Op-Ed: The Investor's Guide to the Political Market
The 2013 elections were supposed to have been boring. "The final result is already clear and there is nothing new under the sun," the pundits promised. However, with just about three weeks until the polls open, we are in the throes of one of the most fascinating election campaigns that Israel has known: It is a campaign that faithfully reflects the deep currents of change in Israeli society. Nobody can yet predict its final outcome.
Let us try to analyze what is taking place, from Left to Right. First, though, we must understand the factors that influence the power of any political party:
The political world is very similar to the financial world. The "stock exchange" of the political world is elections. The value of the stocks – the political parties – is actually determined by a number of parameters. There is the stock's current value: how many people voted for the party in the previous elections. There is also its real market value and the value at which it is traded at the given moment.
For example, as these words are being written, the current value of Kadimah is 27 mandates. But the real market value of the party (which has established mechanisms and registered members) is much lower. At the current moment, Kadimah is being traded even below its low value and will apparently disappear off the charts.
When we try to understand what is happening now in Israel's political arena, we must first assess the true value of the different parties. In this way, we will be able to differentiate between deep processes and processes that have no long-term significance.
The true value of a party is determined by the following 6 factors:
1. Message. When all is said and done, political parties are supposed to herald some sort of message. That is why they are established.
2. A consistent nucleus of voters that identifies with the party. (In the financial world, this is called trademark)
3. Identification of voters at large (the market) with the party's message.
4. Identification of voters at large with the party's actions or accomplishments.
5. The party structure. In other words, an independent party that has established respectable party institutions, an internal voting mechanism and member participation in decision making and choice of representatives.
6. The party leaders.
When Kadimah was established and leapt to a decisive victory, I claimed that it would disappear off the political map within a few election campaigns. The reason for this evaluation was the understanding that Kadimah's "stock" was overvalued. The party did enjoy an extraordinarily strong Factor #6 – its powerful and charismatic leader, Ariel Sharon. However, it lacked all the other components and it was clear that it was living on borrowed time.
At the same time, when many were already eulogizing the Likud, I already publicly went on record with the assessment that the Likud would return to the helm of government. The reason for this evaluation was that the Likud, on one level or another, enjoys all the other components above. So if it won only 12 mandates due to a political "accident", its market value did not reflect the true value of the stock, but rather, its current value at that given time.
With these 6 components in mind, we can now analyze the current political picture:
On the Left end of the political spectrum in Israel are Meretz and the Arab parties: Hadash, Ra'am, Ta'al and Bal'ad. No real change can be expected for any of these parties. They have all six components and we can expect them to more or less maintain their strength.
On the Right end of the political spectrum, things are a bit more complex. Otzmah L'Yisrael (Eldad and Ben Ari), the rightist parallel of Meretz, certainly has a clear message, public identification with its message that should get it past the 2% threshold and well-known leaders. But it is a new party with no clear party structure.
The same is true for Am Shalem, Rabbi Amsalem's party. It has a message and leadership, but it is not clear if it has the critical mass of the other components to create a real party and get it over the threshold.
The Ashkenazi hareidi parties, just like the Arab parties, enjoy all six components and will likely maintain their current strength.
The picture is less clear for Shas. For many years, Shas was overvalued, due to the major dominance of its leader, Rabbi Ovadiah Yosef. The Rabbi's dominance is naturally diminishing, but the party does enjoy all the other components. It will not disappear, but in the future, Shas will contract to its real market value. I assess that at approximately 8 mandates.
It is important to remember that while the Arabs will not enter a rightist coalition, the hareidim are certainly willing to enter a leftist coalition and have done so in the past.
Let us now analyze what is taking place in the relevant Left. ( As opposed to Meretz, the ideological Left that is not confused by the facts.)
