Knesset members vote on dissolving the government last week. EPA
Knesset members vote on dissolving the government last week. EPA
Knesset members vote on dissolving the government last week. EPA
Knesset members vote on dissolving the government last week. EPA

Israel's Knesset to dissolve by midnight and trigger a snap election


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Israel was heading on Wednesday for its fifth election in less than four years, plunging it deeper into political uncertainty as it grapples with rising living costs and renewed international efforts to revive a nuclear deal with Iran.

Prime Minister Naftali Bennett moved last week to dissolve parliament after infighting made his ruling coalition no longer tenable. The Knesset set a deadline for midnight on Wednesday for a final vote to dissolve.

Once the call for a snap election gets the Knesset's final approval, Israel's centre-left foreign minister, Yair Lapid, will take over from Mr Bennett as prime minister of a caretaker government with limited powers.

But even with legislators grappling over the exact election date, either October 25 or November 1, the campaign is already being dominated by the possible comeback of former prime minister Benjamin Netanyahu.

Mr Lapid and Mr Bennett ended Mr Netanyahu's record tenure a year ago by forming a rare alliance of rightists, liberals and Arab parties, which lasted longer than many expected but has faltered recently.

Yair Lapid, Israel's Foreign Minister, during a meeting at the Knesset in Jerusalem on Monday. Bloomberg
Yair Lapid, Israel's Foreign Minister, during a meeting at the Knesset in Jerusalem on Monday. Bloomberg

Mr Netanyahu, now opposition leader, appears delighted by the end of what he has called the worst government in Israel's history. He hopes to win a sixth term in office despite being on trial over alleged corruption.

Legislators from the pro-Netanyahu bloc said they were working to form a new government before parliament dissolves. That scenario, which appears remote, would scupper an early election.

The anti-Netanyahu camp will probably be led by Mr Lapid, the centrist who has surprised many since being dismissed as a lightweight when he entered politics a decade ago.

As he and Mr Bennett announced last week that their coalition was no longer tenable, Mr Lapid sought to cast Mr Netanyahu's potential return to office as a national threat.

“What we need to do today is go back to the concept of Israeli unity. Not to let dark forces tear us apart from within,” Mr Lapid said.

While parliament's collapse appeared a near certainty, last-minute surprises remained possible given Israel's volatile political climate.

Factions across the political spectrum fear fresh polls will lead to them losing seats or ending up out of parliament entirely by falling below the minimum support threshold, which is 3.25 per cent of votes cast.

But options to avoid another election were vanishing, according to Israeli reports.

That means Mr Lapid was expected to take office at midnight after parliament gave final approval to a dissolution bill, in accordance with the power-sharing deal he agreed with Mr Bennett last June.

A parliamentary committee was due to meet on Wednesday to finalise the bill that must clear two more plenum votes before becoming law.

One reported hold-up was a dispute over the election date.

Mr Netanyahu and his allies are fighting for an October election when their supporters will be on a break from religious study centres, hoping that might boost turnout in what could be another extremely close contest, media reports said.

Mr Bennett, a religious nationalist, has led a coalition of right-wingers, centrists, doves and Islamists from the Raam faction, which made history by becoming the first Arab party to support an Israeli government in the state's 74-year history.

The alliance, united by its desire to oust Mr Netanyahu and break a damaging cycle of inconclusive elections, was imperilled from the outset by its ideological divides.

But Mr Bennett said the final straw was a failure to renew a measure that ensures the roughly 475,000 Jewish settlers in the occupied West Bank live under Israeli law.

Some Arab politicians in the coalition refused to back a bill they said marked a de facto endorsement of a 55-year occupation that has forced West Bank Palestinians to live under Israeli rule.

For Mr Bennett, a staunch supporter of settlements, allowing the so-called West Bank law to expire was intolerable. Dissolving parliament before its expiration on Thursday temporarily renews the measure.

“We fought like lions, down to the very last moment, until it simply became impossible,” Mr Bennett said days after announcing his coalition's demise.

Mr Bennett is expected to stay on as alternate prime minister and be responsible for Iran policy, as world powers take steps to revive stalled talks on Tehran's nuclear programme.

Israel opposes a restoration of the 2015 agreement that gave Iran sanctions relief in exchange for limits on its nuclear programme.

Mr Lapid will retain his foreign minister title while serving as Israel's 14th prime minister. He will find himself under early scrutiny, with US President Joe Biden due in Jerusalem in two weeks.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: June 29, 2022, 1:39 PM