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Election woes for Israel's economy

Wednesday, December 03, 2014 - 02:20

Israeli markets fall on election news, with the shekel sliding 1.3 percent to a two-year low against the dollar. David Pollard reports.

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Uncertainty. Markets hate it, but Benjamin Netanyahu has dished out a large dose of it for Israel. Even if the prime minister himself says his call for a snap election is a must for stronger government under his Likud party. (SOUNDBITE) (Hebrew) ISRAELI PRIME MINISTER BENJAMIN NETANYAHU SAYING: "The coming election is about one question - who will lead the country through the tremendous challenges facing Israel - security, economic, regional. We need a large, experienced ruling party. The Likud is the only party that comes to mind.'' The fracturing of his coalition government reached its final, terminal stage with the sacking of two ministers - both moderates. Finance minister Yair Lapid - here on the right - was accused of undermining the prime minister. The two at loggerheads over Lapid's plan for tax breaks for house buyers. Justice minister Tzipi Livni fell out by opposing a bill to enshrine in law a Jewish nation state. She says Netanyahu's latest move is not as bold as it appears. (SOUNDBITE) (Hebrew) CHAIRMAN OF HATNUA PARTY TZIPI LIVNI SAYING: "The truth is that we have a prime minister .... who is afraid." Also at issue: Israel's budget for next year. Markets fell on the election news. As did the Israeli shekel. Eran Pasternak of Shoham Investment Bank. (SOUNDBITE) (English) FOUNDER AND CEO OF SHOHAM INVESTMENT BANK HOUSE, ERAN PASTERNAK SAYING: "The shekel was devaluated by 15 percent in the last two months. This is a three-year low peak in the local currency compared to the US dollar ... We must remember that very important reforms will be frozen or cancelled. the Israeli real estate market is boiling, the cost of living is very high and a strong leadership is needed." If strong leadership means a lurch even more to the right, then that's what Israel could get. Polls suggest Likud will emerge as the strongest party - but short of a majority. Netanyahu may then be likely to form the most right-wing government in Israel's history - comprising his current ultra-nationalist partners and, possibly, Orthodox Jewish allies. But it's not yet a given. One influential member of Netanyahu's party is threatening to form his own movement - and could take seats away from Likud. The opposition Labour party - and sacked moderates from the outgoing government - may yet have something to smile about when Israel votes next March.

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Election woes for Israel's economy

Wednesday, December 03, 2014 - 02:20