Cypriot-‘troika’ deal means that Cyprus is leaving eurozone in all but name

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Another late Sunday night in Brussels, another eurozone bailout plan for Cyprus — and it seems likely that the new deal between Cyprus president Nicos Anastasiades, and the ‘troika’ of the European Commission, the European Central Bank and the International Monetary Fund will endure much longer than last week’s disastrous plan, though capital controls to be implemented by the Republic of Cyprus’s government seem likely to lead to a backdoor eurozone exit for the nation of 1.15 million people.
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The Cypriot-troika deal in brief

The deal will shield depositors with under €100,000 in savings from a ‘haircut’ levy, but depositors with funds over €100,000 now face an even more painful result –what amounts to a haircut for depositors and creditors alike at the troubled Bank of Cyprus (the largest Cypriot bank), and an even deeper haircut for Laiki’s depositors and creditors, who will take huge losses as Laiki is wound down.  Laiki (also known as the Cyprus Popular Bank, the country’s second-largest bank) will be split into a ‘bad bank’ and a ‘good bank,’ the latter to be folded into the Bank of Cyprus.

All creditors at the Bank of Cyprus will see their interests restructured into a long-term equity interest and uninsured depositors will take an expected haircut of around 35% or 40%, with their deposits also held up for some time to come.

All the same, as Joseph Cotterill at FT Alphaville writes, the deal is better on two counts:

But there were two major injustices in the first Cyprus-Troika deal which made a mockery of the bail-in principle. Without debate, and upfront, it “taxed” depositors below the insured €100k limit alongside the uninsured. Then the tax was applied to either irrespective of bank. Why should small depositors in Barclays Nicosia or VTB Limassol take pain off large ones in Laiki or BoC, for instance. Well, finally, now we know. They shouldn’t have. The two unjust parts are gone.

Bonus points, I guess (if you’re a eurocrat), for structuring the deal in such a way that it can be implemented directly under Cyprus’s banking authority, so no need for another vote from the Cypriot parliament, which overwhelmingly rejected last week’s plan.  That plan featured a 6.75% levy on all depositors with savings under €100,000 in any Cypriot bank.  The parliamentary run-around, however, will only fuel the ‘democratic deficit’ hand-wringers throughout the European Union and breed resentment inside Cyprus and beyond.

The worst of the Irish and Icelandic precedents

Though the deal is ostensibly narrowed to focus on Cyprus’s two largest banks, and it’s better than last week’s plan, the deal essentially features the worst elements of the Irish and Icelandic examples.

Like Iceland, some of the Cypriot banking sector will be allowed to fail — Laiki’s uninsured depositors are out of luck, no matter whether they are Russian or Cypriot or whatever.  That’s exactly how Iceland approached its banking sector failure.

But unlike Iceland, Cyprus does not control its own monetary policy, so it won’t be able to devalue its currency and take the kind of independent monetary policy steps to rebalance its economy in the way that Iceland has.  Though Iceland is no longer the financial center it was before 2008, it has returned to GDP growth (around 3% in 2011 and 2.5% in 2012) and features relatively low unemployment — just 5.3% as of November 2012.  In contrast, Cyprus remains trapped in the ECB monetary policy straitjacket.

But like Ireland, the rest of the Cypriot banking sector will be essentially nationalized by the Cypriot government, with a European bailout that is likely to require additional bailout assistance and will come with increasingly stringent austerity measures that Cyprus’s government will be forced to take that will invariably depress its own GDP growth.  No one’s optimistic about Cyprus — it seems fated to suffer a fierce GDP contraction and a massive uptick in unemployment, joining Greece and Spain as one of the eurozone’s most troubled economies, no thanks to the Eurogroup’s clumsy policymaking.

Self-inflicted wounds to the European project

It’s worth repeating that the damage from the first Cyprus plan remains and cannot easily be reversed — Cyprus’s banking sector has now been decimated, probably permanently.  As one unsentimental Moscow economist put it, Cyprus’s beaches-and-banks economy is now just beaches.  The best hope for Cyprus’s economy is the rapid development of natural gas deposits that could bost its economy back after what will likely be a double-digit recession. But the ultimate scope and richness of those deposits are still unknown, and there’s no assurance that natural gas will be the country’s economic savior.

Brussels has so thoroughly undermined Anastasiades that he allegedly threatened to resign Sunday at one point, so it’s not clear how much legitimacy he’ll have in the next four years and 49 weeks of his five-year term, especially given that his own center-right party Democratic Rally (DISY, Δημοκρατικός Συναγερμός or Dimokratikós Sinayermós) controls just 20 of the 56 seats in the Cypriot House of Representatives (Βουλή των Αντιπροσώπων).

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In addition to the obvious ammunition that eurozone leaders have handed to euroskeptics, no one in Spain or Italy or Slovakia or Latvia should be feeling very good these days about keeping their money in national banks, deposit insurance or not.  Already today, Jeroen Dijsselbloem, the newly elected president of the Eurogroup of eurozone finance ministers (pictured above with IMF managing director Christine Lagarde), has released a statement walking back earlier comments that appeared to hail the Cypriot bailout as a precedent for future deals.

It’s been a horrible start for Dijsselbloem, who succeeded Luxembourg prime minister Jean-Claude Juncker — Juncker has already (very gingerly) criticized the Eurogroup’s post-Juncker approach to Cyprus, and it’s hard to believe that Juncker would have made some of the more glaring errors that  Dijsselbloem has made — unlike Juncker, who was Luxembourg’s finance minister from 1989 to 2009 and has been prime minister since 1995, Dijsselbloem has served as the Dutch finance minister for barely over four months. It’s starting to look like the decision to appoint Dijsselbloem as a sort of compromise Eurogroup president (he’s a pro-growth member of the Dutch Labor Party who’s implementing an austerity regime in an otherwise budget-cutting government led by center-right prime minister Mark Rutte) may have been a poor one.

Capital controls are a backdoor Cypriot eurozone exit 

While it’s far from an original observation — more sophisticated financial commentators and economists have made the same point — the biggest takeaway from the weekend is that Cyprus has essentially been booted out of the eurozone, in large part due to the capitol controls that Cyprus looks set to enact tomorrow when banks in the country reopen — here’s a short summary of the menu of options from Yiannis Mouzakis, based on the capital control bill that Cyprus’s parliament passed over the weekend.  There’s optimism that the controls will be ‘very temporary,’ and will be somewhat lighter than originally feared, but it’s worth noting that Iceland’s controls are still in place even today, over four years after their imposition in late 2008.

