ISRAEL AT WAR - DAY 147

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50 ex-ministry heads, treasury chiefs join financial warnings over judicial overhaul

Former senior officials, many of whom worked under Netanyahu for years, say reforms could cause ‘long-term’ damage to economy

Tobias (Toby) Siegal is a breaking news editor and contributor to The Times of Israel.

Illustrative: View of the Tel Aviv Stock Exchange, November 29, 2020. (Miriam Alster/Flash90)
Illustrative: View of the Tel Aviv Stock Exchange, November 29, 2020. (Miriam Alster/Flash90)

Fifty former ministry directors have joined the warnings against the government’s plan to overhaul the judiciary, saying it would lead to “long-term” damage to the country’s economic growth and quality of life.

In a letter published Monday, former senior officials — including former treasury directors and some who worked under Prime Minister Benjamin Netanyahu for years — said the planned overhaul “will cause unprecedented damage to Israel’s economy.”

Signatories include former Finance Ministry directors general David Brodet, Yaacov Lifshitz, Ohad Marani, Yarom Ariav, Aharon Fogel, Haim Shani, Shalom Singer and Keren Terner Eyal, as well as former budget director at the Finance Ministry Shaul Meridor, former Prime Minister’s Office director general Raanan Dinur, former Energy Ministry director general Udi Adiri, and former Competition Authority director general Michal Halperin.

The officials said “the appreciation and stability enjoyed by the Israeli economy largely stem from the independence of the judiciary and public institutions.”

“Harming that,” the letter continued, “would lower credit ratings and create difficulties for high-tech companies looking to raise money.”

The letter cited studies indicating that compromising the independence and thus the quality of government institutions is usually irreversible.

Prime Minister Benjamin Netanyahu leads a cabinet meeting at the Prime Minister’s office in Jerusalem on January 29, 2023. (Yonatan Sindel/Flash90)

“An institutional balance that supports growth is delicate. Diverting from it could prove long-term, since harmful political and economic bodies tend to perpetuate themselves for decades,” the letter read.

“The concentration of so much political power in the hands of the ruling group, void of checks and balances, is the main cause of economic decline. Studies show that without effective limitations on government bodies… the democratic system is weakened and becomes non-professional,” the former officials said.

The Netanyahu coalition’s proposals, as presented by Justice Minister Yariv Levin, would severely restrict the High Court’s capacity to strike down laws and government decisions, with an “override clause” enabling the Knesset to re-legislate struck-down laws with a bare majority of 61; give the government complete control over the selection of judges; prevent the court from using a test of “reasonableness” to judge legislation and government decisions; and allow ministers to appoint their own legal advisers instead of getting counsel from advisers operating under the aegis of the Justice Ministry.

Israelis protest against the proposed changes to the legal system, in Tel Aviv, on January 28, 2023. (Tomer Neuberg/Flash90)

The plan has drawn intense criticism and warnings from leading financial and legal experts as well as weekly mass protests and public petitions by various officials, professionals and private companies.

Earlier this month, 17 of Israel’s leading law firms warned that the controversial sweeping reforms won’t fix the system and instead will harm the country’s reputation and economy. The following week, two former Bank of Israel governors, Karnit Flug and Jacob Frenkel, joined warnings that the plan could negatively affect Israel’s credit rating. And last week, Israeli bank chiefs warned Netanyahu of the potential economic fallout of his government’s proposals.

More recently, 310 economists, including Nobel Prize-winning economist Eric Maskin of the United States and Israel Prize recipient Menahem Yaari, signed a letter against the proposed overhaul warning that the overhaul could “lead investors to flee and bring a brain drain.”

While Netanyahu said he was open to dialogue, he has insisted that he will not slow efforts to advance the judicial overhaul.

The premier, whose far-right and religious government was sworn in last month, has pushed back against the mounting criticism, claiming that judicial oversight was actually hampering economic growth and urging professionals and some politicians to stop “bringing down a tsunami of lies about the collapse of the economy.”

Addressing reporters last week, Netanyahu, who is technically blocked from weighing in on legislation that could affect the outcome of his ongoing corruption trial, said: “When judicial reform passes, I am convinced that everyone will see that rule of law remains intact, and is even strengthened, that democracy remains intact, and is even strengthened, and that our free economy is even strengthened, and strengthened a lot.”

Carrie Keller-Lynn contributed to this report.

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