The Fall of Benjamin Netanyahu and the Future of Israel

When Benjamin Netanyahu visited Washington earlier this month, it should have been a political triumph, a moment of exultation. For most of his 12 years in power, the hawkish Israeli prime minister was forced to work with presidents who despised him, left-leaning Democrats who talked about settlements and Palestinian statehood. Now, he has Donald Trump. Their March 5 meeting at the White House was the first since the U.S. announced plans to relocate the American Embassy from Tel Aviv to Jerusalem this spring. Israeli politicians had long demanded the move; Netanyahu was the one to deliver it. Ever the flatterer, he compared Trump to Cyrus, the Persian ruler who freed his Jewish subjects 2,500 years ago and let them return to Jerusalem. From there, it was off to the annual American Israel Public Affairs Committee (AIPAC) policy conference, where Netanyahu and his wife were greeted with standing ovations, a warmer welcome than anything he would find back home.

And yet the whole trip was spoiled from the start. Hours before Netanyahu met with Trump, Israelis learned that one of the prime minister's closest advisers had turned against him. Nir Hefetz, a former journalist, has been described as "Netanyahu's spin doctor," the man responsible for massaging press coverage of the first couple. But after Hefetz's arrest in February, he agreed to turn state's evidence and hand over recordings of the Netanyahus discussing an alleged criminal conspiracy. He is the third confidante of the prime minister known to have cooperated with the authorities in recent months.

Netanyahu acted as if nothing was wrong. He is, after all, Israel's second-longest-serving prime minister. He has survived police investigations before, as far back as his first term, in the 1990s. "There will be nothing because there is nothing," he has said, dismissing the latest spates of corruption probes. And critics have made a career of underestimating him. Before the last election, in 2015, Israelis were convinced Netanyahu was finished. The vote would hinge on the economy, they predicted, and the prime minister had little to offer (he didn't even bother releasing an economic program). He won anyway, in decisive fashion.

Yet even his allies are starting to whisper that this jubilant visit to Washington was his last. After years of investigations, the police are closing in; the cases against him grow more substantive by the day. The attorney general will decide in the coming months whether to indict him on a slew of charges, which range from comically absurd to deathly serious. The man Time once dubbed "King Bibi" has lorded over Israel's political scene for 10 years and planned to stay for many more. Now, suddenly, he seems vulnerable.

His address to AIPAC was his usual stump speech. He talked about Israel's security, its burgeoning diplomatic ties in previously unfriendly parts of the world, its enviable high-tech industry. These are undeniable achievements, but they are not Netanyahu's real legacy. When he goes—and it now seems a question of when, rather than if—he will leave behind a country that is deeply, perhaps irreparably, divided.

This division is not entirely his fault. Demographic and cultural changes—from the rapid growth of the ultra-Orthodox Jewish population to the hawkishness of a younger generation raised during the second intifada, the violent Palestinian uprising—play a major role. But he has undeniably sped up the process. He allows the Haredim (the Hebrew word for ultra-Orthodox Jews) to dictate policy on everything from railroad construction to prayer arrangements at the Western Wall. He has largely remained silent about the wild, right-wing incitement aimed at the president and the army. Rather than push back against the racist and nationalist fringes in his coalition, Netanyahu empowers them. The final act of his 2015 campaign, for example, was an Election Day warning that "the Arabs are coming to the polls in droves."

The schisms in Israeli society may be on stark display in a few months. With indictments looming, Netanyahu may call an early election. He would enter the campaign with an approval rating in the low 30s and most Israelis demanding his resignation. Many voters are struggling financially because of a high cost of living, low wages and housing shortages. The peace process with the Palestinians is defunct. And yet, if the election were held today, despite his unpopularity and the growing likelihood of a prosecution, he would probably still win.

