Since early January 2023, a series of protests, strikes, and hunger strikes have been going on in Israel. Tens of thousands of people have flocked to Tel Aviv, Israel’s commercial capital, among other prominent cities, to oppose the ruling government’s decision to implement the judicial reforms. The reforms were promoted by the governing coalition led by Prime Minister Benjamin Netanyahu. Israel’s Deputy Prime Minister and Justice Minister, Yariv Levin, introduced the reforms with the support of the leaders of the coalition ruling Israel.
The proposed reforms provided the government more control over the appointment of judges, barred the Supreme Court from rulings of basic law, gave the parliament the power to override court rulings with a simple majority of 61 out of 120 seats, abolished the grounds for reviewing administrative decisions for ‘reasonability’, limited the power of the government’s legal councillors, and made the Attorney-General’s advice non-binding for the ministers.
Background
Judges in Israel have been chosen by the Judicial Selection Committee since the 1980s. The Supreme Court President, two Supreme Court Justices (chosen by the Justices from among themselves), the Justice Minister, one Cabinet Minister, two Knesset members chosen by secret ballot, and two members of the Israel Bar Association make up the committee’s nine members. Except for the Supreme Court, all justices were appointed by a simple majority, with a quorum of seven required. At least seven of the committee’s nine members must vote for an appointment to the Supreme Court.
The Judicial Reforms seek to remove representatives from the Israel Bar Association from the committee. The Supreme Court president, two retired lower court judges, and three members of the Knesset—two from the coalition, including the chair of the Constitution, Law, and Justice committee, and one from the opposition—will then make up the judicial selection committee. The justice minister will appoint the three members of the committee with the consent of the Supreme Court president. The committee will also include three Cabinet ministers, including the justice minister. Every judge, including Supreme Court justices, will require a simple majority of five votes to be appointed.
If adopted, the new arrangement would grant the coalition government an automatic majority of five votes (three Cabinet ministers and two Knesset coalition members) as well as voting power over the committee’s selection of retired lower court judges. By doing this, the coalition government would effectively be given the power to choose who leads Israel’s courts and dominate the judicial proceedings, thereby undermining the nation’s democracy and the independence of the judiciary.
Situational Update
The protests have met with mixed reactions and have drawn support from a wide range of Israelis, including lawyers, academics, former civil servants, economists, activists, civil society, tech-sector executives, political opposition, and the common man. These critics contend that the judicial reforms would undermine the country’s democracy by weakening the judicial system and granting the government unlimited authority. They also claim that the measures would shield Mr. Netanyahu, who is currently on trial for alleged corruption, and allow the government to adopt laws without any obstruction. According to them, this would also lead to the evisceration of minority rights in Israel since the right-wing governments in Israel would continue to implement laws discriminating against the country’s minority communities.
Others, on the other hand, support the reforms, arguing that they are necessary to reform Israel’s judicial system. These supporters argue that they elected the coalition on the premise that it pledged to overhaul the judiciary. The government argues that it considers the current judiciary to be meddling with legislation, biased on various issues, and undemocratic in its selection of the judges.
Following widespread opposition to the reforms, PM Netanyahu repealed the judicial legislation in March. But since then, counter-protests have been organized by the people in favour of the reforms. When negotiations to reach a compromise failed, in June, the government planned to resume the passage of the legislation. Since then, the protests have persisted regarding the anti-reform movement.
Impact on the World: The Geo-Political Angle
The ongoing protests would have a long-term consequence that might effect the entire world and geo-politics. One implication is that the protests mark an inflection point with far-reaching implications for the future of Israel’s international status and Israel’s reputation as a democracy. This could make it difficult for Israel to gain world-wide backing for its policies in the international arena.