The inescapable conclusion is that a ‘Cypriot euro’ is no longer the same thing as a euro throughout the rest of the eurozone.

As former banker Frances Coppola wrote over the weekend, the imposition of capital controls transforms Cyprus into something far short of an equal member of the eurozone:

Once full capital controls are imposed, a Euro in Cyprus will no longer be the same as a Euro anywhere else in the Euro area. It cannot leave the island. The Cyprus Euro will in effect be a new domestic currency. The imposition of capital controls in Cyprus is therefore the end of the single currency in its present form.  Continue reading Cypriot-‘troika’ deal means that Cyprus is leaving eurozone in all but name

A bad day for Boris — London’s mayor called ‘nasty piece of work’ in interview

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Boris Johnson, reelected last year as London’s major and often discussed as a potential Tory successor to prime minister David Cameron, had a very bad weekend.United Kingdom Flag Icon

In an interview with the BBC’s Eddie Mair, Johnson hemmed and hawed over whether he once invented a quote 30 years ago as a young news reporter, lied to former Conservative leader Michael Howard over an affair and a controversial phone conversation from 1990 between Johnson and a friend who wanted to, perhaps, assault a journalist (the journalist was never assaulted, though), each of which are revelations to be discussed in an upcoming documentary about Johnson’s life.

The interview culminates with Mair asking, ‘you’re a nasty piece of work, aren’t you?’

Mair finishes the interview challenging Johnson’s integrity even further for refusing to answer whether he wants to be prime minister one day.

I’m not sure that the questions were entirely relevant to Johnson’s role today as a two-term mayor of London, but it was nonetheless painful to watch Johnson dissemble throughout the interview, especially given the easy manner that ‘Boris’ generally has in public, which was clearly on display during the 2012 summer Olympics.

I’ve seen bad interviews before, and this is about as bad as the infamous Roger Mudd interview with the late U.S. senator Ted Kennedy in 1979 when Kennedy couldn’t give a compelling answer as to why he wanted to be president (Kennedy was challenging U.S. president Jimmy Carter at the time for the Democratic Party’s nomination).

The interview doesn’t necessarily end his chances to become prime minister one day, and it may well backfire on Mair, but it will also certainly renew and reinforce existing doubts about the London mayor’s discipline and his image — it’s the downside to the boyish, off-the-cuff charm that has made him such a noteworthy foil to the more dour Cameron and his chancellor of the exchequer, George Osborne.

Watch the choice clips from the interview below the jump:

Continue reading A bad day for Boris — London’s mayor called ‘nasty piece of work’ in interview

First Past the Post: March 25

East and South Asia

Hazar Khan Khoso will be Pakistan’s caretaker prime minister until May 11 elections.

Former Pakistani leader Pervez Musharraf has returned to Pakistan.

With another one of her nominees resigning due to scandal, South Korean president Park Guen-hye will retain current defense minister Kim Kwan-jin.

North America

The shrinking U.S. role in advising policymakers in Iraq.

Venezuela

Venezuela’s government admits that homicides rose 14% in 2012.

Latin America / Caribbean

The Cuban revolution hasn’t been such a great thing for Cuban blacks.

The Vatican won’t intervene in the Falklands/Malvinas dispute.

Sub-Saharan Africa

Rebels capture the capital of the Central African Republic.

Eight Nigerian governors are set to defect from the Peoples Democratic Party.

The significance of Chinese president Xi Jinping’s visit to Tanzania.

Nigeria’s Chinua Achebe has died.

Europe

Cyprus and the IMF/European ‘troika’ reach a deal — with a 40% haircut for deposits at the Bank of Cyprus over €100,000.

Felix Salmon already has some must-read comments on the latest Cyprus deal.

The previously planned capital controls would have essentially meant the end of Cyprus’s membership in the eurozone.

Police say there’s no evidence that Boris Berezovsky, a Russian oligarch living in exile in London, was murdered.

Paris hosts a widespread rally opposed to same-sex marriage.

Middle East and North Africa

Lebanese prime minister Najib Mikati has resigned, three months ahead of parliamentary elections.

Australia and Oceania

Australian prime minister Julia Gillard announces her post-spill team of ministers.

¡Hasta siempre, comandante!

I don’t know quite what to make of this.  Fifth circle of hell or cielo bolivariano?Venezuela Flag Icon

In any event, it’s a good reminder that the April 14 presidential election is still about Hugo Chávez, perhaps even more than the elections in which Chávez himself contested since 1998.

There’s of course Salvador Allende there (in the suit), the martyr of Chilean socialism whose fall ushered in nearly two decades of military rule by Augusto Pinochet; Eva Peron, the wife and successor to her husband’s mid-20th century peronismo movement in Argentina; and, of course, Che Guevara, who’s practically become the patron saint of revolutionary spirit.

Finally, of course, no paean to Chávez would be complete without the Great Liberator himself, Simon Bolívar.

H/t to Caracas Chronicles, which should be required reading for anyone interested in Venezuela.

Scotland sets a referendum date: September 18, 2014

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Scotland’s first minister, Alex Salmond, has set September 18, 2014 as the date for the referendum on potential Scottish independence.United Kingdom Flag Iconscotland

Polls have been relatively consistent, with support for independence at around 30% to 35% and with support for continued union with England at around 50% to 55%.

But the up-or-down vote will come in 18 months, and a lot can obviously change in 18 months, including the popularity of Salmond (pictured above) and his Scottish National Party, which won in 2011 the first majority government since devolution in the late 1990s.

Three quick things to keep an eye on:

Shetland and Orkney.  Shetland and Orkney, the groups of islands to the northeast of Scotland, could well stay within the United Kingdom if Scotland leaves.  That would complicate the Scottish economic rationale for independence, dependent as it is upon North Sea oil revenues.  It’s no surprise then, to see Liberal Democrats encouraging Shetland and Orkney to think of themselves as a unit within the United Kingdom than as just an appendage of Scotland.

Tory incentives. As Liberal Democratic deputy prime minister Nick Clegg has sharply noted, Conservatives do not have an incredible incentive to fight hard to keep Scotland in the United Kingdom, given that they hold one seat.  It’s fair to worry that Tories actually have an electoral incentive to see an independent Scotland — though, because the Scots are just 8.5% of the UK population, it’s not as much as you might think.  Labour prime minister Tony Blair’s massive 12-point 1997 landslide was still a massive 10-point landslide within England proper.  In the 2010 general election, Labour won 28.1% in England and 29.0% nationwide, while the Tories won 39.6% in England and just 36.1% nationwide.  So it’s a boost, but not a gigantic one.