Someone Put Bibi in a Corner

The Netanyahus have been accused of petty corruption for decades, and the press loves to feast on their lavish, entitled lifestyle. Gidi Weitz, a Haaretz correspondent and one of Israel's top investigative reporters, once wrote a story about their penchant for skipping out on the check at an Italian restaurant where he worked in the 1990s. The freebies got larger after Netanyahu was re-elected in 2009: He signed a $2,500 contract for gourmet ice cream at their official residence and had workers install a $127,000 bed on a government plane so the first couple could nap on the five-hour flight to London. Still, these were small-time swindles—a politician taking advantage of his position to live a little more luxuriously. Perhaps the highlight was what's known as Bottlegate: For several years, Sara Netanyahu pocketed the 8-cent refunds from returning empty wine bottles that the state had purchased. (Sara is an influential figure in her husband's administration, as well as a source of his legal troubles: Two former domestic workers have successfully sued her for abuse.)

The allegations turned far more serious on February 13, when the police recommended filing charges against Netanyahu in two separate cases. In the first, known as "Case 1000," he is accused of accepting gifts from billionaires and doing them favors in return, like helping one renew his American residence visa. Their largesse—cigars, champagne and the like—allegedly came to 1 million shekels, or about $288,000. (In a delightful flourish, one of his benefactors was Arnon Milchan, the producer of Pretty Woman.)

The other revolves around Arnon Mozes, the publisher of Yediot Aharonot, Israel's largest paid daily newspaper. It has long been critical of Netanyahu, a position that owes more to a personal feud than political differences. Sara Netanyahu once compared Mozes to Lord Voldemort, the villain of the Harry Potter novels. Yet according to the police, the two foes held friendly meetings to discuss a quid pro quo. Mozes offered to tone down his newspaper's coverage of the prime minister. In return, Netanyahu allegedly offered to kneecap Israel Hayom, a popular free paper funded by American casino magnate Sheldon Adelson that has taken a huge chunk out of Yediot's ad revenues. There is no evidence that Netanyahu acted on his promise. In fact, he did the opposite: He called early elections in 2014 to stop a bill that would have restricted the distribution of Adelson's newspaper. But the mere discussion may have been a crime.

In years past, these allegations would have sufficed to end an Israeli politician's career. Yitzhak Rabin resigned the premiership in 1977 after a journalist discovered that his wife kept a foreign bank account, which held about $10,000 of their own money. Bizarre as it sounds now, that was illegal in Israel, then a relatively poor country in dire need of foreign currency. Rabin admitted it was a "mistake" and said he would not "hide behind parliamentary immunity." There was no suggestion of bribery or corruption, but even this minor technical violation was enough to drive a prime minister from office.

No longer. A country romanticized for its socialist kibbutzim has now become a neoliberal economy; among the members of the Organization for Economic Cooperation and Development, a club of wealthy nations, Israel ranks second only to the United States in economic inequality. "We used to be a very homogeneous society where nobody had a lot of money," says Ifat Zamir, the head of the Israeli branch of Transparency International. "And then, in the 1990s, some people earned some money, and the world changed with them. And so did the public's trust in government."

Indeed, many Israelis have reacted to the allegations against Netanyahu with apathy. Left-wing activists have organized weekly protests against the prime minister, but even at their peak this summer, the crowds numbered only in the thousands. By March, they had dwindled to a few hundred. And many of the attendees were already inclined to dislike Netanyahu. His right-wing base has not deserted him. Quite the opposite: Some polls actually show his popularity has increased. In the first days after the police released their recommendation, it was possible to think Netanyahu would keep his job.

But the list of allegations keeps growing. He is accused of cutting another allegedly shady deal, this one with the owner of Bezeq, Israel's main telecommunications company. The businessman, Shaul Elovitch, also owns Walla, a popular news website. In this case, the favors may have been worth hundreds of millions of dollars. The police are also looking at whether Netanyahu and his aides offered to promote a judge to attorney general if she agreed to halt a case against the prime minister's wife. And looming in the background are allegations that top security officials took bribes from a German conglomerate that makes the nuclear-capable submarines used by Israel's navy. The last one has yet to implicate Netanyahu, but several of his senior advisers are under investigation.

As one Knesset member puts it, speaking anonymously because of the matter's sensitivity: "We still have a few red lines, and one of them is messing with national security."