The shattering of the Oslo vision has left the Israeli Left with no relevant message. When there is no message, things get out of control and the first to be affected are political parties. Their politics become personal and not ideological, tension within and between the parties grows and break-offs and new, strange bedfellows flourish. In the past we have seen the same phenomenon in the Right, also as a result of lack of relevant vision. There have always been hatred and jealousy in the Left and in the Right. But when the passengers believe that the driver knows where he is going, they fight for a good spot behind him – and not for the driver's seat.
The Labor Party
The Labor party has always enjoyed all six of the components above. In addition, it is a party with history and a leadership mentality that knows how to address the entire public. For this reason, Labor will always be a leadership option. I estimate that Labor's current market value is between 25 and 30 mandates. The party that under Ehud Barak's leadership deteriorated to an all-time low, leapt back to its real value as soon as it rid itself of its problematic leader and put a young and charismatic new leader at the helm. Sheli Yechimovitz understood that she must propose a new vision to replace the shattered Oslo, and had the wisdom to focus on social and economic issues.
However, the founding ethos in Israel was and remains the security ethos. In Israel, "It's the security, stupid." As long as Labor will not be able to establish a political/security alternative, it will not surpass the Likud. In addition to this basic fact, competition from Lapid and Livni on the one hand and problematic primaries that put anarchistic candidates at the top of the list, on the other – have eroded Labor's value. Today, the party's market value is lower than its real value (17 mandates, as per the latest polls).
Lapid's Party (I Can't Remember its Name)
Clearly, Lapid's current market value (11 mandates) has nothing to do with its real value. The party lacks all of the components except #6 – a young and widely recognized leader (thanks to his media career). The reason that I don't remember the name of the party is that it really isn't a party: It is a person. Lapid's party is a shopping cart picking up dissatisfaction and hopelessness without proposing any real alternative. Just like Kadimah and Lapid Senior, this party will disappear off the map in a short time.
Livni's Party (I Can't Remember its Name)
Clearly, Livni's current market value (11 mandates) has nothing to do with its real value. The party lacks all of the components except #6 – a widely recognized leader. The reason that I don't remember the name of the party is that it really isn't a party: It is a person. Livni's party is a shopping cart picking up dissatisfaction and hopelessness without proposing any real alternative. Just like Kadimah, this party will disappear off the map in a short time.
Except for a clear message, the Likud enjoys all the other components that make up a real party. Like Labor, the Likud is also a ruling party. But unlike Labor, the Likud boasts a large membership that plainly reflects Israeli society as a whole – as do its voters. The method for internal elections in the Likud is far from perfect. The political mechanism is problematic. Nonetheless, the party manages to faithfully express the main will of its voters and to ensure (with safe slots on the party list) a high-quality roster that authentically represents the multi-faceted Israeli society.
The Likud evades its own message, preferring to be "not Left." This is an effective method when there is no alternative to the Right. But it becomes problematic as soon as such an alternative appears. In my estimate, the true value of the Likud is approximately 40 mandates – even more. But for a long time, it has been traded well below its market value. This is due to the Russian vote that has migrated to Lieberman's party, the Sephardi vote that migrated to Shas and Likud's inability to establish a political/security alternative to the Left's platform. In the current elections, the Religious Zionists are also retreating into sectoral politics, thanks to Naftali Bennett. The Likud's ridiculous fight against Bennett has accelerated the under-market-value phenomenon.
The Likud's attack on Bennett's declaration in favor of a sort of insubordination established it in the eyes of the Religious Zionists as a party that could once again initiate large scale expulsions. When Bennett reneged, the Religious Zionists understood that once again, their party would be a tool in the hands of possible future evictions. But the Likud's attack saved Bennett from the results of his zigzag and featured him in the right place nonetheless: His proponents heard him say that he would fulfill expulsion orders, but they don't believe him.