Europe.  Also, there’s some dicey choreography with the European Union too, because as the United Kingdom approaches prime minister David Cameron’s promised 2017 referendum on potentially leaving the EU, the more it could have a negative effect on the Scotland effort.  In fact, even with sluggish growth in the next 18 months, I think the anti-Europe tone in England is the biggest threat to the anti-independent forces in very much pro-Europe Scotland.  If Nigel Farage’s United Kingdom Independence Party (UKIP) continues to make further gains in advance of the 2015 general election, it could well scare some of the pro-union, pro-European Scots toward the independence camp.

Despite what anyone in Brussels or Berlin or London or Edinburgh says, no one thinks that Scottish independence would leave it outside the EU for long.  Given that the Scots have implemented as much of the acquis communautaire as England has, it’s certain that the Scots would align independence with simultaneous Scottish accession to the EU.  That’s a non-issue.

Meet the new heir to Hugo Chávez: the feistier, populist Capriles 2.0

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Just days after the death of longtime Venezuelan president Hugo Chávez, his previous opponent in the 2012 election, Henrique Capriles, lost no time in taunting acting president Nicolás Maduro:Venezuela Flag Icon

Nicolás, nobody elected you president. The people didn’t vote for you, kid.

It was quite a bit out of character for Capriles (pictured above), who often campaigned against Chávez, then ailing with the cancer that ultimately took his life, with kid gloves — after all, Chávez remained the beloved champion of Venezuela’s poor, and Capriles himself pledged to retain the misiones that provided education and health benefits in the event of his election.

In fact, Capriles’s sneering and taunting attitude was more reminiscent of Chávez, who never lost an opportunity for a little name-calling.

Although Capriles is reported to have seriously considered boycotting the election, he announced March 10 that he would accept the presidential nomination of the opposition coalition, the Mesa de la Unidad Democrática (MUD) with the kind of intensity that critics claimed his previous 2012 campaign lacked.  In a fiery, nearly hour-long speech, he attacked the record of chavismo and pursued Maduro with a newfound aggression, challenging Maduro by his first name (¡Y tu, Nicolás…) and attacking the government’s handling of the constitutional succession and its performance since Chávez won reelection:

Maduro was hand-picked by Chávez as his new vice president and anointed as his preferred successor, and he has — for now — secured the support of the Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela) and much of the Venezuelan army, now sympathetic to the ruling chavista regime after 14 years of Chávez in power.

But from his newfound abilities in populist rhetoric and campaign aggression, it may well be Capriles who is becoming the true heir to Chávez.

For example, on March 10, in response to ‘homophobic’ slurs from Maduro, Capriles took the opportunity not only to deny them, but to make a full-throated attack on the machismo of the chavistas and to argue forcefully for social inclusion for all Venezuelans, no matter what their sexual orientation:

That takes a lot of brass — and perhaps it’s the kind of brass that comes from a campaign against Maduro that seems more doomed than the one last year.

The conventional wisdom is that Maduro will ride the wave of sympathy for Chávez to victory so soon after the funeral, and polls show that Maduro is leading Capriles, in some cases by a wider margin than the 11% victory Chávez won in 2011 (such as a recent Datanalysis poll that gives Maduro a 14-point lead).

Capriles has attacked the polls, too, arguing that the government are paying pollsters to show Maduro leading.  True or not, it’s a classic play from the Chávez playbook — disregard the facts, and turn a negative into a way to attack your opponent.

What it means is that Capriles is running the kind of offensive campaign that Chávez ran throughout his career, and Maduro is running the kind of defensive, hesitant campaign that’s typically been associated with the opposition.

But regardless of whether Capriles has a chance to win, he’s now free to run against chavismo without having to run against the charismatic commandante himself.

After a setback for opposition forces in the regional and gubernatorial races in December 2012 (Capriles himself won reelection only narrowly against Elías Jaua, a well-financed former Chávez vice president), a feisty loss in the April 14 presidential election would not only energize the opposition, but keep it united and prepare it to take on the PSUV in parliamentary elections due in 2015.

Even more slyly, one of the subtle themes of the Capriles campaign is simply, ‘Maduro is no Chávez.’

The subtext here is that, even if you supported Chávez, and perhaps especially if you supported Chávez, you don’t necessarily need to support Maduro, who doesn’t measure up to Chávez.  Capriles has argued that Maduro, in less than a hundred days as the de facto acting president during Chávez’s terminal illness, has already begun to dismantle the achievements of the Chávez era.

That’s one reason Capriles has been so aggressive in attacking Maduro’s February devaluation of the bolívar, Venezuela’s currency, which lowered its value by 32%.  Maduro doubled down this week, however, announcing a second devaluation that is expected to cut even more deeply into the value of the currency, and a new foreign exchange system to assist importers acquire increasingly rare U.S. dollars.  The devaluations are also designed to cut a budget deficit that swelled in 2011 and 2012 in advance of Chávez’s reelection, despite abundant oil wealth.

It’s also why Capriles has gone on the offensive about cutting subsidies to Cuba — it’s widely believed that Maduro was Havana’s preference as Chávez’s successor, hoping that Maduro’s election will secure the uninterrupted flow of oil subsidies, cheap credit and other goodies to the Castro regime.  Again, the anti-Cuba rhetoric is subtle way of reclaiming nationalism at the expense of Maduro’s relatively weaker position.  Capriles would never have been able to attack the nationalist bona fides of Chávez, the 21st century champion of ‘bolivarian’ revolution.  Not so with Maduro.

Consider, too, this television advertisement from the Capriles campaign yesterday — although it’s only a simple 21-second spot, it’s a harsh indictment of chavismo that lists five reasons for change: violence, power outages, expropriations, deficient hospitals and lack of water:

Capriles may well still lose the election because the wall of sympathy for Chávez was always going to be too high to surmount.

But make no mistake, Capriles is certainly waging a more spirited campaign than anyone every really anticipated — it may not be enough to win the election, but it may well make it a far closer run than the chavista regime would have liked.  That, in turn, will lay the groundwork for a future challenge if Maduro wins and conditions deteriorate in advance of parliamentary elections or before the next presidential election in 2018.

