Israel's government wobbles as Netanyahu allies threaten exit

Galit Altstein and Marissa Newman, Bloomberg News on Jun 5, 2025

By clicking submit, I authorize Arcamax and its affiliates to: (1) use, sell, and share my information for marketing purposes, including cross-context behavioral advertising, as described in our Privacy Policy , (2) add to information that I provide with other information like interests inferred from web page views, or data lawfully obtained from data brokers, such as past purchase or location data, or publicly available data, (3) contact me or enable others to contact me by email or other means with offers for different types of goods and services, and (4) retain my information while I am engaging with marketing messages that I receive and for a reasonable amount of time thereafter. I understand I can opt out at any time through an email that I receive, or by clicking here

Israeli Prime Minister Benjamin Netanyahu’s ruling coalition faces the possibility of collapse and early elections after his ultra-Orthodox partners threatened to bring down the government.

The United Torah Judaism party has indicated it would support the dissolution of parliament unless agreements are reached on the longstanding exemption of its men from enlisting in the military, with the Shas party expected to follow.

The issue is contentious in Israel, particularly as the 20-month war in Gaza takes a toll on the tens of thousands of citizens who are called up to the reserves.

Netanyahu has until June 11 to smooth out the differences with his partners, otherwise a vote will take place on a bill to dissolve Knesset — the Israeli parliament — with the opposition on track to win a majority with Ultra-Orthodox support. That could lead to elections as early as this fall, a year ahead of schedule, depending on the outcome of further votes.

In a statement from his office Wednesday, Netanyahu acknowledged the growing divide within the government and said a meeting will be held on Thursday to try to reach a compromise.

While the situation is fluid and could quickly change, Netanyahu and his ruling coalition have lost ground in polls since the Oct. 7, 2023 Hamas attacks and subsequent war in Gaza, and are not projected to win a majority in the next election. A new government would be expected to bring about an earlier end to the Hamas conflict — if it’s ongoing —- and shelve moves to weaken institutions, both perceived as positive developments by investors.

The shekel rose on the prospects of an early election and traded at 3.48 per dollar as of 9:31 am local time, its strongest since February 2023, and is up almost 1% this week.

Israel has pledged to continue the war until Hamas frees its remaining hostages and disarms, but the country has come under increasing international pressure over the humanitarian crisis facing Palestinians in the territory. Hamas is designated a terrorist organization by the U.S. and many other countries.

“Any government, the existing one or a different one, will face the same issues of dangerous Iranian armament, of a Hamas which still exists in certain parts of the Gaza Strip,” Danny Danon, Israel’s ambassador to the United Nations, said on Army Radio Thursday. “Whether or not there will be an election, we are still committed, of course, to returning the hostages and defeating Hamas.”

Political acumen

Netanyahu, Israel’s longest-ever ruling prime minister, is renowned for his political acumen, but on this occasion his options are limited. It’s thought by political analysts the Israeli leader may be able to buy more time, possibly by replacing Yuli Edelstein, the lawmaker responsible for advancing the ultra-Orthodox law, but his government won’t be able to serve its full term.

Last year, Israel’s top court ordered the government to pass an enlistment law for the ultra-Orthodox, or Haredi, who have been exempt from military service for decades so they can focus on religious study. The issue has long divided Israelis — most of whom are subject to mandatory service — and has worsened since Oct. 7 as citizens are repeatedly called up, taking a large toll on their families and working lives.

The drafting of Jewish Orthodox men would relieve some of these pressures and smooth out social tensions arising from a sense of injustice about the war burden.

With a solid majority of the public behind drafting Haredi men, Jewish Orthodox parties are isolated in their objection to any such move.

These parties, however, answer to religious authorities who see this matter as existential, and insist their men be allowed to keep studying in religious seminaries, which they say is as important to winning Israel’s wars as taking part in combat. Their solid voter base grants them enough seats in parliament to make them crucial to the formation of any government, whether by Netanyahu or another leader.

-----------

—With assistance from Dan Williams.