Mr. Status Quo

If Netanyahu is one day sentenced to the minimum-security Maasiyahu Prison, he will be following a well-worn path. In February 2016, Ehud Olmert, the previous prime minister, was being driven to the facility. Two years earlier, he was convicted of bribery and sentenced to 19 months behind bars. A morning show on Israeli radio wanted to offer some advice to the new inmate. That wasn't hard to arrange: A veritable shadow Cabinet has done time in Israeli prisons. The hosts called a former health minister, Shlomo Benizri, to offer tips. ("The guards are not sentimental about ministers," he noted.)

But Netanyahu's case could be different for one reason: Israeli law is clear that a minister charged with serious offenses must step down, but says nothing about a prime minister. Olmert resigned before he was charged. His successor is determined to stay. The legal consensus is that he can, until he is convicted and exhausts his appeals. So at least for now, his battle is political. Olmert stood down after his coalition partners told him, first privately and then publicly, that he had lost their support. He also came under withering attack from the opposition. "A prime minister who is sunk up to his neck in investigations has no moral and public mandate," said the opposition leader at the time.

That opposition leader was Benjamin Netanyahu, who seems to have forgotten his earlier edict. He is under no real pressure to resign. His allies are standing by him. Education Minister Naftali Bennett, in Washington to attend the AIPAC confab, said Netanyahu should be presumed innocent until proved otherwise. Miri Regev, the populist culture minister, said she was "unimpressed" by the case against Netanyahu: "I don't rush to hang people in the village square."

There is talk in the Knesset, Israel's parliament, of early elections—but as a show of strength for Netanyahu, not of weakness. Just a few weeks ago, his coalition seemed unassailable, on track to become the first since 1988 to serve a full four-year term. It passed a two-year budget in December 2016, all but assuring its survival until the next scheduled election. (Under Israeli law, if a government fails to pass a budget, it automatically dissolves.) But now the ultra-Orthodox parties have threatened to vote against the next budget unless the Knesset passes a law exempting Haredi men from the army draft. Though the spending plan does not have to pass until December, Netanyahu may use it as a pretext to go to the polls.

He has good reason to be confident. Surveys of the Israeli electorate can be admittedly unreliable. Days before the 2015 election, most of them had the Likud Party trailing well behind its main center-left competitor. Still, they offer a decent barometer of the public mood. The latest poll, conducted by Channel 10, puts Likud, Netanyahu's party, at 29 seats, just one below its current total. In second place, with 24 seats, is Yesh Atid, a centrist party that has seesawed in popularity since it was founded in 2012. Labor ranks a distant third, with just 12 mandates, half of what it has now. The rest of the Knesset would remain largely the same.

Some analysts paint Israel as a country lurching inexorably to the right. This is an oversimplification. In 1981, the right-wing and religious bloc won 64 seats in the 120-member Knesset. In 2015, it won 67. The center-left ceded a lot of ground—but almost all of it to the Arab parties, which came into existence in the 1990s. The size of the conservative, religious bloc has remained almost constant for a generation. The real shift is found within the blocs. In 1981, the two largest parties—Likud and Alignment, a forerunner of Labor—won 95 seats, nearly four-fifths of the Knesset. No other party won more than 5 percent of the vote. In the last election, though, Likud and Labor won just 54 seats. Even if they agreed to form a unity government, they still wouldn't have a majority. Seven other parties, from across the ideological spectrum, cleared the 5 percent mark.

This fragmentation makes it hard for many Israeli politicians to form coalitions. Netanyahu could reassemble his current one, albeit with a smaller majority. Yair Lapid, the chairman of Yesh Atid, would struggle with the task. Even with a broad coalition spanning from the center-right to the far left, he would fall short of a majority. To cross the 60-seat threshold, he would need either the ultra-Orthodox parties or the ultranationalist Yisrael Beiteinu faction. The latter is a far-right party that campaigned in 2015 on ethnic cleansing and reviving the death penalty. And Lapid built his political career agitating against the former, demanding cuts to their welfare benefits and an end to their draft exemptions. Either would be an awkward fit.