Pier Luigi Bersani has five days to build an Italian government

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When elections were called in Italy late in 2012, the centrosinistra (center-left) coalition united around Pier Luigi Bersani thought, on the basis of polls that showed Bersani (pictured above, left) with a wide lead, that it was nearly assured that they would easily win a five-year mandate to govern Italy.Italy Flag Icon

Instead, they may have won just a five-day mandate to show that they can win a confidence vote in both houses of Italy’s parliament.

The leader of Italy’s Partito Democratico (PD, Democratic Party), Pier Luigi Bersani, will have the first formal opportunity to form a government after three days of talks between Italy’s president Giorgio Napolitano (pictured above, right) and the various party leaders, including former technocratic prime minister Mario Monti, who ran on a platform of extending his reform program; former prime minister Silvio Berlusconi, whose centrodestra (center-right) coalition nearly outpaced Bersani’s coalition; and Beppe Grillo, the leader of the Movimento 5 Stelle (the Five Star Movement), who himself did not run for a seat in the Italian parliament.

Napolitano, in a rare speech today, pleaded for a solution, arguing that institutional stability is just as important as financial stability.

Yesterday, Bersani called for a grand ‘governo di cambiamento,’ a government of change that would draw from all of the parties in the parliament.  It’s not immediately clear, however, what exactly Bersani would do with such a government or that the announcement would significantly shake up the coalition talks.

Bersani will have until March 26 — Tuesday — to show that he can pull together a patchwork vote of confidence.  Otherwise, Napolitano will conduct further talks with the party leaders in search of a Plan B.

In the February 2013 elections, the centrosinistra won an absolute majority of the seats in the 630-member Camera dei Deputati (House of Deputies) because under Italian election law, the winner, by whatever margin, of the nationwide vote automatically wins 54% of the seats.  So Bersani commands a majority in the lower house, though he does so after winning a surprisingly narrow victory (29.54%) over Berlusconi’s centrodestra (29.18%) and Grillo’s Five Star Movement (25.55%):

Italy Camera 2013

The current crisis of governance in Italy springs from the fact that there’s no similar ‘national winner’s bonus’ for the upper house, the Senato, where the centrodestra actually won more seats than the centrosinistra.  That’s because there’s a regional ‘bonus’ — the party with the most support in each of Italy’s 20 regions is guaranteed an absolute majority of the senatorial seats in that region.  As Berlusconi’s coalition won so many of the contests in Italy’s largest regions (i.e., Piedmont, Sicily, Campania), however narrowly, he won the largest bloc in the Senato:

Italy Senate 2013

In the immediate aftermath of the election results, I argued that Italy faced essentially four paths for a government:

  1. A Bersani-Monti minority government. 
  2. A Berlusconi-Bersani ‘grand coalition.’
  3. A formal or informal Bersani-Grillo alliance.
  4. Snap elections (after the election of a new president).

Since then, we haven’t seen an incredible amount of action, because the parliament only sat for the first time last weekend, when it elected speakers to both the lower and upper houses.  None of those are likely to happen in any meaningful sense, but there are small variations on each that could keep Italy’s government moving forward, if only for a short-term basis to implement a narrow set of reforms (e.g., a new election law) and to elect a new president — Napolitano’s term ends in May.

So with the clock ticking for Bersani’s chances of becoming prime minister and leading a government, where do each of those options still stand? Continue reading Pier Luigi Bersani has five days to build an Italian government

First Past the Post: March 21-22

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East and South Asia

Chinese president Xi Jinping’s first overseas trip will be to Russia and then, to Africa.

South Korea’s new nominee for defense minister offers to resign.

The PML-Q in Pakistan is falling apart.

Pakistan is still scrambling to pick a caretaker prime minister until May 11 elections.

Agitating for a presidential-style debate between Rahul Gandhi and Narendra Modi?

Pro-democracy groups form a new ‘Alliance for True Democracy’ in Hong Kong.

Bangladesh’s president Zillur Rahman has died.

Thailand’s leadership encouraged to move beyond the shadow of former prime minister Thaksin Shinawatra.

North America

All about the 2013 Canada budget.  Québec is not happy. (When is it ever?)

Liberal Party leader frontrunner Justin Trudeau says ‘just watch me’ about his chances of defeating Tory prime minister Stephen Harper.

Greenland’s new government wants to ban Danish from its national parliament.

Venezuela

More problems in U.S.-Venezuelan diplomacy.

The country remains in a state of suspended animation.

Peruvian author and Nobel laureate Mario Vargas Llosa says Venezuela faces a choice between populism and modernity.

Student protestors clashed with chavistas in Caracas on Thursday. [Spanish]

Corporate Brazil prefers Nicolás Maduro as president.

Opposition candidate Henrique Capriles dismisses polls after allegations of cash payments from the government. [Spanish]

Latin America / Caribbean

A second chance for Peruvian mayor Susana Villarán.

Will El Salvador end sovereignty?

Colombian president Juan Manuel Santos is optimistic for a peace accord with the FARC by the end of 2013.

Sub-Saharan Africa

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Taking Ethiopia to the next level.

The pardon for Nigerian Solomon Peter Alamieyeseigha is a touchy issue.

Senegal’s president Macky Sall fights corruption.  [French]

Sudanese president Omar al-Bashir says he’ll step down in 2015.

Congolese war crimes indictee Bosco Ntaganda certainly seems headed to the Hague.

The ICC still seems set to proceed against Kenya’s president-elect Uhuru Kenyatta.

Kenya’s new National Assembly will sit next Thursday.

Europe

Italian president Giorgio Napolitano is set to likely give center-left leader Pier Luigi Bersani the first chance to form a government on Friday afternoon.

UK chancellor George Osborne announced the new budget Wednesday.

Former prime minister Margaret Thatcher’s colleagues were a bit wobblier on the 1982 war over the Falkland Islands.

Scottish first minister Alex Salmond announces the date of Scotland’s independence referendum: September 18, 2014.

Tobias Billström, Sweden’s migration minister, apologizes again over his ‘blonde, blue-eyed’ comments and won’t resign.

Former French president Nicolas Sarkozy is charged with campaign violations from financing his 2007 presidential campaign and taking advantage of L’Oréal heiress Liliane Bettencourt.

Cyprus will try to raise money through an Investment Solidarity Fund.

More on the Cypriot financial sector and its now likely demise.

Eurogroup president Jeroen Dijsselbloem says a levy on Cypriot savers is unavoidable.

