Moody's to Israel: Judicial regulation harms economy

International credit rating agency Moody's warned in its report published yesterday regarding the approval in parliament of a bill limiting the Supreme Court's oversight of the executive branch in Israel that concerns about the Israeli economy are beginning to materialize. The report by international credit rating agency Moody's stated that the risk of a constitutional crisis in Israel is increasing. "We believe that the content of the government's comprehensive plans could significantly weaken the independence of the judiciary and disrupt effective checks and balances between the various authorities," the report said. The report, indicating that the negative impact of judicial regulation on the Israeli economy has begun, warned that there are indications that Israel is moving away from global trends in technology. The report stated that "Venture capital and investments in new Israeli high-tech companies fell significantly in the first half of this year, falling to $3.7 billion, the lowest figure since 2019." Netanyahu and Smotrich issue statements in response to Moody's report Israeli Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich issued a joint statement regarding Moody's report. The statement in response to Moody's special report assessed that, "This is an instantaneous response; when the dust settles, it will be seen that the Israeli economy is very strong." The statement cited Israel's export data, technological developments and investments in the country, and stated that, "The Israeli economy is based on strong foundations and will continue to grow under experienced leadership that implements responsible economic policies." Controversial judicial regulation The "judicial reform" announced by Israeli Justice Minister Yariv Levin on January 5 includes changes such as limiting the powers of the Supreme Court and giving the government a say in judicial appointments. Prime Minister Benjamin Netanyahu announced on March 27 that he was postponing the judicial reform that had caused increasing mass protests and strikes across the country, but he announced that the judicial reform would be brought back to the agenda after the 2023-2024 budget was passed by the parliament at the end of May. The government recently pressed the button again for judicial reform after negotiations with the opposition stalled. Thousands of Israelis, including fighter pilots, submarine officers and other elite units, who opposed the government’s “judicial reform,” decided to quit their voluntary reserve military service. High-level figures in Israel’s politics, military, security, economy and judiciary, as well as various professional organizations, had announced their opposition to the government’s judicial reform.