Labor-Gesher-Meretz leader Amir Peretz said over the weekend that his party would join a Blue and White-led government that would receive the outside backing of the Joint Arab List and Yisrael Beytenu.
Speaking at an election rally on Friday, Peretz said he would mediate between the factions to ensure a minority government could be formed.
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Blue and White leader Benny Gantz denied the he and Peretz discussed the idea.
Prime Minister Benjamin Netanyahu lambasted Peretz, saying the statement by Labor-Gesher-Meretz's leader confirmed his previous warning on the matter.
"Such a government would be a danger to Israel's security," Netanyahu said in a Facebook post.
Peretz replied that "the real danger to Israel was having a prime minister with three criminal indictments dragging Israel to a fourth election."
Speaking at a Likud rally on Saturday evening, Netanyahu said, "Amir Peretz dropped an atomic bomb. … he lifted all the veils, all the masks, and said Gantz can't form a government without [Joint Arab List MK] Ahmad Tibi.
"And it's not like Gantz hasn't tried this before – he was about to close the deal [following the September 2019 elections], but pulled out at the last moment," Netanyahu stated.
"Now he can do it. Amir Peretz struck an agreement with Gantz and with [Yisrael Beytenu leader Avigdor] Lieberman, who has completely shifted to the Left, and with Tibi, to form a minority government."
Speaking with Channel 12's "Meet the Press" on Saturday Gantz reiterated that his party "Will not establish a government with the Joint Arab List or with its support. We have no agreement with anyone."
Lieberman also denied any deal was made, saying, "The only thing Peretz really cares about is the presidency. For that, he is willing to sell out the Labor party, Gantz and [Meretz leader Nitzan] Horowitz as well."
Peretz's name has been mentioned as a possible candidate for the presidency after President Reuven Rivlin's term in office ends, in 2021.