Israeli Defense Minister Ehud Barak’s decision to break away from the Labor Party and form his own centrist faction is a boost to Prime Minister Benjamin Netanyahu’s government. With the remaining members of Labor now shifted to the opposition, Netanyahu has rid his coalition of several Knesset members who are opposed to his policies. In the long run, Barak’s new party will, as David Hazony noted yesterday, provide unwanted competition for the largest opposition party, Kadima, making the path to power for it and its leader, Tzipi Livni​, far more difficult.
Livni is understandably upset about this development and vented her spleen today in some over-the-top comments when she complained that Barak’s decision was “the dirtiest act in history.” Given the fact that party-jumping has been a staple of Israeli politics throughout the country’s short history, it’s hard to make an argument that this understandable breakup between the centrists and the old leftists in Labor is any kind of a scandal. It is just the belated recognition on the part of Barak that he is better off letting Labor’s far-left activists merge with what remains of those factions that were to Labor’s left rather than sticking with them. Labor was once Israel’s dominant and natural party of government, but today it is as bankrupt — and obsolete — as the kibbutzim that symbolized the country’s socialist dreams. [1]

Bibis Gamble to Keep Power
Israeli Prime Minister Binyamin Netanyahu proposed a sweeping economic package late last week to appease criticisms that his government assists the rich more than the struggling middle class, although the reforms really represent his effort to retain power after the next round of elections that will be held in 2013 at the latest.
The recent uprisings throughout the Arab world demonstrate constituents’ power to overthrow their leaders, reinforcing to Netanyahu that he must quash criticisms from Kadima and a possible future Israeli social left that he is in the pockets of big business and the rich.
The economic reforms — which raise the minimum wage by over 10 percent and lower taxes on the low-middle class — were announced after repeated condemnation by Kadima leader Tzipi Livni and aspiring Labor chief Isaac Herzog over the past few weeks, including their high profile remarks at the Herzliya Conference.
Netanyahu is well aware that Livni’s Kadima — not his own Likud — won the 2009 elections and that Labor could successfully reposition itself as the party of the people to rise from the ashes of its Ehud Barak-led evisceration.
This proposed economic package has much broader implications than merely quashing threatened worker strikes — its the launch of Netanyahu’s campaign to retain the seat of power once elections are held, currently slated for 2013, although they might be called earlier.
The economy — and not the peace process or Middle East stability — will be the issue at hand for the next round of elections, and Netanyahu is well aware of that fact. Israelis are jaded by the repeatedly stalled negotiations with Palestinians, content with the status quo that has seen minimal terror attacks in the last year. Both Hezbollah and Hamas acknowledge that a future Israeli attack will result in their movements’ complete annihilation, therefore they are wary of launching rockets at their Jewish neighbors.
Conversely, the economy is at the forefront of Israelis’ daily life. Economic indicators suggest that Israeli exports are strong and the large firms’ profits are booming. Meanwhile, restaurants are half empty and Israeli’s debate whether to water their plants, buy that new car or purchase goods that they would have hastily put in their homes before Netanyahu’s rise to power.
Israelis are not going hungry, but the middle class has felt the squeeze in recent years even though the corporations and upper class are watching their bankrolls grow.
Netanyahu is certainly a shrewd politician, attune to the concerns of the masses, who are losing confidence in their Knesset-selected — not popularly-elected — leader because of their perception that he is for the rich at the expense of the poor.
Don’t be mistaken — posturing for the next round of elections is at hand, and it will most certainly focus on the economy and not perpetually disappointing peace negotiations. Kadima and the nearly-decimated Israeli left should take note. [2]

[1] - http://www.commentarymagazine.com/2011/01/18/israeli-shakeup-another-setback-for-obama/

[2] - http://foreignpolicyblogs.com/2011/02/15/bibis-gamble-to-keep-power/