Israel

November 2005 | Risk Summary

Prime Minister Ariel Sharon has shaken up domestic politics by splitting with his Likud party to form a new ‘centrist’ party, Kadima. Unlike previous third parties, Kadima is the front runner to win the March 2006 elections, while Likud is now badly damaged despite its heavyweight leadership challengers. However, Sharon may again end up in coalition with Labour if the Likud ‘rump’ gains sufficient support from smaller right wing parties. Sharon will need to move slightly to the left on fiscal policy, perhaps easing Benjamin Netanyahu’s cap on spending growth. It is less clear if he will be swayed to

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