After reported Netanyahu overtures, ex-US Treasury chief rejects judicial shakeup

Lawrence Summers says reforms may be needed, but current plans ‘raise serious questions about the rule of law’ and ‘could have serious adverse effects on the Israeli economy’

Former US Treasury secretary Lawrence Summers speaks to Bloomberg, February 10, 2023. (Video screenshot)
Former US Treasury secretary Lawrence Summers speaks to Bloomberg, February 10, 2023. (Video screenshot)

Former US Treasury secretary Lawrence Summers said Friday the current Israeli government’s effort to limit the powers of the judiciary appears “overly rapid,” could raise “serious and profound questions about the rule of law” and “could have quite serious adverse effects on the Israeli economy.”

Summers spoke with Bloomberg TV, with his comments coming days after Channel 12 reported that the financier had recently been contacted by Prime Minister Benjamin Netanyahu, who lobbied him to back the new government’s proposals. The network reported that the two spoke a few weeks ago for over an hour, with Netanyahu attempting to convince the former US official of the merits of his government’s plan. The premier presumably wanted Summers to push back against assertions from top Israeli economists that the plans to limit the judiciary would harm Israel’s economy.

However, Summers appeared to agree with those assessments.

“There is a strong case for judicial reform in Israel,” he said. “It’s unusual by international standards for judges to be chosen by currently sitting judges. It’s unusual for courts to be able to rule out legislation simply by judging that it’s unreasonable without having a constitution to point to.”

But, he said, “On the other hand it’s very clear from the context of the way this is being done that it is feeling to a large number of people — and a large number of people with the capacity to lose their money in and out of Israel, particularly in the entrepreneurial community — that an overly rapid, not carefully done judicial reform could raise serious and profound questions about the rule of law.

“That, it seems to me, could have quite serious adverse effects on the Israeli economy.”

He added that “judicial reform is appropriate but with a very different process and on a slower track than seems to be envisioned by many in Israel right now.”

At the same time, Summers said he thought “the temperature has to come down on both sides” of the debate.

Summers, who is Jewish, served in the cabinet of former US president Bill Clinton, and was also director of the National Economic Council under former US president Barack Obama. He also served as president of Harvard.

In 2013, Netanyahu sought to nominate Summers as the governor of the Bank of Israel — a post he declined. Both Netanyahu and Summers attended MIT in the mid-1970s.

The government’s overhaul proposal has come under severe criticism across the business sector in Israel, with tech professionals, money managers, and financial institutions warning that it can lead to a brain drain among professionals, the outflow of funds from Israel and a decline in investments from abroad. Former Bank of Israel governors have also warned of its detrimental effects.

It has also faced searing criticism from numerous top current and former jurists, including Supreme Court President Esther Hayut and Attorney General Gali Baharav-Miara.

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