Most of Netanyahu's potential replacements on the left and right face a similar dilemma. Though he carries on as the opposition leader, the unpopular Isaac Herzog no longer controls the Labor Party. His successor, Avi Gabbay, was elected to the top job in Labor last year and immediately set out to court right-wing voters. His popularity soon plummeted and has yet to recover. Bennett's Jewish Home Party is too closely linked to the settlers, and Avigdor Lieberman's party, Yisrael Beiteinu, to Russian émigrés. Neither is likely to win a plurality in the Knesset. A few recently retired generals are eying a second career in politics, but they need to find a party to run with, and some of them are still in a cooling-off period that bars them from running for office. As it stands, Likud is the only party with a realistic shot at forming a government.

Netanyahu's resilience seems puzzling, given that he has little to offer his voters. His critics often deride him as "Mr. Status Quo." In 2011, massive socioeconomic protests shook Israel. They started with a small tent city on a fashionable boulevard in Tel Aviv; by September, hundreds of thousands of people were in the streets to complain about the high cost of living. They ended without any major reforms. Mobile phone plans are cheaper. Supermarkets slashed the price of cottage cheese. But the fundamentals of the economy remain unchanged. Netanyahu has done little to address a nationwide housing shortage that has made apartments unaffordable for the majority of young Israelis. (Buying a five-bedroom apartment costs the average Israeli almost 16 years' pay, compared with seven and a half in France and five in the United States.) Meanwhile, the prime minister hasn't tried to address the constant skirmishes over religion and culture that roil Israeli politics, from restrictions on business during the Sabbath to the growing incitement against liberal activists and academics.

To some foreign audiences, Netanyahu's most unforgivable lapse is his inaction on the peace process. Every month, the centrist Israel Democracy Institute conducts a survey called the Peace Index. The first two questions are always the same: Do you support peace talks with the Palestinians? Do you think they will succeed? The latest numbers are grim. Nearly 60 percent of Israeli Jews support the process, but just 18 percent believe it will bring peace. Put those numbers together, and barely one in 10 Jewish Israelis both supports and believes in a two-state solution. An overwhelming majority thinks the status quo is here to stay. (The Palestinians are similarly resigned.) "Netanyahu had two goals when he took office," says a former adviser, who asked for anonymity to speak frankly about his ex-boss. "One of them was to dismantle the Oslo Accords."

The prime minister has never put it so bluntly—at least in public. But he has undeniably been successful. For nearly a decade, he has stalled for time, agreeing to peace talks but never to the substantive concessions that might advance the process. He says one thing in Hebrew and another in English. Days before the 2015 election, he promised to never establish a Palestinian state. After his victory was secured—and after sharp criticism in the West—he tried to disavow those comments. When Trump first took office and asked Netanyahu to "hold back" on settlements, the prime minister was nonplussed. "He's going to lose interest," another aide predicted last year, while Trump was visiting Jerusalem. Sure enough, the president is no longer on speaking terms with the Palestinians and seems to doubt he can reach what he once called the "ultimate deal."

In fairness, even a dovish prime minister would struggle to negotiate with the Palestinians, divided as they are between Fatah, the secular party that controls the West Bank, and Hamas, the Islamist group that seized power in Gaza in 2007. Nor would he receive much help from the current White House. The American ambassador to Israel, David Friedman, is an unabashed supporter of Israeli settlements. Jared Kushner, Trump's son-in-law, whose family's charity has donated money to settler groups, was meant to play a leading role in the peace process. Today, he is mired in scandal, his role in the White House greatly diminished.

Yet there is no reason to think Netanyahu's successors will be willing or able to implement to the two-state solution. Of the six men likely to replace him, four are avowed opponents of Palestinian statehood. Bennett wants to annex two-thirds of the West Bank, a step that would preclude a Palestinian state. Lieberman rejects the idea of statehood, as do most of the leading lights within the Likud. When journalists from Walla polled the Cabinet, just four ministers were willing to publicly endorse a two-state plan.

