Three Key Elections to Watch (5 min read)

Even if it were possible to set Brexit and Trump aside, the rest of the global political scene hasn’t exactly been a picture of peace and quiet. A few weeks ago we discussed Argentina’s woes, with the sudden return of Peronism wrecking the Peso. And this week we look at the three upcoming elections in Israel, Romania, and Tunisia – countries each suffering their own governmental turmoil that investors should keep an eye on. All three elections lack a clear winner, experience coalition failures, and are witnessing a potential uprising against rooted incumbents with the emergence of independents.


  1. IsraelBenjamin Netanyahu still a favourite but is unlikely to secure the majority he needs

Legislative - 17th September 2019

In April this year, incumbent Israeli Prime Minister Benjamin Netanyahu and his right wing Likud party failed to form a governing coalition (the first such failure in Israeli history). The Israeli Kneesset has 120 members and it voted to dissolve itself, calling for snap legislative elections on 17 September. Likud is now hoping to form a coalition with their secular partner party Hayemin Hehadash, but this seems unlikely to succeed given that they barely made the 3.25% entry threshold for a seat in spring.

For this election, similar to the April race, Netanyahu is focusing on Israel's policy supporting the settlements (such as the communities of Jews living on the West Bank) with the continued granting of permits for the construction of new homes in the region. This is always popular with voters. His foreign policy has been weak at best, however, with a single visit to the Ukraine, as has his stance on the economy – cutting expenditures to expand the budget deficit.

Other plausible contenders in the same bloc as Likud include Yamina, a newly-established alliance between two nationalists positioned on the far right, and Yisrael Beiteinu, a nationalist secular party predominantly representing Israelis of ex-USSR descent. The latter party is aware it won’t make the cut given its anti-Haredi rhetoric and is therefore pushing for an alliance between Likud and the left-centre Blue and White party.

The Blue and White is heading the polls, having earned the same number of seats as Likud in April. It was established to run in the April 2019 Knesset elections by the Israel Resilience Party, Yesh Atid, and Telem, in hopes of defeating Netanyahu. Its views are similar to Likud’s, making them a potentially good coalition opportunity. Blue and White, however, is reluctant to team up with Likud while Netanyahu is still on board because of the corruption allegations surrounding him.

Latest opinion polls predict Likud enjoying a marginal edge over Blue and White but neither bloc is headed for majority and coalition between the two is unlikely, given Netanyahu is nowhere near resignation. This week Likud is pressuring two far-right parties to pull out of the upcoming election to prevent right-wing votes from being ’wasted’ on the factions. For now it looks like a deadlock, but watch this space.


2. Romania - The familiar sight of a fragile government collapsing right before presidential elections

Presidential – 10th November 2019, Legislative – scheduled for late 2020, but likely called sooner

This week, the leader of ALDE (Alliance of Liberals and Democrats), who form the current coalition together with the PSD (Social Democratic Party), Calin Tariceanu announced he was no longer running for president and broke up the alliance. The ALDE wanted the PSD to restructure the government by halving the number of deputy ministers, reducing the number of ministers, as well as to review the ruling programme, fix public finances, and be more involved in the decision-making process. But the real issue for the break-up is probably the election of PSD’s Viorica Dancilla as the common presidential candidate of the alliance for the November elections (and not Tariceanu). As such, as was expected, the ALDE realised it had no gains from the alliance. Indeed, the disastrous result obtained in the EP election on May 26 showed that an association with the PSD dragged down the ALDE below the parliamentary threshold.

As a result, PSD is struggling to maintain power, lacking a majority and in need of replacing three out of four ALDE ministers. Without the ALDE, the PSD can only ensure a majority with support from the ethnic Hungarians' Union (UDMR) or Pro Romania, both of which appear unwilling.

The opposition lacks a majority as well, however, with The National Liberal Party’s leader Ludvic Orban’s best shot being to collect signatures to induce a no-confidence vote; at the same time, the other opposition party, the USR, offers participation in a government only as a result of an election and not due to overthrowing the government.

Calling an early election is, in any case, difficult as requires convincing half of the MPs to give up one year of their mandate (the next general election is due at the end of 2020). It also takes time, something which is in short supply.

Consequently, the PSD will probably cling to power with a minority government until the local elections that would take place next June.


3. Tunisia – a budding democracy put on a test

Presidential – 15th September 2019, Parliamentary – 6th October 2019

Tunisia’s first democratically elected President is Beji Caid Essebsi, the founder of the liberal party Nidaa Tounes who won the October 2014 legislative elections. However, Essebsi passed away earlier this year, forcing an early election that is creating disorder.

One hundred initial candidates were cut to twenty-six, the result of a proliferation of independent candidates driven by a struggling economy and high inflation. This will likely result in a dispersed vote with no majority. Polls are also unhelpful and give scarce data; for now, controversial media magnate Nabil Karoui, who is currently under arrest, emerges with the most support (above 20%) but this is largely based on unreliable data.

Other frontrunners include the current Head of the Government, Youssef Chahed, who supports IMF-led programmes but is criticised for bringing austerity; and Abdelkarim Zbidi, the current Minister of Defence, who is focuses less on aggressive reform and more on maintaining the status quo.

It is fair to expect that in a potential run-off between a modernist liberal and Islamist contender, the votes of leftist supporters will go for the former. Overall, a run-off no later than 3rd of November is highly likely.

CEEMarketWatch produces macroeconomic and political research for over 60 countries in EMs and the eurozone periphery. The research is conducted by a team of local economists.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

Sign up to the Macro Hive newsletter here:

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign Up For Our Free Newsletters