The Guardian / March 9, 2023
Proposals to neuter the country’s judiciary have spooked entrepreneurs who had seemed immune to the political weather.
About 20 years ago, the skyline of Tel Aviv began to change. The city’s collection of elegant white Bauhaus buildings has been joined by tower after tower, each one a salute to Israel’s rapid transformation into one of the world’s most important advanced technology centres.
It is no accident that the rise of the “startup nation” has dovetailed with the career of its longest serving prime minister, Benjamin Netanyahu. Bibi, as he is widely known, is a firm believer in the free market and has championed Israel’s vaunted high-tech sector as his own personal achievement. At 15.3% of GDP, it is now Israel’s main engine of economic growth, employing 10% of the country’s salaried workforce, and generating about a quarter of income taxes.
Which perhaps makes it all the more surprising that the tech sector is now rebelling against the prime minister over government proposals to neuter the Israeli judiciary. Spooked by predictions of the end of democracy and the rule of law, Israel’s entrepreneurial class, previously seemingly immune to the political weather, has joined the hundreds of thousands of people striking and marching as part of the country’s biggest ever protest movement.
There are increasing signs the famously resilient sector is under pressure. A recent report by the Israeli business publication Calcalist suggested that 85bn shekels (£20bn) in capital has been taken out of Israel in the two months since the new government was sworn in and the shekel was the world’s third worst-performing currency in February, falling to a three-year low against the dollar. Economists globally have predicted a possible downgrade of Israel’s credit rating – unwelcome news for the hi-tech sector, which by some estimates is 90% funded by outside investors.
A handful of industry leaders have been vocal about moving funding outside the country, while many more appear to have done so quietly. Eynat Guez, the CEO and co-founder of Papaya Global, a payroll software “unicorn” worth more than $1bn, was the first to publicly do so in January.
“This is beyond left or right, it’s that the reforms are simply a power grab,” she said. “We live in a dangerous neighbourhood, and despite that we have built this industry and gained investor trust.
“If this is the end of the tech industry in Israel – not because of the economy, because of politics – it will take a decade for anyone to forgive and forget that. It will destroy the economic future of the next generation.”
Netanyahu returned to office in December at the head of the most rightwing government in Israeli history. Various elements of the coalition wish to annex the occupied West Bank, roll back pro-LGBTQ+ legislation, limit freedom of speech and give the Knesset the power to appoint supreme court judges and overturn the court’s decisions.
Proponents say it is necessary to fix the balance of power across different branches of the state, and counter a perceived leftwing bias in the court’s rulings. Critics point out the changes would help the prime minister evade a conviction in his corruption trial, in which he denies all charges, and undermine democratic norms in a country with no formal constitution.
Despite the protests, and polling that shows the vast majority of the public are against the judicial changes in their current form, the government appears to be rushing towards passing the legislation before the Knesset’s winter session ends for the Passover holiday in a few weeks’ time.
Israeli media reported on Tuesday that the president, Isaac Herzog, whose role is mostly ceremonial, had been pushing the government and the opposition towards a compromise that would “soften” the proposals, a plan expected to be made public in the next few days.
For many of those opposed to the government’s plans, however, compromise is not a welcome prospect.
“You can’t compromise on a coup,” Guez said. “Pilots are saying they won’t serve [in the military], doctors are striking. We love Israel and want to defend it. That doesn’t mean you just obey the people currently in charge.”
Bethan McKernan is Jerusalem correspondent for The Guardian