JERUSALEM: Reports that Israeli Prime Minister Benjamin Netanyahu was considering firing Defense Minister Yoav Gallant shook the political landscape and sent Israeli financial markets lower on Monday.
Israel’s leading television channels and news websites reported that Netanyahu, under pressure from far-right coalition partners, was contemplating firing Gallant and replacing him with a former ally turned rival, Gideon Saar, who is currently a member of the opposition.
Such a move would be a major shock to the political and security landscape, especially with the looming threat of all-out war between Israel and Iran-backed Hezbollah in Lebanon.
The shekel weakened 1 percent to nearly 3.75 versus the dollar, while main Tel Aviv share indices were down 1.4 percent to 1.6 percent .
The Israeli currency was expected to appreciate after data on Sunday showed Israel’s inflation rate rose more than expected to 3.6 percent in August, a jump analysts said would delay rate cuts well into 2025 in contrast to expected rate cuts in the United States and Europe.
Netanyahu denied that he was in negotiations with Saar, though he did not refer to his plans for Gallant. Saar denied that he was negotiating with some members of the coalition.

NETANYAHU AND GALLANT AT ODDS
It would not be the first time Netanyahu has tried to fire Gallant. The two have been at odds over a number of government policies and, more recently, the handling of the war in Gaza and the terms of a possible hostage release and ceasefire deal with Islamist militant group Hamas.
Centrist lawmakers criticized Netanyahu for getting sidetracked by political wrangling rather than focusing on the task at hand.
“Instead of the prime minister being busy with victory over Hamas, returning the hostages, with the war against Hezbollah and allowing (evacuated) residents of the north to return to their homes, he is busy with despicable political dealings and replacing the defense minister,” centrist lawmaker Benny Gantz wrote on social media.
Police minister Itamar Ben Gvir, who heads an ultranationalist party in Netanyahu’s coalition, has for months been advocating to replace Gallant and called for his immediate dismissal.
“We must resolve the situation in the north and Gallant is not the right man to lead this,” Ben Gvir said referring to a possible escalation with Hezbollah.
Tens of thousands of Israelis have been displaced near the Lebanese border in the north due to daily rocket fire from Hezbollah.
Gallant, who rose to the rank of general during a 35-year military career, on Sunday told US Secretary of Defense Lloyd Austin he was committed to returning residents back to their homes and that the “possibility for an agreed framework is running out.”
On Monday, he said the only way to return residents evacuated from the north to their homes was with military action.
In March 2023, Netanyahu fired Gallant after he broke ranks with the government and urged a halt to a highly contested plan to overhaul the judicial system. That triggered mass protests and Netanyahu backtracked.

MADRID: The first Palestinian ambassador to Spain presented his credentials on Monday to Spanish King Felipe VI after Madrid in May formally recognized a Palestinian state.
The head of state welcomed Husni Abdel Wahed to the royal palace in Madrid for the traditional ceremony for newly appointed foreign ambassadors to Spain, according to images published by the royal palace on social network X.
Wahed had been the head of the Palestinian diplomatic mission in Madrid since 2022 and he enjoyed a similar status to that of an ambassador but he officially changed rank after Spain along with Ireland and Norway formally recognized a Palestinian state comprising the Gaza Strip and the West Bank.
The three countries said at the time they hoped their decision would spur other European countries to follow suit and accelerate efforts toward securing a ceasefire in Israel’s war against Hamas in Gaza.
Israel has condemned the decision, saying it bolsters Hamas, the militant Islamist group that led the October 7 attack on Israel that triggered the war in the Hamas-governed Gaza Strip.
Spanish Prime Minister Pedro Sanchez, one of the staunchest critics in Europe of Israel’s Gaza offensive, announced earlier this month that a bilateral summit between Spain and Palestine would be held before the end of the year.
The October 7 attack that sparked the war resulted in the deaths of 1,205 people, mostly civilians, according to an AFP tally based on official Israeli figures.
Militants also seized 251 hostages, 97 of whom are still held in Gaza, including 33 the Israeli military says are dead.
Israel’s retaliatory military offensive has so far killed at least 41,226 people in Gaza, according to the health ministry in the Hamas-run territory.