Israeli Vote Deadlock Looms Over Middle East

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With governments teetering across Europe, there’s another democracy struggling to form a ruling coalition with implications that could shake the Middle East.

Opinion polls show Israeli Premier Benjamin Netanyahu no better positioned to secure a parliamentary majority after a Sept. 17 snap election than he was in May, when he called for the revote.

His main problem is former ally Avigdor Liberman, who refused to join him in May and is poised to again become kingmaker. The latest survey shows the prime minister and his right-wing allies winning 55 of the Knesset’s 120 seats, neck-and-neck with centrists led by former military chief Benny Gantz’s Blue-and-White bloc.

Netanyahu’s predicament puts him in the same boat as leaders in Spain, Belgium, and Austria. Italy, too, has a fractious coalition constantly on the verge of collapse, and Germany’s governing alliance is under strain. In the U.K., Boris Johnson has a one-seat majority.

But where the European nations are at odds primarily over domestic squabbles, Israel is facing regional security issues, and its political paralysis is holding up the presentation of the Trump administration’s Middle East peace plan.

That all makes for a riveting drama as Israelis decide whether to keep their longest-serving leader or whether he’ll be dumped for someone new.

Global Headlines

Kashmir backlash | Pakistan downgraded diplomatic relations and suspended bilateral trade with India after New Delhi revoked seven decades of autonomy for the disputed Muslim-majority state of Kashmir. While there’s relatively little at stake commercially — bilateral trade amounted to just $2.5 billion in 2018 — every escalation ratchets up the pressure on the nuclear-armed rivals.

Decisive week? | President Donald Trump is in the midst of a week that could hamper his 2020 re-election bid. As Joshua Green reports, he faces a national furor over racist gun massacres, a plummeting stock market and growing signs that his trade war with China will fail to produce the historic deal he’s promised.

Trump’s not the only one. Click here for more on how embattled Senate Majority Leader Mitch McConnell’s political difficulties could affect Republicans’ efforts to keep control of the chamber. Stay on top of the latest developments in the 2020 race for the White House with Bloomberg’s Campaign Update.

Missile worries | North Korea has been testing an increasingly sophisticated, hard-to-track missile system that could wipe out South Korean and Japanese cities — not to mention U.S. forces based in both countries. Trump says he’s not worried, but Nick Wadhams reports that some in his own administration are concerned the president is needlessly giving up leverage and may even be encouraging Kim Jong Un to cross the U.S.’s red line on nuclear testing.

Calming nerves | The yuan steadied today after the central bank set the daily fixing stronger than analysts expected, providing some reassurance to traders rattled by a tumultuous week in markets. China’s daily currency fixing has become a hotly watched event after the biggest loss in the yuan since 2015 sparked concerns about a global currency war. But, with Trump threatening more tariffs on Chinese goods, further depreciation is possible.

Jenny Leonard and Mark Niquette have the latest on the Trump administration’s rush to finalize a list of $300 billion in Chinese imports it plans to hit with levies in a few weeks. Subscribe to Bloomberg’s Terms of Trade newsletter to receive all the big developments in your inbox each weekday.

Rescue act | Trump’s push to oust the Nicolas Maduro administration in Venezuela just got more complicated after a Chinese contractor agreed to shore up the oil-rich country’s derelict refining network to ease fuel shortages. As Peter Millard and Fabiola Zerpa report, U.S. sanctions contributed to Caracas’s decision to revive its crippled refining capacity.

What to Watch

U.S. immigration agents arrested about 680 people during raids at food-processing plants in Mississippi, in an operation federal officials said was probably the largest of its kind in a single state. Italian Deputy Premier Matteo Salvini has given Prime Minister Giuseppe Conte a Monday deadline to shake up the cabinet, indicating that if his partners in the Five Star Movement don’t yield to his demands, he’ll bring down the government. The U.S. and South Korea can’t even agree on whether they’ve started talks on sharing defense costs, let alone how much to pay.

And finally … Hong Kong police are using a larger volume of tear gas and rubber bullets to subdue the city’s protests compared with their operations during the 2014 Occupy movement. Back then, crowds gathered for 87 seconds of silence, representing one second for each tear-gas canister fired during the 79 days of demonstrations that shut down parts of the Asian financial hub. Police have deployed more than 1,800 tear-gas rounds and 300 rubber bullets, as rallies against a controversial extradition law continue to rock the city.

 

–With assistance from Kathleen Hunter, Karl Maier, Ruth Pollard, Amy Teibel and Sheryl Tian Tong Lee.

To contact the author of this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

To contact the editor responsible for this story: Michael Winfrey at mwinfrey@bloomberg.net

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