Netanyahu's missed opportunity - FT.com When Benjamin Netanyahu announced the formation of a national unity government in May, he was hailed as a supreme tactician and the undisputed master of Israeli politics. On Tuesday, with the exit of the centrist Kadima party from his coalition, it became clear the prime minister had made a grave miscalculation - perhaps the worst since he assumed the premiership more than three years ago. Far from ushering in a period of stable government, it triggered an escalating confrontation over an issue that will come back to haunt not just Mr Netanyahu, but the country at large as well. Shaul Mofaz, the Kadima leader, said the party's departure came in response to the prime minister's refusal to endorse a radical overhaul of Israel's system of military service. He and his allies had urged Mr Netanyahu to extend the draft to members of the country's ultra-orthodox Jewish community. The promise to reform the military draft was the main reason that Kadima gave for joining the government in the first place. Under the current regime, young ultra-orthodox men are exempted from military service as long as they dedicate their lives to religious study. The call to end that privilege resonates deeply with a majority of Israeli voters, who feel that the burden of military service must be shared equally among all citizens. There is, however, far more to the issue than the simple notion of fairness. Once a tiny minority, the ultra-orthodox, or Haredim, today accounts for about one in 10 Israeli citizens. Thanks to extraordinarily high birth rates (in excess of seven children per family), their share of the population will grow rapidly in the years ahead. The rising demographic power of the ultra-orthodox poses a clear challenge to the army, which will have to draw its recruits from an ever-smaller slice of the Israeli population. The greater danger, however, is to the economy. In order to avoid the draft, young Haredi men remain in Jewish seminaries until the age of 26. This means they reach adulthood without exposure to the secular world, and without the basic skills needed in the modern economy. Poverty, unemployment and welfare dependency are the inevitable consequence. It is far from clear that extending conscription is the best solution for this problem. But economists such as Dan Ben-David from Tel Aviv University regard the debate as "Israel's moment of truth" all the same. Along with countless other analysts, Prof Ben-David argues that Israel can no longer afford to leave the Haredim (and Israel's Arab minority, which is also exempt from military service) at the margins of society. One way or another, they will have to be brought close enough to the Israeli mainstream to find employment, pay taxes and contribute to the economic well-being of the country. Israel's prime minister is, of course, perfectly aware of the demographic and economic dynamics facing Israel. But Kadima's demands for a radical overhaul of the draft system faced furious opposition from two ultra-orthodox political parties that were long-standing members of Mr Netanyahu's coalition. Forced to choose between Kadima and the ultra-orthodox, the prime minister opted to sacrifice the former. The Israeli leader still retains an impressive majority and there is no immediate threat to his tenure, meaning he may yet be able to see out a full four-year term in office - an exceedingly rare achievement in the volatile world of Israeli politics. Mr Netanyahu's political and popular standing, however, is likely to be diminished. He is now exposed to accusations that he values the political support of the Haredi minority over the demands of Israel's more secular mainstream. This will give Mr Netanyahu's rivals - both in Kadima and the resurgent centre-left Labour party - an effective argument at the next election. But such tactical considerations pale in comparison to the broader picture: as long as he controlled 94 out of 120 seats in parliament, Mr Netanyahu had a rare opportunity to put real political pressure on the ultra-orthodox community, with the aim of helping its members escape a self-imposed economic ghetto. It is an opportunity that may not return for many years to come.