After the Gaza ceasefire, what's next for Benjamin Netanyahu?

While the Middle East was on tenterhooks this week waiting to see if the latest ceasefire would hold in Gaza, US President Donald Trump revealed a conversation he had with Israeli Prime Minister Benjamin Netanyahu shortly after the deal was announced.

“[Netanyahu] called. He said: ‘I can’t believe it, everybody is liking me now,’” the US President told Fox News. “I said: 'More importantly, they are loving Israel again,’ and they really are.”

Mr Netanyahu's opponents in Israel seized on the conversation as yet another example of the Prime Minister thinking first about his own interests rather than those of the country he leads, an accusation that has dogged him throughout the Gaza war.

Now, a ceasefire is holding, all living hostages have returned to Israel, and at a peace conference in Egypt, world leaders threw their support behind the US President’s regional vision. Mr Trump has been lavished with praise across the Israeli political spectrum.

Families of hostages campaigned for Israel to make a deal for their release. AFP

The extent to which this appreciation extends to Mr Netanyahu, whom Mr Trump and his close aides have credited a great deal in recent days, is far less certain.

The Israeli Prime Minister has been lagging in polls since the outbreak of the war. He has seen bumps in support at points when Israel appeared to be achieving military successes, but never at levels great enough to significantly stabilise his political future.

Through much of the war, polling suggested that most Israelis wanted hostages released as part of a deal rather than continued fighting in Gaza. Now that all the living captives have been freed, it is far from certain that this is associated with the Prime Minister’s work.

“Netanyahu’s political position is poised to improve somewhat, I would not go further than that,” Israeli pollster and analyst Dahlia Scheindlin told The National.

“So far, the polls we have show very minimal signs of a slight rise which has not truly affected the overall strength of the coalition. [Mr Netanyahu's] Likud Party has only gone up a tiny bit, at the expense of the other coalition partners mostly,” she said.

During US envoy Steve Witkoff’s address on Saturday to a hostage rally in Tel Aviv, the very mention of Mr Netanyahu’s name elicited loud boos from the crowd, a sharp contrast to the rapturous welcome given to the Trump administration officials on stage. Visibly embarrassed, Mr Witkoff said: “I was in the trenches with the Prime Minister. Believe me, he was a very important part here.”

US envoy Steve Witkoff witnessed boos for Benjamin Netanyahu during a speech in Tel Aviv. Reuters

With anger still boiling, the Israeli opposition is trying to present a compelling alternative to Mr Netanyahu. Elections are not due to be held for another year, but could take place much sooner if the coalition buckles under the strain of post-ceasefire politics.

The mainstream opposition dialled down its criticism of Mr Netanyahu in the days after hostages were released. Yair Lapid, leader of the centrist Yesh Atid party, said Israel is “about to reinvent itself” and that the “challenges before us also require a new vision”. Former prime minister Naftali Bennett signed off a long post on X praising the war, and slamming Israel’s foreign critics, by saying “change is coming soon”.

“The opposition has failed to be an opposition this entire time,” Ms Scheindlin said. “They could build momentum by taking bold positions, rather than just going on and on about micro issues.”

Other than Israel’s tiny far left, the strongest criticism of the government’s current path comes from within the coalition itself.

Far-right National Security Minister Itamar Ben-Gvir has described the arrangement through which Israel and Hamas exchange the bodies of captives as a “disgrace”. Parliamentarians from Mr Ben-Gvir’s party boycotted Mr Trump’s speech in the Knesset after the deal was struck, as did members of the Likud party.

Israel's National Security Minister Itamar Ben-Gvir has repeatedly threatened to quit the government. AFP

Hardliners have floated leaving the government if the war ends on terms they find unsatisfactory, in particular if Israel fails to destroy Hamas and resettle Gaza. That could end Mr Netanyahu’s majority in parliament. The hardliners could also choose less dramatic options, such as leaving the government but still voting with it.

Pressure on Mr Netanyahu from both sides does not appear to put him in immediate danger, but none of the underlying criticisms of him have been addressed, in particular his part in the major security failure over the Hamas-led attacks on October 7, 2023. Whether the threat is terminal will become clearer when the Knesset starts its winter session on Sunday.

Four reasons global stock markets are falling right now

There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:

1. Rising US interest rates

The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.

Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”

At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.

2. Stronger dollar

High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”

3. Global trade war

Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”

4. Eurozone uncertainty

Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.

Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”

The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”