Israel’s Grand Coalition Reduces Chances of War with Iran

Israel’s Grand Coalition Reduces Chances of War with Iran

In a last minute deal, Israel’s largest party joined the government to form a grand coalition and push back planned elections to the end of 2013.

The politicians in this government are mostly committed to remain in their seats, and not rocking the boat in the near future. This certainly reduces the chances of a strike against Iran’s nuclear facilities and will add to the downward pressure on oil prices.

Dirty Politics

The Israeli parliament was already deep in the process of approving early elections on September 4th. Also politicians were warming up, and many seemed keen to go to the people, including PM Binyamin Netanyahu, who leads the right-wing government.

Yet the leader of Israel’s largest party, centrist Kadima, was set for a severe loss in these elections. Also defense minister Ehud Barak was likely to end his career gaining no seats in the new parliament. Also some other leaders had an interest to cling to power and avoid elections, fearing the recovering Labor Party and a new party led by former journalist Yair Lapid.

In a deal made late at night, just before the final vote on the election law, Kadima and ruling party Likud reached a deal: Kadima’s leader, Shaul Mofaz would join the government. The elections are now pushed back to the original date: late 2013. Perhaps Netanyahu saw Hollande’s victory in France and feared the same fate.

Political Calm

Shaul Mofaz is a former chief of staff, like defense minister Barak. Nevertheless, Mofaz, born in Iran, is openly opposed to any strike on Iran and said that this is not the time and that this should be left for the Americans.

He also blamed Prime Minister Netanyahu for manipulating the Iranian story to change the agenda from the social justice protests that rocked the country in the summer of 2011 and are still high on the agenda.

Mofaz did not live up to his word by joining Netanyahu’s government. However, with a coalition encompassing most of the current parliament, and with elections due only in a year and a half, it’s hard to see the current leaders rushing for an attack on Iran.

In addition, the US is putting pressure on Israel not to make any move at least until the US elections in November.

Israel, Iran, Oil and the Dollar

So, it’s reasonable to expect that Israel will not strike Iran at least in the next 6 months and will also move to other things on the Israeli agenda such as recruiting ultra orthodox Jews to the army, as the controversial “Tal law” expires.

Lower rhetoric or no rhetoric regarding Iran means more downward pressure on oil prices. This goes hand in hand with the global slowdown that already weighs on crude oil.

Lower oil prices leave more money in the pockets of Americans, boost the US economy and support a stronger dollar.

Further reading:  5 Reasons Why Israel Will Not Attack Iran – But if It Will, How will Currencies React?

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.