Netanyahu pledges to face down Iran

By Anshel Pfeffer, April 2, 2009
Israeli demonstrators hold banners reading ‘Peace Now’ in a protest against the new Israeli government

Israeli demonstrators hold banners reading ‘Peace Now’ in a protest against the new Israeli government

Stabilising the Israeli economy, dealing with the Iranian threat and establishing a dialogue with the Obama administration will be the first priorities of Binyamin Netanyahu’s new government, which was sworn in on Tuesday night.

With 30 ministers and eight deputy ministers, Mr Netanyahu’s Cabinet is the largest government in Israel’s history, and is based on a coalition of six parties and 74 members of the Knesset.

After meeting President Shimon Peres on Wednesday morning and visiting the Western Wall, Mr Netanyahu entered the office vacated the previous evening by his predecessor, Prime Minister Ehud Olmert.

The blueprint for Mr Netanyahu’s first months in power has been drawn up by a special “100 days” team, headed by his finance minister, Yuval Steinitz.

Due to the elections, the Knesset has yet to approve a 2009 budget and the government departments have been working on “auto-pilot”. The new government has to approve a budget in 45 days and it is expected that it will try to push through a two-year budget plan.

The other pressing issue is preparing the Israeli economy for the global recession. While the country has been spared, so far, the serious financial damage felt in Britain and other countries in the West, there are already worrying signs of financial problems, including a rise in unemployment and heavy losses posted by banks and major companies in the last quarter. The government’s main priority will be to safeguard jobs and the 100 days plan sets out a series of guarantees to be granted to companies and banks, to encourage them not to lay off workers.

Mr Netanyahu’s decision to appoint a finance minister with no relevant experience at the height of an economic crisis caused much controversy in business circles. The criticism forced Mr Netanyahu to issue a statement saying that, while Mr Steinitz would be finance minister, he himself would have the title of “Over-Minister for Financial Strategy”.

The two previous Israeli governments enjoyed warm ties with the Bush administration, but a question-mark still hangs over the new occupant of the White House. President Barack Obama has caused concern in Jerusalem with his policy of “engagement” with Iran and the Arab world, and the 100 days team seeks an early meeting in Washington between the two leaders as a matter of urgency. Such a meeting could take place next month if Mr Netanyahu travels to the US to attend a conference of the Israel lobby, Aipac. Relations with the Obama administration will be a key factor in dealing with the other pressing concern — Iran.

Israel needs to know urgently the administration’s long-term plans regarding Iran, if — as most Israeli experts believe is inevitable — Mr Obama’s engagement policy fails.

However, military planners have stressed that an Israeli strike, without US assistance, or at the least, tacit support, will be extremely difficult.

Last updated: 4:27pm, April 2 2009