Contrary to criticism, Netanyahu says proposed judicial reforms will help economy

Israeli Prime Minister Benjamin Netanyahu called a press conference on Wednesday night to counter the onslaught of criticism directed at his government’s proposed judicial reforms, which have prompted concerns that businesses will rethink investment in Israel.

Joined by Israel's recently-appointed Finance Minister Bezalel Smotrich, Netanyahu said the flurry of criticism is “irresponsible” and constitutes “a tsunami of lies about the collapse of the economy.”

The reforms would actually strengthen Israeli democracy and subsequently the economy, Netanyahu insisted.

“Excessive judicial intervention in Israel is like sand in the wheels of Israel's economy,” he said. “When the judicial reform passes, and it will pass... I am convinced that everyone will see that rule of law is intact and has even been strengthened, that democracy remains intact and has even been strengthened, that our free economy remains intact and has even been strengthened.”

He urged investors to “keep investing in Israel, it’ll be worth it.”

In the last few days, concerns expressed both domestically and abroad have intensified over the effect the proposed reforms could have on democracy and the freedom to do business in the Jewish state. While more than 100,000 Israelis protested on Saturday night, employees in high-tech businesses blocked roads in Tel Aviv this week during the regular work day.

In addition, 250 top Israeli economists – including both the present and former governor of the Bank of Israel – signed an “emergency letter” warning that reforms could result in reduced investments and “brain drain” as companies seek to relocate.

“Look at the signatories of the letter – people appointed by Netanyahu, such as myself and others,” Professor Eytan Sheshinski, a former Netanyahu appointee, told Channel 12 news.

He said that the impact could take years to realize. Sheshinski pointed to Poland which, in 2016, “took steps against the constitutional court and wanted to limit public broadcasting,” and was downgraded by the S&P.

The letter expresses “deep concern that weakening the judiciary will lead to long-term damage to the economy's growth trajectory and the quality of life for Israel's residents.”

Two businesses – venture capital fund Papaya Global and Disruptive – announced today their intention to withdraw funds from Israel.

“Following Prime Minister Netanyahu's statements that he is determined to pass reforms that will harm democracy and the economy, we made a business decision at Papaya Global to withdraw all of the company's funds from Israel, in the emerging reform, there is no certainty that we can conduct international economic activity from Israel, this is a painful but necessary business step,” said Eynat Guez, CEO and co-founder of Papaya Global.

The judicial reforms in question would put the power of judicial appointments in the hands of the governing coalition, while also giving the government the ability to override Supreme Court decisions. Supporters say that these changes are necessary to rein in an activist Supreme Court and to restore the balance of power in the hands of elected officials.

Netanyahu blamed the judicial system for bottlenecking key economic projects, such as the extraction of gas from the Mediterranean Sea and Israel’s Highway 6.

The gas extraction “has turned Israel into an independent energy superpower,” he said, blaming initial delays on “superfluous legal processes that were accompanied – of course – by outraged cries from the opposition.”

“I personally was compelled to go to the Supreme Court to fight the attempts to prevent the extraction of gas from the sea, an issue which was doubtful if it needed to be taken to court,” he said.

Netanyahu also raised the issue of the COVID vaccines, blaming the former attorney general for denying him the ability to order more.

“Even in the case of the coronavirus, we were forced to struggle against legal processes for our right to take the correct policy, which again saved the Israeli economy. We needed to struggle for the right to import more vaccines,” Netanyahu said. “This was denied me by the attorney general and I had to go to the Knesset in order to bypass this impediment, and even then I could not bring in millions more vaccines that remained in Europe and which we did not bring to the citizens of Israel.”

Netanyahu said that “when the judicial reform passes, and it will pass," everyone will see “that democracy remains intact.”

“Therefore, whoever invests in Israel will only profit,” he said.

Foreign Minister Eli Cohen, who attended the World Economic Forum gathering in Davos last week said that the proposed reforms were not brought up in any of his meetings.