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Bank of Israel head to meet PM amid rating agency concerns

Levin said unfazed by protests against judicial overhaul, unwilling to compromise

Report says High Court’s Deri ruling made coalition more determined; Smotrich said pushing to hasten process as questions grow on economic impact; Herzog announces space for dialog

Justice Minister Yariv Levin speaks in support of Aryeh Deri during a Shas party meeting, at the Knesset on January 23, 2023. (Yonatan Sindel/Flash90)
Justice Minister Yariv Levin speaks in support of Aryeh Deri during a Shas party meeting, at the Knesset on January 23, 2023. (Yonatan Sindel/Flash90)

Justice Minister Yariv Levin and Prime Minister Benjamin Netanyahu are undeterred by the public outcry and protests over their planned overhaul of the judicial system and have no intention of backing down, Channel 12 reported Monday, citing unnamed sources in the coalition.

The report followed massive demonstrations against Levin’s plan, which critics warn will undermine democracy, and came amid indications from the opposition that it was seeking to negotiate in a bid to reach a consensus on the matter.

However, Channel 12 reported that Levin is determined to push through the overhaul in its original form and has no intention of compromising. The report said that he was giving indications of a willingness to talk in order to calm the waters and buy himself time to prepare the legislation.

The report also quoted a source close to Levin as saying he would be willing to consider some changes — implying that they would be relatively minor — only if the opposition supported the overhaul in the Knesset, an unlikely scenario.

As presented by Levin, the coalition’s proposals 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.

Channel 12 said that last week’s recent decision of the High Court of Justice to bar Shas leader Aryeh Deri from serving as a minister due to his past corruption convictions had made Netanyahu and Levin even more determined to push through the sweeping reform in its entirety.

Israelis protest against the planned judicial overhaul, in Tel Aviv, January 21, 2023. (Tomer Neuberg/Flash90)

They are planning to send the bill for its first reading in several weeks, the report said, with a further gap between the second and third readings to ensure the legislation cannot be challenged as having been enacted in a rushed process.

Levin has called the proposals “the first stage” of his planned overhaul; further changes with additional ramifications would reportedly be enacted at a later stage.

Levin’s proposals have drawn intense criticism, even from longtime proponents of judicial reform, and have sparked weekly mass protests and public petitions by various officials, professionals, private companies and other bodies.

Over 100,000 people demonstrated against the overhaul in Tel Aviv on Saturday night, with thousands more at other demonstrations including in Jerusalem, Haifa and Beersheba. Thousands of workers in the tech sector announced an hour-long strike for Tuesday.

Israelis protest Israeli Prime Minister Benjamin Netanyahu and his his far-right government that his opponents say threaten democracy and freedoms, in Tel Aviv, Israel, January 21, 2023. (AP Photo/Oded Balilty)

The Channel 12 report said that while Levin was not in a rush, there was mounting pressure to push the law through quickly from Religious Zionism MK Simcha Rothman, the head of the Knesset Law, Justice and Constitution Committee, at the behest of party leader Bezalel Smotrich.

Smotrich, who is finance minister, is facing increased questions about the economic impact of the judicial overhaul.

Bank of Israel governor Amir Yaron is expected to meet with Netanyahu soon to express his concerns about the possible impact, the report said, noting that the bank had sent the Finance Ministry a list of concerns raised by international ratings agencies.

Two former Bank of Israel governors, Karnit Flug and Jacob Frenkel, said this week that the government’s plans for a sweeping overhaul of the country’s judiciary could negatively affect Israel’s credit rating and “deal a severe blow to the economy and its citizens.”

Finance Minister Bezalel Smotrich leads his Religious Zionism faction’s meeting at the Knesset, January 23, 2023. (Yonatan Sindel/Flash90)

Advocates of the shakeup say the court is overly interventionist and subverts the will of the electorate.

Earlier Monday, opposition leader Yair Lapid said he had urged President Isaac Herzog to set up a commission to come up with a “balanced” judicial reform and that the president was considering the idea.

Speaking at a meeting of his Yesh Atid faction in the Knesset, Lapid said he had “proposed to President Herzog that he form a presidential committee to offer a balanced and reasonable recommendation to improve the judicial system and find the proper balance between the legislative and judicial branches.”

Lapid said Herzog was “considering the proposal” and that he expected such a panel would be established. “I hope and believe the committee will be formed and will prevent the destruction of our democracy and the terrible division among the people of Israel,” Lapid said.

In a statement confirming his interactions with Lapid and others, Herzog’s office added: “The president continues his ceaseless efforts with all relevant actors in a bid to create a wide-ranging respectful dialogue in the hope of reaching a broad understanding.”

Head of the Yesh Atid party Yair Lapid speaks during a faction meeting at the Knesset, on January 23, 2023. (Yonatan Sindel/Flash90)

Lapid’s initiative drew some criticism from fellow members of the opposition.

Labor chairwoman Merav Michaeli slammed Lapid for what she said was a concession to Netanyahu and his government’s planned reforms.

“Making offers to Netanyahu, be it directly or indirectly through a mediator, is caving in,” she said.

Yisrael Beytenu chairman Avigdor Liberman said that “there is no room for compromise on the issue.”

Lapid, in turn, defended his actions by denying he was making an attempt to reach a compromise with the coalition.

On Tuesday, Herzog announced a plan for the President’s Residence in Jerusalem to serve as a forum for conflict management and discussions on contentious issues, stating that the location was “the only place that holds the trust of all parties in Israeli society.”

Herzog did not provide specific details on how the program will be implemented, but said that active steps will be taken to exchange opinions, deal with disputes and have substantive dialog. The president has faced criticism over his perceived inaction on the judicial overhaul, and protests outside his residence in Jerusalem have drawn thousands in recent weeks.

File: President Isaac Herzog at the Federation of Local Authorities conference in Tel Aviv, December 6, 2022. (Tomer Neuberg/Flash90)

Last Wednesday, the High Court ruled that Netanyahu could not appoint Deri to ministerial office — citing Deri’s multiple convictions and recent apparent deception of a lower court — requiring the prime minister to fire him, which he on Sunday.

On Monday, Netanyahu and other coalition chiefs attended the Shas party’s weekly Knesset faction meeting, at which Netanyahu reiterated that he was seeking a way to “return Aryeh to his appropriate place… as soon as possible.”

“Harm has been done to the principle of the will of the majority, and we must fix this,” Netanyahu said, pledging to restore Deri to the cabinet table and saying it was just “for right now” that Deri isn’t a minister.

“It’s the wrong decision… that coerced us into a situation in which Aryeh Deri is not leading as a minister in the government,” Netanyahu said.

Prime Minister Benjamin Netanyahu speaks at a Shas party faction meeting at the Knesset, with Shas leader Aryeh Deri seated at his side, on January 23, 2023. (Yonatan Sindel/Flash90)

The premier connected Deri’s dismissal to the broader fight against the judiciary, saying his government was facing “a flood of false propaganda” against its sweeping reform plans, “but we won’t let them win.”

“We haven’t come to end democracy,” he said. “We’ve come to save democracy. What is democracy? Rule of the majority and respect for individual rights.” He added that the way to ensure that the majority respects individual rights is an appropriate balance between the three branches of government. “This balance has been violated in recent years,” he argued.

Deri attacked the judicial system for not giving the government an earlier indication that his ministerial appointments would be shot down.

“No one warned the prime minister that he was working under an ‘extreme lack of reasonableness,'” Deri charged, referencing the High Court’s basis for disqualifying him, despite the fact that his appointments — as interior and health minister — had been “discussed for a full month” before they took place.

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