Israel Readies for Fateful Vote on Weakening of Judiciary
(Bloomberg) -- Israel’s Parliament was preparing on Monday to pass a law reducing the power of judges to overrule government decisions and appointments, a plan that has sent hundreds of thousands of protesters into the streets and threatens to undermine the country’s economy and security.
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The bill is sponsored by the right-wing government of Prime Minister Benjamin Netanyahu — who was discharged from the hospital Monday and joined the debate after having a cardiac pacemaker inserted.
Advocates for law argue that the courts have grown too powerful and are captured by the left. But the plan has drawn fierce opposition from a broad swath of Israel’s establishment, from tech entrepreneurs to military reservists, who say it’ll undermine the country’s democratic checks and rule of law.
As passage approached — the government has the votes it needs — the shekel showed volatility and shares of the biggest banks — Bank Hapoalim Ltd. and Bank Leumi Le-Israel — dropped as much as about 3 percent..
Long buoyed by a tech sector resilient to war and regional turmoil, the shekel weakened against the dollar in the six months since Netanyahu first mooted the plans. On Monday, reports of a compromise strengthened the shekel, but after talks failed, the currency reversed some of its gains.
Critics also worry that Netanyahu, who is fighting a long-running fraud and bribery case, will use a weakened judiciary to avoid jail time.
The standoff over the law has come to represent a broader battle over the nation’s identity and what it means to be a Jewish democracy. Opponents fear the law is the first step toward a religious autocracy, while supporters see it as permitting their once-marginalized voices to be heard.
Bracing for Protests
Hundreds of thousands joined demonstrations. A business forum representing Israel’s largest companies went on strike. It’s been joined by about 150 tech companies, while Bank Hapoalim said it would allow its employees to miss work to participate in protests that have attracted members of the political and business elite.
Read More: Israeli CEOs Ditch the C-Suite to Lead Anti-Government Protests
Over two-thirds of tech companies have taken financial and legal steps to safeguard their assets since the reform plans were unveiled in January. A report by Startup Nation Central, which tracks the sector, said 22% of 500 companies surveyed moved funds abroad and 8% moved their headquarters.
Read More: Israel Tech Investors on Edge as Government Plans Judicial Curbs
More than 10,000 reservists joined 1,200 pilots from the air force threatening to suspend service if the bill goes through without wide public consensus. They’ve been supported by dozens of top former security officials, alarming the military leadership as it grapples with growing tensions with Iran and its proxies on Israel’s borders.
Last-Ditch Talks Fail
President Isaac Herzog, who returned from a visit to the US on Sunday, sought to mediate a last-minute compromise, meeting with Netanyahu and opposition leaders Yair Lapid and Benny Gantz in quick succession. His bid failed, although there remained some compromise talk even as the day wore on.
The government’s approach has drawn rare criticism from the US and think tanks have warned that Israel’s ties with its staunchest ally could be damaged if it pushes through the changes in the face of widespread opposition.
“Given the range of threats and challenges confronting Israel right now, it doesn’t make sense for Israeli leaders to rush this — focus should be on pulling people together and finding consensus,” US President Joe Biden told Axios in a statement.
The measure set to be passed Monday will remove the ability of the courts to strike down government policies deemed “unreasonable.”
It was originally part of a larger package of changes and it’s not clear if the government will seek to put forward other measures. Netanyahu has said the government will not take any further steps without first seeking a political consensus. But National Security Minister Itamar Ben Gvir, one of his most radical partners, has said the bill is just “the first course.”
Religious Right
Secular Israelis are particularly alarmed by changes they say will strengthen the religious right, not just putting off international investors, but making the country a less attractive place to live and work, especially for women. To form a government following last year’s election, Netanyahu brought into government politicians who for decades were considered to be on the extreme fringes of public life.
The protests have drawn huge numbers of women, some dressed as the red-hooded “handmaidens” of Margaret Atwood’s dystopian novel, warning against any erosion in democratic rights.
--With assistance from Marissa Newman.
(Updates with shekel and market moves in 4th paragraph)
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