Israeli Prime Minister Benjamin Netanyahu has fired two senior cabinet ministers, setting the stage for an expected announcement of early elections.
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Netanyahu's office said Tuesday he had ordered the dismissals of Finance Minister Yair Lapid and Justice Minister Tzipi Livni.
The coalition government has been divided over key issues in recent weeks, and Lapid and Livni have emerged as fierce critics of the prime minister.
Netanyahu planned a nationwide address later Tuesday.
With his coalition in tatters, Netanyahu is expected to order new elections, more than two years ahead of schedule.
Netanyahu's government, which is dominated by the right and came to power early last year, has been unravelling over a range of issues including the 2015 budget. He said Monday he would go to the polls unless rebellious ministers stopped attacking government policies.
A new mandate could give Netanyahu more leeway domestically to pursue his settlement policies on occupied land Palestinians seek for a state and a controversial bill to declare Israel the Jewish nation-state, legislation critics see as discriminating against the country's 20 per cent Arab minority.
Lapid failed to win a budget deal in a session on Monday with Netanyahu.
Legislators would meet to decide date
"Prime Minister Netanyahu decided to take Israel to unnecessary elections," said Lapid, leader of the Yesh Atid party, accusing Netanyahu of blocking his proposed housing reforms. Political commentators said an election could come as early as March.
Zeev Elkin of Netanyahu's Likud party said it would likely back an opposition motion to dissolve parliament, expected on Wednesday. Legislators would then hold meetings to agree on an election date and parliament would dissolve itself next week, with the government staying on until a new one is sworn in.
"An election is now a fact. I do not want to go into the reasons that led to this point and up until this moment I am certain that we could have acted differently and avoided election," Foreign Minister Avigdor Lieberman, head of the far-right Yisrael Beitenu party, told a news conference.
"I think that all of us should have united and at the moment instead of becoming unified we are going to quarrel for a few months. I am sure that immediately after election, which should take place as soon as possible, we will have to form a government which is capable of dealing with all challenges," he added.
Markets slide
The political turmoil also comes at a difficult time for Israel economically, with next year's budget not agreed and growth slower in the wake of the July-August Gaza war. Israeli financial markets fell on Tuesday on election news, with the shekel sliding 1.3 per cent to a two-year low against the dollar.
Political adversaries accused Netanyahu of engineering the crisis — the next election is not due until 2017 — so he can oust centrists and win votes back from far-right partners.
A backroom deal with two ultra-Orthodox Jewish parties could let him reshape his coalition without an election, or form a government without centrists if one is held.
An opinion poll in the left-leaning Haaretz newspaper on Sunday showed that Netanyahu, with an approval rating that has dipped to 35 per cent, was still Israelis' preferred candidate.
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