published Mar 19th 2017, 5:00 pm, by Jonathan Ferziger and David Wainer

(Bloomberg) —
Israeli Prime Minister Benjamin Netanyahu’s threat to dissolve his government for a fourth time is overshadowing a trade trip to China meant to promote deals with some of the country’s biggest corporations.

Netanyahu told ministers from his Likud party on Saturday that if Finance Minister Moshe Kahlon doesn’t agree to scrap a new public broadcaster that’s supposed to go on air next month and keep the old one running, then he’ll dismantle the government, according to two party members who spoke on condition of anonymity because the conversation was private.

Elections midway through the government’s four-year term would come as police gather evidence in two criminal probes into Netanyahu’s conduct that could increase pressure on him to resign should they lead to charges. Netanyahu is also having a tougher time with the Trump administration than some in Israel foresaw. The sides are now negotiating a deal over West Bank settlement construction that has caught him between governing partners who want him to build more aggressively and the U.S. president, who has told him to hold back.

In remarks before the flight to Beijing, Netanyahu spoke more about the broadcast authority than he did about China, though he didn’t discuss early elections. Economy Minister Eli Cohen, a member of Kahlon’s Kulanu party who accompanied Netanyahu on the trip, said “going to elections over something like this is not the right thing for the state of Israel.”

“It’s a shame that this seems to be distracting people from what we’re doing here this week,” Cohen said. “We have a real opportunity to increase trade with China and that’s what the prime minister should be focusing on.”

Back home, several senior members of Netanyahu’s coalition, from Education Minister Naftali Bennett to Defense Minister Avigdor Liberman, spoke out against elections with Yisrael Katz, Minister of Transportation, telling Army Radio that a government shouldn’t break-up over a disagreement about the media. While Kahlon didn’t publicly comment on the possibility of early elections, he said he “doesn’t need anybody to teach him about ethics and mercy” when it comes to the broadcaster’s workers.

Asia Push

Netanyahu has made a point of trying to expand Israel’s trade and political relations, with an especial emphasis on Asia. During his four-day China trip, he’s scheduled to meet with the chairmen of Alibaba Group Holding Ltd., Fosun International Ltd., Lenovo Group Ltd. and Baidu Inc., and address a conference of Chinese and Israeli businesspeople. He’ll also dine with Prime Minister Li Keqiang, and hold talks with President Xi Jinping.

“We want more collaboration, we want more markets for Israeli companies and we want more Chinese investment for Israel,” Eli Groner, director-general of the prime minister’s office, said on the flight to Beijing.

Netanyahu may be using the feud as a pretext because early elections wouldn’t prevent the old broadcaster from being closed, said Yoaz Hendel, a former aide to the prime minister.

‘A Ruse’

“The fight over the public broadcaster is simply a ruse,” Hendel said. “Netanyahu’s routine is always to surprise his colleagues. He is paranoid — for good reasons, I must say — and he sees the threats, from the promises to settlers he may not keep to the police investigation closing in around him, and so he may think this might be time to catch his rivals unprepared.”

The elections threat may also have been meant to bring rebel ministers in line. Netanyahu accuses Kahlon, a political rival, of violating a coalition agreement giving the prime minister control of communications policy. The prime minister has also faced criticism from Bennett of the Jewish Home party, another rival who seeks a more aggressive Israeli settlement policy.

“We won’t have opinions and decisions forced upon us,” coalition chairman David Bitan said on Saturday. “If these threats and remarks will continue, there’s a good chance we’ll be heading toward elections.”

It was Netanyahu himself who originally pressed to replace the Israel Broadcasting Authority, only to later say it would be less costly to overhaul it than replace it. Likud allies including Bitan have said the new broadcaster has been stacked with left-wing figures hostile to the government.

Kahlon says the new broadcaster would be cheaper to run. The Finance Ministry also expected to receive 1.7 billion shekels from selling the land on which the old broadcasting authority sits, he has said. Local media reported that opposition leader Isaac Herzog has called on him to leave the Netanyahu government to help form — and possibly lead — an alternative coalition.

The stock market fell on Sunday, largely in line with the S&P 500’s decline on Thursday and Friday, with the TA-35 closing down 0.7 percent. Government bonds rose, pushing yields on the 10-year notes 5 basis points lower.

To contact the reporters on this story: Jonathan Ferziger in Beijing at jferziger@bloomberg.net ;David Wainer in Tel Aviv at dwainer3@bloomberg.net To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net Amy Teibel, John Deane
COPYRIGHT
© 2017 Bloomberg L.P
NICODES