Israeli Prime Minister Benjamin Netanyahu, speaks to reporters before a meeting with lawmakers at the Capitol in Washington, Wednesday, July 9, 2025. (AP Photo/Manuel Balce Ceneta)

TEL AVIV, Israel (AP) — Israeli Prime Minister Benjamin Netanyahu suffered a major political blow on Wednesday, with a key governing partner announcing it was quitting his coalition government, leaving him with a minority in parliament as the country faces a litany of challenges.

Shas, an ultra-Orthodox party that has long served as kingmaker in Israeli politics, announced that it would bolt the government over disagreements surrounding a proposed law that would enshrine broad military draft exemptions for its constituents — the second ultra-Orthodox governing party to do so this week.

“In this current situation, it’s impossible to sit in the government and to be a partner in it,” Shas Cabinet minister Michael Malkieli said in announcing the party’s decision.

But Shas said it would not undermine Netanyahu’s coalition from the outside and could vote with it on some legislation, granting Netanyahu a lifeline in what would otherwise make governing almost impossible and put his lengthy rule at risk. Once their resignations come into effect, Netanyahu’s coalition will have 50 seats in the 120-seat parliament.

Netanyahu’s rule, for now, doesn’t appear threatened. Once Shas’ resignations are put forward, there’s a 48-hour window before they become official, which gives the Israeli leader a chance to salvage his government.

Lawmakers attend a session of the Knesset, Israel's parliament, in Jerusalem, Monday, July 14, 2025. (AP Photo/Ohad Zwigenberg)

The party’s announcement also comes just before lawmakers recess for the summer, granting Netanyahu several months of little to no legislative activity to bring the parties back into the fold.

A spokesperson for Netanyahu’s Likud party did not immediately respond to a request for comment.

The political instability comes at a pivotal time for Israel, which is negotiating with Hamas on the terms for a U.S.-backed ceasefire proposal for Gaza. Shas’ decision isn’t expected to derail the talks.

But with a fracturing coalition, Netanyahu will feel more pressure to appease his other governing allies, especially the influential far-right flank, which oppose ending the 21-month war in Gaza so long as Hamas remains intact.

Despite losing two important political partners, Netanyahu will still be able to move ahead on a ceasefire deal, once one is reached. The Trump administration has been pushing Israel to wrap up the war.

On Tuesday, the ultra-Orthodox United Torah Judaism party said it was quitting over Netanyahu’s failure to pass a law on the military draft exemptions.

Military service is compulsory for most Jewish Israelis, and the issue of exemptions has long divided the country. Those rifts have only widened since the start of the war in Gaza as demand for military manpower has grown and hundreds of soldiers have been killed.

A decades-old arrangement by Israel’s first prime minister granted hundreds of ultra-Orthodox men exemptions from compulsory Israeli service. Over the years, those exemptions ballooned into the thousands and created deep divisions in Israel.

The ultra-Orthodox say their men are serving the country by studying sacred Jewish texts and preserving centuries’ old tradition. They fear that mandatory enlistment will dilute adherents’ connection to the faith.

But most Jewish Israelis see the exemption as unfair, as well as the generous government stipends granted to many ultra-Orthodox men who study instead of work throughout adulthood. That bitterness has only worsened during nearly two years of war.

Netanyahu’s coalition has been trying to find a path forward on a new law. But his base is largely opposed to granting sweeping draft exemptions and a key lawmaker has stood in the way of giving the ultra-Orthodox a law they can get behind, prompting their exit.