JERUSALEM – With the 18th Israeli Knesset dispersed and new national elections set for January 22, 2013, Israel’s various political factions began preparing for what is expected to be a brutal campaign to elect a new 120-seat parliament. Following the elections President Shimon Peres will ask a newly elected MK, presumably from the largest faction, to form the next government.

Though most polls show incumbent Prime Minister Benjamin Netanyahu’s Likud Party in the lead and in the best position to form the next government, growing dissatisfaction with Netanyahu’s economic policies among many middle-class voters who supported him four years ago could shift their alliances in the months leading up to the elections.

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Netanyahu’s reelection campaign was dealt a blow on Monday when Minister of Communications and Minister of Welfare & Social Services Moshe Kahlon resigned from politics. MK Kahlon, who was directly responsible for opening up the formerly monopolistic cell phone and cable TV markets that resulted in substantial savings for financially pressed Israeli consumers, was considered a rising political star in the Likud. His record of no-holds-barred challenging of Israel’s powerful business tycoons and social welfare activists would have played a central role in the Likud’s campaign.

According to a Yediot Aharonot report, the popular Kahlon was urged by many supporters to reconsider his decision to return to the private business sector. And other Israeli newspapers reported that Kahlon’s reason for a career change was due to the constant infighting among the party’s Central Committee members and the disrespectful treatment he received from other Likud Party MKs. Yediot added that Likud has received numerous messages from voters threatening not to vote for Likud if Kahlon does not return to elective politics.

Other media sources are speculating that many disaffected Likud voters could switch their political allegiance to a revamped Shas Party or to former TV talk show host Yair Lapid’s new secular centrist Yesh Atid (There is a Future) Party.

It’s also being reported that Shas spiritual leader Rabbi Ovadia Yosef is meeting with members of the party’s Council of Torah Sages to determine if former Shas leader Aryeh Deri should return as faction head for the upcoming election or share leadership responsibilities with the incumbent party leader, Minister of Internal Affairs Eli Yishai. Newspaper polls conducted last week show that Shas would increase its number of Knesset seats if Deri returns as party leader. Deri, who generally doesn’t share Netanyahu’s free-market economic agenda, is not considered a political ally of Netanyahu. In contrast, Yishai has worked closely with the Israeli leader over the past four years.

In another political development, Likud MK Tzipi Hotovely is expected to ask Israel’s Supreme Court to deny Deri and former prime minister Ehud Olmert (if the latter chooses to do so) from returning to the political scene. Deri has served jail time while Olmert was convicted recently on a corruption charge and faces criminal charges in another case. To attract Modern Orthodox voters Lapid is considering the inclusion of Rabbi Shai Piron, co-founder of the Tzohar rabbinical organization and a senior staff member of Yeshivat Hesder Petach Tikva, to his election list. Lapid supports changing Israel’s electoral system and easing the social and tax burdens on the middle class by drafting haredim into the military and cajoling more haredim into the job market.

Labor and Kadima are expected to announce their Knesset lists within two weeks.

Netanyahu is expected to highlight his strong leadership during a time that he describes as “the most difficult period of security challenges to Israel’s existence.” Many of his challengers are likely to focus on domestic economic issues.

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