Brad DeLong uses the World War interregnum as a history lesson for today’s eurozone.

Malta’s new cabinet.

Germany won’t ban the far-right National Democratic Party after all.

Romania’s Party of Democrats-Liberals (PDL), the main opposition, chooses a new leader this weekend.

Macedonia holds local elections on Sunday.

Russia and Former Soviet Union

Russian prime minister Dmitri Medvedev thinks that both the EU and the Cypriot government are acting like a ‘bull in a china shop.’A key constitutional vote in Georgia’s parliament.

Middle East and North Africa

Kurdistan Workers’ Party (PKK) leader Abdullah Öcalan called for a PKK cease-fire and withdrawal from Turkey.

U.S. president Barack Obama calls for the resumption of the Palestinian-Israeli peace process in the West Bank.

The Israeli take on the Obama visit.

Pro- and anti-Syria clashes in the northern Lebanese city of Tripoli.

Australia and Oceania

Kevin Rudd rules out any future leadership runs.

LIVE BLOG: Labor Party leadership spill in Australia

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UPDATE: Kevin Rudd has not challenged prime minister Julia Gillard, and Australia’s Labor Party leader will continue in that role after winning a snap leadership spill.

* * * *

What a day in Australia!Australia Flag Icon

Simon Crean (pictured above), Australia’s minister for arts and regions, a former leader of the Australian Labor Party from 2001 to 2003, and a member of the Australia House of Representatives, has called for Australian prime minister Julia Gillard to call a leadership contest — known as a spill in Australian politics in a day that saw Gillard avoid a vote of no confidence by just a handful of votes after it was called by the opposition leader, Tony Abbott.

Gillard responded by calling a spill at 4:30 p.m. Sydney time (1:30 a.m. Washington DC time), taunting her rivals, ‘Give me your best shot.’

Crean has been relieved of his duties as a minister, and it’s unknown whether Kevin Rudd, the former prime minister and former foreign minister.

Gillard ejected Rudd as leader in 2010 after the Labor Party found his leadership to be dysfunctional and erratic before nearly losing the 2010 election to Abbott and the Coalition.

Rudd, who served as Gillard’s foreign minister, declared himself a candidate for the Labor leadership in February 2012, but lost that vote 71 to 31, and Gillard promptly sacked him from her cabinet.

The latest Morgan poll in Australia shows that the Coalition (Liberal/National) would win the next Australian election with 54.5% of the vote to just 45.5% for Gillard’s Labor Party.  Recent polls show that Rudd is by far the favorite among Australians to lead Labor, and polls show that a Rudd-led Labor would win the election.

The current election is scheduled for September 14.

So Gillard’s leadership has been under pressure for some time, especially after Labor lost ground in the recent state elections in Western Australia.

12:39 a.m.: No word yet on whether Rudd will even contest the spill, but it seems certain that such a sudden leadership spill won’t settle anything, especially if Rudd wins more than the 31 votes that he won 13 months ago. Continue reading LIVE BLOG: Labor Party leadership spill in Australia

Who is Philippe Couillard?

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As unbelievable as it seems, the Jean Charest era is firmly over in Québécois politics.Quebec Flag IconpngCanada Flag Icon

Philippe Couillard, his former minister of health and social services, is now the leader of Québec’s Parti libéral du Québec (Liberal Party, or PLQ), which narrowly lost its reelection campaign in September 2012 for what would have been a fourth consecutive term in government under Charest.

As expected, Couillard won on the first ballot with 58.5% of the vote — the convention lacked the drama of January’s Ontario Liberal Party convention that saw Kathleen Wynne win the leadership in Canada’s largest province, thereby paving the way for Wynne to succeed Dalton McGuinty as Ontario’s premier.

So who is Couillard and what does his elevation as Québec’s chief opposition leader mean for the province and for Canada?

A neurosurgeon by training, Couillard came to provincial government in 2003 as a member of the provincial legislature from Mont-Royal, a constituency in Montréal, though he stepped down in 2008 after a relatively successful stint as health minister, where he oversaw a ban on public smoking in the province.

During the leadership race, Couillard received criticism for his partnership with Arthur Porter, the former head of McGill University’s health center, who is living in the Bahamas and wanted on fraud charges in respect of a 2010 contract to build McGill’s new hospital — Couillard had partnered with Porter for a consulting venture in 2008 upon returning to the private sector.

Couillard must now win a seat in the Assemblée nationale du Québec, although he may well wait until the next election, and he’s said that winning a new seat is not a top priority for him — Jean-Marc Fournier, who served as the interim party leader, will continue for now as the PLQ floor leader in the provincial assembly.  Because the current sovereigntist Parti québécois (PQ) holds only a minority government under premier Pauline Marois, Québec could return to the polls, perhaps even within the year.  So it’s fair that rebuilding and rebranding Québec’s Liberal Party is a more pressing task for Couillard in the months ahead.

Unlike Charest, who worked to keep a lid on the fraught constitutional politics that afflicted Québec in the 1970s and the 1990s, Couillard has wasted no time in calling on the province to become a signatory to Canada’s 1982 constitution by the year 2017 — a move that’s already generating controversy both inside Québec and outside:

“We need to be methodical in the way we are going to approach this,” said [Couillard]… “The first thing to do is within our party, to discuss this question of identity or the specific nature of Quebec and then have conversations with the other governments of Canada on how this could be approached.”

He proposed that a new round of constitutional talks could include other issues, such as prime minister Stephen Harper’s proposal to reform the Senate. “This could be one window of opportunity,” he said adding that another more “symbolic window” would be the 150th anniversary of Confederation.

That’s slightly perilous talk for any Canadian politician in light of the constitutional battles of the early 1990s — the 1990 Meech Lake accord failed and Canadians voted down the Charlottetown accord in a 1992 referendum, one of the reasons for the implosion of Progressive Conservative prime minister Brian Mulroney’s government.  Three years later, Québec voted by only the narrowest of margins to remain within Canada in a referendum on its future status.

Charest, a federalist who led the Progressive Conservatives in the 1997 Canadian federal elections, left national politics for provincial politics in 1998, and his Québec premiership sought to downplay constitutional and sovereignty issues.

Couillard has also criticized Marois’s government for its proposed Bill 14, which would make Québec’s French language laws even stricter by revoking the ‘bilingual’ status of municipalities with less than 50% anglophone population, introduce a mandatory French proficiency test for Québécois students, and prevent small businesses (less than 25 employees) from using English in the workplace. Continue reading Who is Philippe Couillard?