While Lapid and Gabbay support it, they have been vague about how they might achieve it—how to avoid the mistakes that crippled 25 years of U.S.-led negotiations. They offer nothing beyond vague talk of "regional initiatives" and "involving the Arab states." There is little incentive to do otherwise. The issue does not bring in many votes, nor does it even come up much in Israeli politics. Before the 2015 election, the heads of most major parties gathered for a two-and-a-half-hour debate on Channel 2. The word peace was uttered exactly five times, three of them by Ayman Odeh, who leads the party that represents Palestinian citizens of Israel. "This is not a parameter that differentiates between the parties," said Dani Dayan, a former settler leader who now serves as Israel's consul-general in New York. "Because Israelis understand that whoever is prime minister, nothing will change."

'I Didn't Have a Newspaper'

Netanyahu's first stint in office lasted only three years. He won by a narrow margin in 1996, and voters quickly soured on him. The peace process was faltering. The blood-soaked occupation of south Lebanon seemed endless. Stories of corruption were already swirling around Netanyahu and some of his coalition partners. The public tossed him out in 1999, handing Ehud Barak the election by a 12-point margin.

For Bibi, though, all these substantive issues were secondary. Contemplating his defeat on election night, he told aides, "I lost because I didn't have a newspaper." He solved that problem before his next run for the premiership a decade later. Israel Hayom made no attempt to be an objective source of news. The loss-making paper, subsidized heavily by Adelson, was a crude propaganda outlet for Netanyahu; the prime minister's office even reportedly dictated its headlines.

His ambition went beyond winning the daily war for headlines. On the eve of Israel's 70th birthday, the country's political history can be cleaved roughly into two halves. The first was dominated by the center-left predecessors of the Labor Party. The political establishment was largely liberal, secular men of Ashkenazi descent. Likud did not win its first election until 1977, an event that Israel's main news anchor famously dubbed the mahapakh (revolution). Since then, the left has struggled to regain power. Right-wing prime ministers have ruled for 29 of the past 40 years. And yet Likud continues to act like a permanent opposition party. To hear Netanyahu and his allies tell it, they are fighting for control against the entrenched elites: the military, the judiciary, academia. (His friend in the White House might call this the "deep state.")

To hear his advisers tell it, this was Netanyahu's second goal—to reshape Israel's establishment. His obsession with manipulating the media is one example. He has appointed an unprecedented number of religious Israelis to the top echelons of the security services. Ayelet Shaked, the nationalist justice minister, is trying to change the way judges are appointed, handing power to the Knesset instead of a judiciary seen as leftist. Regev, the culture minister, lashes out constantly at artists, even proposing a "loyalty test" for those who receive state funding.

Nearly one in four Israeli primary school students is ultra-Orthodox, up from one in 10 a generation ago. Though most Israelis support a greater separation between synagogue and state, ultra-Orthodox politicians are pushing in the opposite direction. In the fall of 2016, they balked at the state railway's plan to conduct maintenance on Shabbat, the Jewish Sabbath. The timing made sense: Trains do not run on Saturdays, road traffic is light, and most workers have the day off. But the Haredim, under pressure from their constituents, threatened to bring down the government unless the repairs were canceled. Netanyahu dawdled until the last possible moment—Friday afternoon, less than an hour before the Sabbath. Then he canceled the work, a move that cost the state millions and caused gridlock the following Sunday. All this to avoid alienating a religious constituency that alienates a majority of Israelis.

Different Israeli Jews have fundamentally incompatible views on how to define Israel as a "Jewish and democratic state." Sixty-nine percent of the ultra-Orthodox and 46 percent of the national-religious (a plurality) feel that the state is too democratic. Fifty-nine percent of secular Jews think it is too Jewish. A majority of Israeli Jews feel it is inappropriate for Arab lawmakers to sit in the coalition, and many think it is acceptable that the state allocates more money to Jewish communities than to Arab ones.