The ongoing protests would also have wide-ranging consequences for US-Israel relations and significantly impact Middle Eastern geopolitics. The United States of America, the European Union, and the United Kingdom, Israel’s biggest trading partners, have expressed their discontent about the reforms. These Western Allies have voiced deep concerns about the proposed changes to Israel’s judicial system. They have warned that the actions of Israel’s far-right government would jeopardize and undermine Israeli democracy, which would in turn undermine their relations with Israel, especially the US-Israel relationship. It was the common democratic values between the USA and Israel that strengthened their bilateral and economic relations, security cooperation, and partnerships in other fields. Undermining the democratic values in the country would significantly affect relations between the two countries. This trust is important, especially as Iran nears nuclear threshold status.
Another potential implication is that the protests could embolden other countries that are considering similar judicial reforms. This would have implications for the rule of law and democracy around the world.
Implications for Security
The protests pose immediate threats to the security of the nation. The protests have led to uncertainty and instability in the political and legal landscape, making it difficult for the government to respond to security threats. This could make Israel more vulnerable to attack.
The violent nature of the protests in various instances further poses a national security threat to the whole nation. In one instance, Prime Minister Benjamin Netanyahu had to be airlifted to the country’s main international airport for an overseas trip after throngs of cars and protesters prevented him from driving there.
In addition, the protests have created a sense of division and polarization in Israeli society. The Israeli government would not cooperate with the Palestinian Authority on security matters. It would further support contentious Israeli settlements in the West Bank, undermining security for the minority group.
Additionally, a number of military reservists and graduates of military elite programmes, the backbone of Israel’s armed forces, have protested by threatening to refuse to report for duty. This further creates a crisis and threatens Israel’s security.
Implications for the economy and Businesses
The protests have negative short-term as well as long-term ramifications for Israel’s economy. In the long run, the protests will lead to a drop in per-capita GDP. There will also be increased corruption and decreased oversight of government decisions.
In the short run, the protests related to judicial reforms will weaken the World Bank’s governance indicators and institutional checks, which play an important role in shaping the ratings assigned to countries. A drop in Israel’s credit rating would increase the cost of borrowing and hurt fundraising, which is crucial for outside investment from institutions based in the United States, Europe, and other countries.
The protests also plunged the value of the shekel, Israel’s currency, hurting critical parts of Israel’s economy, including real estate and the stock market, as companies and individual citizens moved their money into US dollars or other currencies. In just one month of the protests in February, the shekel depreciated by 6 percent, its lowest level against the US dollar in the past three years. The currency’s depreciation would force the government to make budgetary changes, impacting Israel’s economy.
The shekel’s fall will also lead to a drop in investor confidence and plunge investments in the country, both inside and outside Israel. The Tel Aviv Stock Exchange plummeted significantly after the protests. This would impact the funding scenario and the venture capital and private equity areas. After just a month of protests in February, 780 million investment dollars had already been withdrawn by hi-tech companies. If the protest continues, there will be a further decrease in investments. This, in turn, will affect Israel’s unicorns and start-ups, leading to a recession in the country’s economy. The continuing protests would cause the ‘start-up nation’ to lose all its investments.
The uncertainty and instability in the political and legal landscape would make businesses hesitant to make investments or take on new projects in Israel. This would also make it difficult for businesses to attract and retain talent from across the world since the talented professionals would be reluctant to move to an unstable region, risking their lives.
The continuing protests would also impact the tourism sector, impacting employment opportunities and thereby significantly impacting the economy. Various flights have been cancelled in the country following the protests, posing a threat to the nation’s economy.
Analysis and Conclusion
Netanyahu and his coalition have yet to pass their proposed reforms. Drawn by the ire of the coalition partners and massive opposition from various ends, Netanyahu’s coalition has agreed to a watered-down version of the judicial reforms. Given the impact on Israel’s economy and businesses, Netanyahu would be obliged to accept the further watered-down version and compromise of the judicial reforms.
Nevertheless, the protests have not been successful in entirely restricting the government’s judicial reforms and continue to occur in Israel, which contributes to a threat to Israel’s stability. If the current situation persists, it will continue to deteriorate Israel’s economy and impact its businesses.