More about Pakistan’s ‘milestone’ and a preview of its upcoming May 11 elections

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Last weekend, Pakistan’s prime minister Raja Pervez Ashraf heralded the completion of the first full government in Pakistan’s history since partition from India and independence in 1947.Pakistan Flag Icon

Today, Pakistan’s president Asif Ali Zardari (pictured above) announced that new elections for Pakistan’s National Assembly (ایوان زیریں پاکستان‎), the lower house of the Majlis-e-Shoora ( مجلس شوریٰ‎)Pakistan’s parliament, will be held on May 11.

Before jumping into an analysis of Pakistan’s upcoming election, let’s first debunk a few myths.

While the Pakistan People’s Party (PPP, پاکستان پیپلز پارٹی‎) deserves some credit in crawling to the five-year finish line and therefore, the end of its term, it’s far from clear that Pakistan has approached anything like a mature democracy, despite Ashraf’s claims that democracy is here to stay for Pakistan. There are reasons to believe that the winner of the May 11 elections might not be as lucky as the previous government, so self-congratulation is quite premature.

Moreover, most decision-making power for truly life-and-death issues lies in the hands of either Pakistan’s military or the Directorate for Inter-Services Intelligence (ISI), and even then, their power doesn’t extend entirely throughout the entire country — it’s especially weak in the Federally Administered Tribal Areas (FATA) along Pakistan’s northwestern border with Afghanistan.

But it still means that the chief of army staff since 2007 (and director general of the ISI from 2004 to 2007), Ashfaq Kayani (pictured below), is more powerful than Ashraf or even Zardari, even as he’s tried to institute military reforms to reduce the military’s direct role in politics and has pledged to keep the military from interfering in the May elections.  His current term as chief of army staff expires in November 2013.

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The PPP came to power after elections in February 2008, following the end of a nine-year military rule by Pakistani general Pervez Musharraf.  Those elections followed the return and subsequent assassination of Benazir Bhutto, the former prime minister who had returned to Pakistan in late 2007 following Musharraf’s National Reconciliation Ordinance (which attempted to provide a blanket immunity against former political leaders with respect to corruption) in order to run in the upcoming elections.

Ashraf (pictured below) has been prime minister for less than a year, taking over after a showdown among Pakistan’s Supreme Court, on the one hand, and Zardari and former prime minister Yousuf Raza Gillani, on the other hand, over corruption charges.  Zardari, Pakistan’s president and the Bhutto’s widower, became Pakistan’s president in September 2008, and remains the key power broker within the PPP, though his official power is waning after 2010 constitutional reforms transferred much of the power of the presidency to the prime minister.  Zardari’s term will end in September 2013.

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In his address to Pakistanis on Saturday night, Ashraf admitted that the government has not been able to ‘provide rivers of milk honey,’ but it’s nonetheless attempted to tackle the myriad problems of the predominantly Muslim country of 180 million people, the world’s sixth-most populous.

Those problems include some of the world’s worst corruption (which is very much a bipartisan endeavor in Pakistan), and they include continuous military tension with India, which most recently flared up last month.

Pakistan’s economy has slowed from the Musharraf years, in part due to the abandonment of privatization in favor of a more corporatist state capitalism model championed by Gillani’s government.  More now than ever, relatively weak economic growth plagues Pakistan, even in light of rapid inflation. Furthermore, the PPP government hasn’t made incredible progress on any of the country’s longstanding development issues, including uneven access to water and electricity, widespread poverty, widespread unemployment, illiteracy and poor health care.

That’s all before you come to the issue of global terrorism and Pakistan’s role in harboring some of the world’s most determined Islamic radicals — it was a compound in Abbottabad, remember, where U.S. forces ambushed al-Qaeda leader Osama bin Laden in May 2011.

So, no, there’s not much ‘milk and honey’ these days in Pakistan — it ranked as the 13th most failed state in the Fund for Peace’s failed state index in 2012.

Despite a shaky foundation for respecting democratically elected governments, Pakistan features relatively robust political activity that breaks down on a heavily regional basis, and the PPP is far from assured of winning a second consecutive term in office. Continue reading More about Pakistan’s ‘milestone’ and a preview of its upcoming May 11 elections

First Past the Post: March 20

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East and South Asia

Nitish Kumar may or may not make a run for Indian prime minister in 2014.

India has passed a tough new anti-rape law.

The Supreme Court of the Philippines has placed a 120-day delay on a reproductive law that would provide free contraception.

Chinese president Xi Jingping meets U.S. treasury secretary Jack Lew, who opted for a cheap dumpling lunch.

Will Nawaz Sharif return as prime minister of Pakistan?

North America

Low hopes for U.S. president Barack Obama’s trip to Israel and the Middle East.

Latin America / Caribbean

Venezuelan presidential candidate Henrique Capriles takes a shot at Cuba.

The trial of former Guatemalan leader Efrain Ríos Montt on genocide charges began Tuesday.

Brazilian president Dilma Rousseff has a 79% approval rating.

Sub-Saharan Africa

Zimbabwe’s constitutional referendum has passed overwhelmingly, as expected.

The Jubilee coalition that supported Uhuru Kenyatta’s presidential campaign is set to control both houses of Kenya’s parliament.

Losing presidential candidate Raila Odinga wants the IEBC’s electronic system audited.

Europe

Former Bank of Cyprus chair Anthanasios Orphanides says the European project is dying.

German finance minister Wolfgang Schäuble warns Cyprus.

French budget minister Jérôme Cahuzac has resigned over an alleged Swiss bank account.

Italian president Giorgio Napolitano will kick off formal government talks today.

Swedish Migration Minister Tobias Billström (pictured above) is under fire over a remark about migrants who are not ‘blond and blue-eyed.’

Middle East and North Africa

Lebanon tries to hold back spillover violence from Syria.

The Obama trip is about Iran, not the Palestinian peace process.

In Depth: Venezuela

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<See below Suffragio’s preview of Venezuela’s April 2013 presidential election, followed by a real-time listing of all coverage of Venezuelan politics.>

Venezuelans will go to the polls on April 14 to select a successor to Hugo Chávez, who died on March 5, 2013, just months after winning reelection to a fourth term in October 2012.Venezuela Flag Icon

Shortly after winning reelection, Chávez returned to Cuba for further treatment for a (still unspecified) illness related to cancer — a cancer that turned out to be terminal.  His inauguration on January 10 came and went, and much of Venezuela spent early 2013 in a state of suspended animation waiting for Chávez to either improve or worsen.