In the first decades after 1948, Israel was surrounded by hostile (and much larger) Arab states. The sense of shared danger helped bind together Jews from all over the world, especially since the memory of the Holocaust was still fresh. Those ties weakened after the treaties with Egypt and Jordan. Still, the peace process continued to stitch up Israeli society, albeit into two halves: a "peace camp" that believed a two-state solution was the only way to safeguard the country's future and an opposing group that felt otherwise. There was nonetheless a sense of shared destiny, that both sides were arguing over a common fate.

By 2018, however, there is no real threat to draw Israelis together. The country has peace treaties with two of its four neighbors; a third, Syria, is in ruins; and the fourth, Lebanon, is so weak that Israel routinely uses its airspace to launch strikes in Syria. (Hezbollah poses a serious threat, but hardly one that could destroy the country, and it is constrained by both its involvement in Syria and Israeli deterrence.) Neither the Iranian nuclear program nor the pro-Palestinian boycott sanctions and divestment movement currently threaten Israel's survival. And the status quo with the Palestinians, rightly or not, seems sustainable well into the future. Few Israelis give it much thought on a daily basis. Their society cannot be drawn together by the need to stand united in the face of mortal danger, because it does not exist. "At this point, and for the foreseeable future, there is no existential threat facing Israel," said Moshe Ya'alon, who served as defense minister until 2016.

Ofer Zalzberg, a Jerusalem-based analyst for the International Crisis Group, seems to agree. "We're caught in a crisis of identity. People are worried about globalization, about a sense of losing tradition. It's the autonomy of the individual versus Jewish tradition. And nobody knows which side will win," he says.

'Full of Hubris'

If Netanyahu left office tomorrow, it would be difficult to choose a headline for his political obituary. Menachem Begin signed a lasting peace treaty with Egypt, and Rabin did the same with Jordan. Barak ended the decades-long occupation of Lebanon. Ariel Sharon withdrew from Gaza. Shimon Peres oversaw vital reforms that paved the way for Israel's high-tech economy. Even Olmert, despite his ignominious end, could argue that he pursued a serious attempt at peace with both Syria and the Palestinians.

Netanyahu simply survived. In his third government, he agreed to a plan to draft ultra-Orthodox men into the army; in his fourth, he postponed it. He announced the mixed-gender prayer space at the Western Wall to great fanfare, but he never opened it. His promise to lower prices and housing costs has gone unfulfilled. Even his wars have been indecisive. The year "1973 was the last time...both sides said, OK, let's make a deal," says Oded Eran, a longtime Israeli diplomat. "All of the wars since ended with a U.N. resolution, which was only partially effective, or the arrangement of 2012. What does it mean that we end it unilaterally? It means that Israel continues to live under the current circumstances. It's not clear what is actually ending."

A senior officer in the Israeli army once called Netanyahu "a character from a Greek tragedy." (The officer is still in the military and asked for anonymity.) He is both a gifted politician and an educated man, a keen student of world history and contemporary geopolitics. As a man of the right, the son of a prominent Revisionist historian and a former army commando, he had the stature to be a transformative politician in the mold of Begin. But his lust for power led him to pursue short-term tactics instead of grand strategy, and the schisms in Israeli society deepened all the while. "He's full of hubris," the officer said.

Or as the Israeli journalist Raviv Drucker wrote in Haaretz in February, "After Netanyahu goes, a lot of the warped norms of governing will go with him. It's not corruption but normalcy that's at stake."

This is true enough. The next prime minister, whoever it is, will probably not be dogged by tales of cigars and champagne and verbal abuse of the domestic help at the official residence. The prime minister's wife won't steal bottle deposit refunds. His son won't ask the sons of wealthy oligarchs to spot him 400 shekels for a prostitute, as Yair Netanyahu did.

But on the most critical questions of Israel's future—its relationship with the Palestinians, and with itself—the prime minister's successor may not be much different at all.

Gregg Carlstrom is a Middle East correspondent for The Economist. Portions of this article were adapted from his book, How Long Will Israel Survive? The Threat From Within.