Key Challenges

Prolonged political deadlock
Israel is suffering due to a prolonged period of political deadlock. Following two elections in which Israel’s political parties have so far failed to form a government, Israel is heading toward its third election in a calendar year. The current transitional government is not allowed to initiate reforms or take any action that is not defined as urgent or essential. Consequently, Israel’s political situation largely affects the government’s ability to tackle fundamental problems. To advance sustainable governance outcomes, Israel must form a new government and retain its political stability.
reform needed
The current political crisis and the inability to form a government raises the need to reform Israel’s electoral system. The current electoral system encourages partitioning and multiplicity on both the right and the left of politics, affecting long-term governance. According to the Israel Democracy Institute, imposing the task of forming a government to the leader of the largest faction will contribute to the concentration of the party system into two major blocs, increasing the ability to form a government and govern.
Politicians attacking
legal system
Israel also suffers from frequent attacks by politicians on law enforcement. In October 2017, President Reuven Rivlin said that government attempts to undermine the judicial system and the media could be considered a coup against the pillars of Israeli democracy. Almost two years later, Prime Minister Benjamin Netanyahu was indicted on charges of bribery, fraud and breach of trust in three corruption cases, and has described corruption charges against him as an “attempted coup.” In general, in 2019, the harsh and personalized attacks against the gatekeepers of Israel’s democracy (e.g., the Supreme Court, the police and the Office of the State Attorney) have continued to mark a real democratic danger. Today, more than ever before, a key challenge will be strengthening Israel’s commitment to core democratic values. A more constructive debate, which recognizes legitimacy and public trust, will be crucial to progressing institutional changes.
Fiscal sustainability
in question
Beyond this, the OECD stated recently that Israel’s general government budget deficit increased from 1.1% of GDP in 2017 to an estimated 4.1% of GDP in 2019. Despite that, the finance minister of Israel, Moshe Kahlon, refuses to raise taxes. In 2018, tax revenues in Israel were ILS 4.5 billion lower than in 2017, while government ministry spending increased ILS 18 billion. Kahlon’s taxation policy must be reconsidered.
High living costs
a concern
Israel also continues to suffer from a high cost of living. The rising cost of living ranks consistently high on public and political agendas, as house prices and rents remain high relative to the OECD average. According to a 2018 OECD report, public transport deficiencies also play a role in worsening the cost of living.
Public transportation
an urgent challenge
Improving public transportation is a key challenge to promoting positive economic and social outcomes. The current public transportation system is the cause of an annual loss of billions of shekels for the economy. Israel’s transportation crisis, Minister of Transport Bezalel Smotrich claimed lately, “is one of the most urgent problems in Israel.” Israel currently has the most congested roads among OECD countries. According to a report published by the State Comptroller, traffic jams and road congestion are due to systemic failures in transport policy planning, implementation and regulation in Israel. Improving the effectiveness of public transportation is fundamental to boosting the economy and improving citizens’ quality of life.
High poverty
rates persist
Furthermore, poverty in Israel is still widely evident and a key challenge for any future government. In December 2018, 21.2% of Israelis lived in relative poverty. Regardless of high employment rates and an increase in the minimum wage, Israel continues to have one of the highest rates of poverty in the OECD. However, while the number of families and elderly citizens living in poverty increased over the year prior, the number of children and total number of people living in poverty decreased.
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Barkat, Amiram, “Kahlon Pledges not to Raise Taxes or Exceed Deficit Target,” Globes, 07.11.2018:

Barkat, Amiram, “Smotrich Orders Six-Week Closure of Tel Aviv Rail Track,” Globes, 18.11.2019:

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Party Polarization

Polarization increasing
According to SGI data on ideological polarization in party systems, left-right polarization within the Israel party system has decreased over the last decade. However, in the last year, polarization has increased substantially.
Fragmentation makes coalition-forming difficult
The September 2019 elections exemplify this point. After the elections, Prime Minister Benjamin Netanyahu established a right-wing bloc with the leaders of Shas, Union Torah Judaism and Yamina, and agreed to negotiate to form a government as a group. However, the bloc’s combined 56 seats is five seats less than the minimum needed to form a coalition. The centrist alliance, Blue and White, which includes some left-wing parties, holds 44 seats. Israel Beytenu, a right-wing party, did not join the right-wing bloc and has repeatedly stated its commitment to form a national unity government, which would include both Likud, and Blue and White. However, at the time of this writing (January 2020), national unity government is yet to be formed, demonstrating the large degree of party polarization that impedes the ability to build compromises within Israel’s paralyzed political system.
Party evolutions exacerbating problems
The failures to form a government following both the April 2019 and September 2019 elections have been exacerbated by the various changes that the Israeli party system has recently undergone, which the Israel Democracy Institute (IDI) has called “the evolution of the party map over the last decade.” The trend prior to 2015 was that the number of parties represented in the Israeli Knesset was increasing, while the share of seats held by the larger parties was decreasing. In the April 2019 and September 2019 elections, however, the two largest parties – Likud, and Blue and White –increased their power, winning more than 50% of votes together.
Traditional parties
losing power
In addition, in 2019, traditional parties (e.g., the Labor Party and the National Religious Party) lost political power, while new parties and alliances have emerged. Among these new alliances, Yesh Atid, Telem and Israel Resilience Party formed the Blue and White list; the Labor Party and Gesher formed the Labor-Gesher list; Balad, Hadash, Ta’al and the United Arab List formed the Joint List; Israel Democratic Party and Meretz formed the Democratic Union; Hayamin Hehadash, Habayit Hayehudi and National Union formed the Yamina list.
Decreasing number
of viable parties
Overall, the number of parties entering the Knesset decreased between the April 2019 and September 2019 elections. Only nine parties entered the 22nd Knesset following the September 2019 elections – two less than the 21st Knesset, which followed the April 2019 elections. While this may indicate ideological convergence, convergence can be seen only on intra-party levels rather than inter-party. In other words, while several parties agreed to join political alliances, those alliances remain unable to form a government.
According to the IDI, only 14% of Jewish Israelis and 20% of Arab Israelis say that they trust Israel’s political parties. (Score: 2)
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