Chávez, who took power after the 1998 election, anointed his newly appointed vice president, Nicolás Maduro, the former foreign minster, as his preferred successor, and Maduro is running as the candidate of the governing Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela) to carry forward the chavismo project.

His opponent will be the governor of Miranda state, Henrique Capriles, who lost the October 2012 presidential race to Chávez, and who represents the broad united opposition coalition, the Mesa de la Unidad Democrática (MUD, the Democratic Unity Roundtable).

NOTE: I will be in Venezuela covering the lead-up to the election from April 9 to 16 — if you’re in Caracas and will be around, drop me a line.

— March 19, 2013

Please note below Suffragio‘s prior coverage of Venezuelan politics:

Politics turns violent in Venezuela
February 20, 2014

SiriusXM: More thoughts on Venezuela and Argentina
February 5, 2014

The National Interest: Will Venezuela or Argentina be the first to crumble into economic crisis?
January 30, 2014

Chavismo offers no solutions for Venezuela’s violent crime
January 8, 2014

After local elections, what next for Venezuela’s government?
December 23, 2013

Show us the long-form, Nicolás (in which birtherism comes to Venezuela)
September 27, 2013

Where Capriles and the Venezuelan opposition go from here
August 20, 2013

Pragmatic Merentes winning control over Venezuela economic policy — but to what end?
August 17, 2013

It’s Diosdado Cabello’s world, the rest of Venezuela is just living in it
June 4, 2013

We’re starting to see what Madurismo will look like in Venezuela
May 8, 2013

Gettin’ raucous in Caracas
May 1, 2013

CNE agrees to 100% audit of Venezuelan votes
April 19, 2013

The National Interest: Chávez’s radical antics provide space for progressive Latin American left
April 17, 2013

Photo essay: Caprilistas block traffic in Caracas suburb to protest fraud
April 15, 2013

A primer on the MUD, Venezuela’s broad opposition coalition
April 15, 2013

The Atlantic: Chavismo is a continuity of — not a rupture from — the petrostate
April 15, 2013

The New Republic: Venezuela’s economy is tumbling despite oil prices over $100/barrel
April 15, 2013

Cabello comments indicate cracks in the chavista high guard?
April 15, 2013

LIVE BLOG from Caracas: Election night in Venezuela
April 14, 2013

Photo essay: Political graffiti and street art in Caracas
April 13, 2013

What’s the deal with Venezuelan presidential campaigns and jumpsuits?
April 13, 2013

Capriles campaign optimistic with 48 hours to go — but can it win?
April 12, 2013

Livin’ la vida seca — the election dray law takes effect in Venezuela
April 12, 2013

Deutsche Welle: Growing U.S.-Venezuelan commercial ties won’t lead to diplomatic thaw if Maduro wins
April 12, 2013

A conversation with former U.S. ambassador to Venezuela, Patrick Duddy
April 12, 2013

The National Interest: Capriles could be the better guarantor of chavismo in Venezuela
April 12, 2013

Photo essay: A chavista party in central Caracas
April 11, 2013

Venezuela marks coup anniversary in leadup to election
April 11, 2013

A diatribe against arepas — and food policy in the Caribbean basin
April 11, 2013

Not a banana republic but an avocado economy
April 10, 2013

Maduro campaign active on penultimate campaign day in Caracas
April 10, 2013

The political geography of Caracas
April 10, 2013

Does Venezuela need its own Margaret Thatcher?
April 9, 2013

Lula’s Maduro endorsement highlights strategic Brazilian ties to Venezuela
April 2, 2013

The policy case for Capriles in Venezuela
April 1, 2013

The policy case for Maduro in Venezuela
April 1, 2013

Book review: ‘Comandante: Hugo Chávez’s Venezuela’ by Rory Carroll
March 29, 2013

In death, the Chávez cult has become even creepier
March 27, 2013

¡Hasta siempre, comandante!
March 23, 2013

Meet the new heir to Hugo Chávez: the feistier, populist Capriles 2.0
March 22, 2013

World leaders descend upon Chávez funeral: one photo but mil palabras
March 8, 2013

Should Capriles automatically get a second shot at Venezuela’s presidency?
March 6, 2013

Chávez’s death kicks off sudden presidential election in Venezuela
March 5, 2013

Despite Capriles win, regional elections a setback for Venezuelan opposition to Chávez
December 26, 2012

With Chávez’s health in doubt, regional Venezuelan elections assume greater importance
December 12, 2012

Chávez officially names Maduro as anointed successor
December 10, 2012

In naming Maduro as new VP, Chávez indicates preference for successor
October 11, 2012

Chávez headed for apparent narrow reelection in Venezuela
October 7, 2012

But really: can Henrique Capriles defeat chavismo?
October 7, 2012

Doubts surface in media about Capriles in Venezuelan presidential race
June 2, 2012

A shift in tone about Chávez’s health
April 6, 2012

Venezuelan presidential race a toss-up
March 23, 2012

And Chávez is back
March 19, 2012

Eventos, my dear boy, eventos
February 23, 2012

Can Henrique Capriles defeat chavismo?
February 14, 2012

Cypriot parliament overwhelmingly rejects EU bailout terms, turns to Plan B

Protesters take part in an anti-bailout rally outside the parliament in Nicosia

This was not surprising.

After a couple of delays, Cyprus’s 56-member House of Representatives (Βουλή των Αντιπροσώπων) has rejected the European Union-led bailout of Cyprus’s banks by a vote of 0 to 36, with 19 abstaining and one not present.European_Unioncyprus_world_flag

As I wrote yesterday, the parliamentary rejection became increasingly likely as the vote became delayed.

So where do things stand now?

The crisis continues to unfold in real time — although the bailout terms ( €10 billion loan to Cyprus, with an additional €5.8 billion to be raised by means of a haircut on all Cypriot depositors) were announced Friday night, Cypriot banks are now closed through at least Thursday while everyone scrambles for a Plan B.

The European Central Bank has, for now, agreed to continue ‘its commitment to provide liquidity as needed within the existing rules,’ but who know what that means?  The current crisis started over the weekend when the ECB threatened to pull that support.

