Thomas Helm
The National / July 26, 2023
Ratings agency warns of negative consequences from government’s push for controversial legal reforms.
Israel’s Prime Minister Benjamin Netanyahu played down a stark warning by Moody’s on Tuesday, in which the ratings agency said the country’s economy faced “significant risk” after the government passed the first bill in its controversial legal overhaul package.
In a joint statement with Finance Minister Bezalel Smotrich, the Prime Minister described the Moody’s report as a “momentary response”.
“When the dust clears, it will be clear that the Israeli economy is very strong,” their statement said.
It is the latest example of disquiet in Israel’s business and financial sector over potentially negative consequences for the economy as a result of the judicial overhaul, which critics say will end democracy.
The Moody’s warning comes four months after it lowered Israel’s credit outlook due to a “deterioration” in governance.
Since then, failed negotiations with the opposition to find a compromise on the divisive legal reforms, which would greatly limit the power of the country’s judiciary to oversee government policy, have aggravated mass protests across the country, which have been taking place for 29 weeks.
The Moody’s report came on the same day that US bank Morgan Stanley gave Israel’s sovereign credit a “dislike stance” due to uncertainty over the reforms.
Netanyahu, who throughout his decades-long career has often been considered a champion of the business community, argued that despite such warnings, Israel’s economy remained strong.
“The security industries are bursting with orders. The gas industry is increasing exports to Europe and seven companies are now competing for tenders to explore for gas in Israel at an investment worth billions,” the statement read, along with a list of other economic developments that the government viewed as positive.
Israel’s economy is heavily reliant on its high-tech sector and cyber industries and is often referred to as the “start-up nation”.
Fears are also mounting that the country’s advanced workforce is leaving because of the judicial overhaul and concerns that the government, the most right-wing in Israeli history, is set to pursue increasingly authoritarian policies.
A survey on Tuesday by Israel’s Channel 13 found 28 per cent of people surveyed were considering leaving the country. More than half said they feared a civil war over the legal reforms.
Thomas Helm is Jerusalem Correspondent at The National
