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Justices convened Sunday to begin discussions on whether the long-serving prime minister should be barred from office as he faces a series of corruption charges.
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The right-wing leader would stay in office until October 2021, when the role would pass to centrist Benny Gantz. The agreement is set to break the deadlock Israel has faced over three elections.
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After three inconclusive elections, Netanyahu and his rival Benny Gantz are reportedly close to a deal to rotate as prime minister, with Netanyahu taking the first turn.
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Retired army general Benny Gantz was tapped after a majority of 61 lawmakers in the 120-member Parliament told President Reuven Rivlin they supported Gantz over Netanyahu.
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After two failed tries, Prime Minister Benjamin Netanyahu hopes to win reelection on Monday. But don't be surprised if there's another inconclusive result.
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President Trump declared that his "vision presents a win-win opportunity for both sides." Palestinian Authority President Mahmoud Abbas has called it a "disastrous announcement."
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In a televised speech, the prime minister called the charges against him "ridiculous libels." Polling suggests most Israelis oppose immunity, but the move could delay his trial.
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It's a massive blow for the longtime leader — Israel's first sitting prime minister to be indicted. He stands accused of bribery, fraud and breach of trust, and has denied any wrongdoing.
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Israel's longtime prime minister had been given a mandate to form a governing coalition after last month's close election. The mandate now falls to his chief rival, Benny Gantz.
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The preliminary results show yet another near deadlock between Prime Minister Benjamin Netanyahu's Likud party and its main centrist rival.