahlon might find himself under public pressure to serve as a gatekeeper, as he has pledged to do. If he returns to the Likud one day, he can always claim that he is bound by coalition discipline and has to vote in Netanyahu’s favor. In this respect, Kahlon is quite realistic. He has told associates since the elections that he no longer intends to bear the burden of defending the country’s top court on his own, and he is coming around to the view that his stance was detrimental to his electability.

On April 30, shortly before the swearing-in of Israel’s new Knesset, Kahlon convened his tiny faction sounding like someone trying to give himself a pep talk. “The Kulanu party is independent and will continue to be independent. Please do not pay attention to made-to-order headlines. Kulanu will continue to serve the public as an independent party. We have come to be partners, not hired hands,” Kahlon said. “Despite it all, we received the support of 152,000 Israelis. This is a sizable number that proves Kulanu has embedded its roots over the past four years. … This is a tremendous success.”

Kahlon was referring to the rumors that he was heading back to the Likud and that an agreement has been struck to unite the two parties. However, such proclamations notwithstanding, even his most ardent fans understand that the finance minister is at a crossroads and may not survive another election.

After the Knesset was sworn in, Kahlon declined to take part in the traditional photo of all the Knesset faction heads posing with the president and chief justice, evidence of his uncertain mood.

Kahlon knows he came close to the fate suffered by his former government colleagues Naftali Bennett and Ayelet Shaked, whose New Right party failed to win sufficient votes despite their popularity. “It was not an absurd scenario,” another of Kahlon confidants told Al-Monitor on condition of anonymity.

He is now weighing his options, keeping an open channel with Netanyahu and holding the entry ticket to another term in the Finance Ministry. On April 28, Netanyahu convened an emergency meeting with Kahlon to discuss the transfer of funds to the economically distressed Palestinian Authority. Kahlon has been the minister closest to the PA over the past four years and has tried to promote moves to improve its economy. If he stays on as finance minister, Kahlon will be a more experienced office holder, and even with only four Knesset seats he will be able to retain his role as the sane, dignified standard bearer of Netanyahu’s fifth government.

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