Israel election tests coalition prospects amid war and security strains

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Israel election and coalitions

Highlights

Polls show neither Netanyahu’s bloc nor the opposition led by Gadi Eisenkot reaching the 61 Knesset seats needed for a governing majority.
High military spending, estimated at 8% of GDP, and repeated reservist call-ups are intensifying economic and labor-market pressures during the campaign.
Netanyahu’s Likud campaigns on uncompromising security and economic liberalization, while Eisenkot’s Yashar party proposes expanded conscription and a reevaluation of Iran strategy.

Election arithmetic and campaign fault lines

As reported by CNBC, the vote is Israel’s first since the Oct. 7, 2023, Hamas attacks and since the U.S. and Israel began their joint war against Iran in February, giving the outcome significance beyond domestic politics.

Israelis vote for parties rather than directly choosing a prime minister, with the Knesset’s 120 seats allocated through proportional representation. Parties need at least 3.25% of the national vote to enter parliament, and coalition-building is typically required because outright majorities are rare.

Recent polls show both Netanyahu’s bloc and the main opposition bloc, led by centrist former military chief Gadi Eisenkot, falling short of the 61 seats needed to govern. That leaves smaller parties, including Arab parties, with potential leverage, even though most major Jewish parties have ruled out governing alliances with them.

Security, conscription and economic pressure

The election is effectively becoming a referendum on Netanyahu as security concerns dominate the campaign. Analysts cited in the report say voters are weighing military preparedness, the management of the wars in Gaza and Iran, and whether the next government can convert battlefield gains into longer-term political arrangements.

Compulsory military service, especially the long-running dispute over conscripting ultra-Orthodox men, is also a central issue. Military service is mandatory for most Jewish, Druze and Circassian Israelis over 18, while most other Arab Israelis are exempt.

The economic burden of prolonged conflict is adding to political pressure. Analysts say high military spending, estimated at about 8% of gross domestic product, and the repeated call-up of soldiers and reservists are making household and labor-market strains a prominent part of the campaign debate.

On policy differences, Netanyahu’s Likud is campaigning on "security without compromise" alongside support for a free economy and stronger financial markets. Eisenkot’s Yashar party is also centering national security, while proposing broader integration of ultra-Orthodox and Arab communities into compulsory service, and some analysts say an anti-Netanyahu coalition would be more likely to reassess Israel’s strategy toward Tehran before any further escalation.

In our earlier report on the IMF’s outlook for the Middle East and Central Asia, we explained how the prolonged regional war and any renewed disruptions to energy production or key shipping routes could deepen economic shocks. The piece highlighted expectations for a 2026 contraction followed by an uneven rebound in 2027, while warning that regional policy buffers are thinning and that governments may need to prioritize price stability and fiscal resilience as volatility persists.

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