Prime Minister Netanyahu reportedly refused to consider continuing his coalition with only the Degel Hatorah faction.
The UTJ party is a joint list of the hasidic Agudat Yisrael faction and the non-hasidic Degel Hatorah faction. Degel Hatorah was founded in 1988 at the behest of Rabbi Elazar Shach, who had pushed for the establishment of a party dedicated to the needs of the non-hasidic haredi community. Currently, Agudat Yisrael is represented in the Knesset by four of UTJ's six MKs, while Degel has two.
According to Reshet Bet, the leaders of UTJ and Shas had approached Netanyahu and offered to support the Draft Law that expands exemptions from military service. The factions added that they were willing to continue in the government even if Agudath Yisrael left.
However, the proposal was rejected out of hand by Netanyahu, who replied that "either everyone stays, or we go to elections."
The haredi political establishment is currently going through a power struggle due to the Draft Law. While Shas and Degel Hatorah say that the proposed legislation is good and that they can "live with it," the hassidic Torah Council, which is led by the Grand Rabbi of Gur, demands that the law be altered substantially.
As Deputy Health Minister Yaakov Litzman hails from the Gur hassidic sect, the dispute over the Draft Law threatens to topple the fragile haredi political alliance.
The two separate Ashkenazic-haredi parties first joined together prior to the 1992 elections. The competing factions have not always agreed on policy matters and ran as separate lists in 2004 before reuniting in 2006.