Obviously, EU leaders and the International Monetary Fund will probably go back to the negotiating table with newly inaugurated Cypriot president Nicos Anastasiades to determine a new approach — the EU position now seems to be that they don’t care how Cyprus raises the €5.8 billion, so long as they raise it.  Essentially, that means some kind of rebalancing of the burden to be shared by depositors in Cyprus — that means perhaps raising the 9.9% levy on deposits over €100,000 and lowering the 6.75% levy on deposits under €100,000.

Meanwhile, there’s word that Cyprus and Russia are now in talks over, potentially, either a solution that involves Russia or Gazprom — Cypriot finance minister Michael Sarris actually flew to Moscow Tuesday, which indicates that the Cypriots and the Russians are extremely serious.

In this regard, today’s vote probably bought some crucial time to come up with a credible counter-offer from Moscow.  Russian president Vladimir Putin is, in particular, upset about the approach because around 22% of deposits in Cypriot banks are held by Russian citizens.  That, in fact, is one of the reasons why the EU was so wary of providing a full bailout to Cyprus over the weekend.  Russia has designs on future exploration of natural gas deposits in Cyprus, and it could also well have designs on a greater military presence in Cyprus as well.  All of this has profound geopolitical security implications — for the EU and Greek Cypriots, but also for Turkish Cypriots, the United States, and its NATO allies, including Turkey.

Whether Anastasiades is serious or not about the Russian alternative, it certainly gives him more negotiation leverage with the EU and the IMF, which could conceivably revert back to a full  €17 billion bailout, via the ‘troika’ or through the European Stability Mechanism, as Open Europe notes in a great post.

We’re also in such uncharted territory that if ‘EU Plan B’ or ‘Russia Plan B’ don’t work, then Plan C is pretty much a disorderly default that finds Cyprus tumbling out of the eurozone, with even greater pain for Cypriot savers, Russians depositors, and all of the holders of private and public Cypriot debt, to say nothing of the costs to the eurozone — now that EU minds from Brussels to Berlin to Helsinki have escalated the bailout into an international crisis, it could catalyze an entirely self-inflicted domino effect that would pretty rapidly bring the eurozone to 2008-crisis levels.

So let’s hope we don’t get to that, though with the United Kingdom airlifting €1 million in cash to Cyprus to cover military personnel unable to access their own funds and with Russian ultranationalist Vladimir Zhirinovsky mock-eulogizing private property in the EU, the Cypriot situation has already reached a pretty high crisis mode.

One question that I haven’t heard asked in the past 72 hours, and one I wish I had an answer: why hasn’t Moscow been involved in the Cypriot bailout talks from last June onward? It’s clear that there’s a Russian interest in an orderly bailout (or even selective default) for Cyprus and its debt-bloated banks.

Russia has already extended a €2.5 billion loan to Cyprus, and Cyprus and the EU are dependent on Russia’s rolling over than loan soon if the current EU-led bailout to have any chance of working.

Are the channels of communication between Brussels and Moscow really so poor?

All of this was predictable nine months ago.

Even if the EU ultimately blinks, it’s already done a lot of damage that it can’t well undo — it’s still the case that the EU has undermined Anastasiades just days into his administration, pretty much destroyed the short-term future of the Cypriot finance sector, undermined the concept of deposit insurance throughout the eurozone, given every euroskeptic on the continent a prime example of the anti-democratic nature of the EU project.

Above all, the Cypriot crisis has undermined global confidence in EU leaders at a time when most everyone was certain that the worst of the eurozone crisis was behind us.

The good news? No word of significant bank runs in Italy or Spain, though I’d love to see how much capital quietly leaves those two countries electronically in the two weeks following March 15.

Photo credit to Yorgos Karahalis of Reuters.

Twelve lessons to draw from Netanyahu’s new Israeli cabinet government

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Israeli prime minister Benjamin Netanyahu’s third coalition government was sworn in yesterday hours before U.S. president Barack Obama arrives for his first trip as president to Israel. ISrel Flag Icon

The government that Netanyahu will lead following January’s elections to the Knesset (הכנסת), Israel’s unicameral parliament, is certainly the most tenuous one of Netanyahu’s career.

Despite the fact that Netanyahu’s center-right Likud (הַלִּכּוּד‎, ‘The Consolidation’), in electoral coalition with the more hawkish Yisrael Beiteinu (ישראל ביתנו‎, ‘Israel is Our Home’) won the greatest number of seats (31) in January’s election, the governing coalition is one that will be dominated less by Netanyahu and more by the two ‘winners’ of the election:

  • Yair Lapid, a news reporter, anchor and the leader of Yesh Atid (יש עתיד, ‘There is a Future’), a new centrist party formed in 2012 that won 19 seats, and
  • Naftali Bennett, Netanyahu’s former chief of staff from 2006 to 2008, a former spokesman for the settler movement, and the leader of the religious Zionist Bayit Yehudi (הבית היהודי, ‘The Jewish Home’) that won 12 seats.

In addition, the newly formed centrist party of former foreign minister Tzipi Livni, Hatnuah (התנועה, ‘The Movement’), with six seats, and the centrist party Livni once led, Kadima (קדימה, ‘Forward’), with two seats, will join the government.

Together, it will give Netanyahu a 70-seat coalition — a strong majority, despite the fact that his own party holds a minority of seats within the government he will now lead.

What does that mean for Israeli policy and for Israeli politics — at least for the foreseeable future?

Here are a dozen lessons that the new cabinet’s formation teaches us:

1. Netanyahu is weaker than ever. 

For those of you counting at home, Netanyahu’s Likud holds just 20 of the seats in the Knesset, and even together with Yisrael Beitenu, their combined bloc holds a minority of the seats within the new government.

Following the election, despite their vast differences, Bennett (pictured above, right) and Lapid (pictured above, left) formed what’s become a surprisingly enduring strategic alliance.  Together they forced Netanyahu to accept a coalition without the haredi parties that have been in each government since 2006 — the ultraorthodox parties Shas and United Torah Judaism.

Likud will hold just nine of the 22 ministries — Netanyahu was forced to agree to a slimmed-down cabinet, and he was forced to cede control over the education portfolio, formerly held by Likud heavyweight Gideon Sa’ar (who had at one point been tipped to become the next finance minister, but will now become interior minister instead).

It’s clear that Bennett and Lapid, so long as they remain strategically allied, will hold just as many seats as ‘Likud Beiteinu’ within the coalition (31), so they will have nearly as much power as Netanyahu in driving the agenda of the Israeli government, in the same way that they drove the harediinto opposition.

Continue reading Twelve lessons to draw from Netanyahu’s new Israeli cabinet government