Lieberman (Yisrael Beyteinu)
When people thought that Lieberman would be prime minister someday, we explained that Yisrael Beyteinu would disappear from the political map. The reason is that, like Kadimah, Liberman's party is also about a person and not about a party. Lieberman is a talented and very charismatic leader who created a party with a steady and loyal voter base. The real market value of Yisrael Beyteinu (as long as Lieberman is able to head it) is 8 mandates. In the previous elections, the Likud lost approximately 10 mandates as a result of Netanyahu's battle against yours truly. Most of those mandates migrated to Lieberman and raised the party's market value way above where it should really be. As the State's Attorney has managed to sideline Lieberman, his party will shrivel up and its voters will disperse (temporarily) to a number of parties – primarily to the Jewish Home party.
The Jewish Home (The New NRP) – Naftali Bennett
This is undoubtedly the most fascinating story of the election campaign. For about twenty years, the NRP stock has been traded way below its true value, which I estimate to be about 8 to 10 mandates.
The reasons for the political downfall of Religious Zionism are a combination of irrelevant ideology and aging leadership that did not have the wisdom to involve the public in choosing the party's ideological path and its leadership. Of the six party-building components, the first (message), fifth (mechanism) and sixth (leadership) were extremely problematic.
The general public that in the 70s expected the "new generation of crocheted kippot" to take responsibility and lead – despaired of the Religious Zionists and turned to other alternatives. Over the years, those who had represented Israeli hope turned into a type of "nudnik". The NRP, which had won 12 mandates in 1977, was hounded by infighting, split time and again and practically disappeared.
Religious Zionism is a unique sector that feels all-inclusive responsibility for the Nation of Israel. It contributes to society, volunteers and serves more than any other sector in the country. But it is this very sector that has found itself harassed, expelled from its status and sometimes even from its own homes.
The hareidi parties do not participate in the Zionist endeavor and the Religious Zionists tended to scorn them. But they have many more mandates than the NRP. The Religious Zionists, more numerous and higher quality, looked on for an entire generation as Israeli society turned its back on them, stopped taking their needs and opinions into account, ignored their great contribution to the state and cozied up to the sectoral politics of its hareidi competitors.
The NRP's message is not sectoral; it appeals to the general public. But its political tool is sectoral. The Religious Zionist nationalist/rightist ideology prevents it from skipping between Right and Left, as the harei di parties do. This built-in political glitch leaves them empty-handed on both ends. They don't really enjoy the privilege of turning to the general public, for this privilege is reserved for those parties that truly are not sectoral. On the other hand, they don't enjoy the bargaining advantage of sectoral politics. After all, the Jewish Home party will never endorse Sheli Yechimovitz as its candidate for prime minister.
If the Likud continues to lose height in the polls until its continued rule is in danger, the Jewish Home voters will rush to vote Likud because the Jewish Home really does not supply the merchandise. It does not offer a ruling alternative or sectoral advantage. All it really supplies is a psychological sense of ease.
So what caused the Religious Zionist stock to almost double its value? After all, it did not solve its basic problem, the dissonance between its all-inclusive ideology and its sectoral political tool. In these elections, the Jewish Home party provides the opportunity to restore the lost honor of an entire generation. Once again, "we" matter. A long list of very worthy representative of the Religious Zionist community will enter the Knesset, making the Jewish Home party the third largest in the parliament. Once again, the Religious Zionists feel, they are taking their rightful place in Israeli society.
The successful registration drive and primaries restored a well-run party mechanism (fifth component) to the Jewish Home. It reconnected the party to its natural membership base and its ideological supporters (components 2, 3 and 4) and installed a new and charismatic leader at its head (component 6). Jewish Home head Naftali Bennett does not project himself as sectoral. This has opened the party to people who, until now, did not have the tools to connect to it.
The Jewish Home is now being traded for 13 mandates and counting. It can certainly get more in the elections. But in the future, it will shrink back to its real value. This is because its charismatic leader does not really herald a new message and does not really solve the dissonance described above.
It is no accident that the contentious subject of conscientious objection was laid at Bennett's doorstep from the very start. This issue digs deep into one of the most basic dilemmas in the National Religious ideology: the relationship between faith and state. The conscientious objection issue is the civil language that frames the faith-based question that asks who is King. G-d? Or the State? Bennett's zigzag and the fact that his entire roster stood behind him when he gave his second answer placed the amazing achievement of the reunification of the Religious Zionism on a very shaky ideological foundation. It also negated its ability to herald the message that it pretends to carry. Voters for the Jewish Home can be absolutely sure that their party will not expel Jews from their homes – on Shabbat!
Before the elections, the Jewish Home candidates have managed to remain silent and to close ranks in the face of theoretical challenges. They all stand firmly behind their ascending leader who avoids ideological statements. But when faced with reality's challenges, the arguments and divisions will begin, highlighting the fact that the party is sectoral and driving away voters who are not from the sector. The Jewish Home party will return to its natural size.
What is Going to Happen in the Next Elections?
With great "talent" and partly due to its assault on Bennett and its decisive stand against conscientious objection, the Likud has distanced the Religious Zionist public which had been joining the party over the last number of years.
The votes that should have been coming in from Yisrael Beyteinu will disperse in every direction when their leader is forced to step down. The person most likely to benefit from this is – once again – Naftali Bennett. But he is not the only one. Some of those mandates will remain in the Likud, nevertheless. Some will migrate to Lapid, the Russian party or even to Otzma L'Yisrael.
It is reasonable to assume that despite all the setbacks, the Likud will form the next government. This is not a sure thing, though. It is enough for some other factor (like criminal charges against a senior minister) to enter the picture in the remaining weeks to redirect more mandates away from the Likud. If the Likud goes under the 30 mark and Yechimovitz rises above 20, Deri (who certainly prefers Yechimovitz) will abstain from endorsing Netanyahu for PM. In that scenario, Deri's move would enable the president to appoint Yechimovitz to form a government, and she could certainly succeed. (A "social" platform with Shas).
One way or another, the Jewish Home will win 15 mandates – possibly more. If Netanyahu will add Bennett to his government, Bennett will be forced to go a very long distance with him in the face of negotiations and political surrenders. For after all, Netanyahu could always exchange him for Sheli, Livni, Lapid – or all of them together. The Jewish Home will never have any option at all except for the Likud. It is also very likely that Bennett will never make it into the coalition at all.
There is no choice for those loyal to the Land of Israel but to remember that the game is not between Likud or Labor or Likud or NRP. The real name of the game is leadership of the national ruling party; leadership of the State of Israel.
The generation of Yamit did not understand this crucial point and did not draw the obvious conclusion that a faith-based alternative must be established. Instead, it rolled the ball to the next generation: the generation of the expulsion from Gush Katif. It seems that the Disengagement generation also did not understand and despite the great progress that Manhigut Yehudit has made in the Likud, Religious Zionists are now returning to sectoral politics. If this trend continues, our children will also find themselves negotiating between a leftist government that wants to expel them and a rightist government that expels without asking.
The solution is not to jump off the train. The solution is to progress slowly but surely to the steering wheel. Those who understand this do not leave the Likud and consider the true market value of the various parties and not the current political fads. We should not make light of the parties being traded under their value, but we must also not become overenthusiastic when a party leaps way above its true value.
From this perspective, the Likud was and remains the party with which to build faith-based leadership for the State of Israel. It is the only party that gives political hope for a true solution. We must remain loyal to the political earth under our feet – even when it is trembling. Those who choose to vote now for the Jewish Home party are basically removing themselves from the relevant arena.
The Likud is not a rose garden. It has expelled Jews in the past and is still capable of doing so. But we cannot ignore the fact that within the parameters of its tactical abilities (when there is no political plan on the table) the Likud does more for settlement than any other party.
In a 12 year struggle, we have led the Religious Zionists deep into the ruling party. The Likud, in turn, gladly opened its gates wide. There are more settlers at the top of the Likud list today than on any other list. We must not stop this important process – the only process that is the right solution for the real problem: The process that will create authentic Jewish leadership for Israel.