Netanyahu said to call global credit rating firms amid concern over judicial shakeup

Premier reportedly appeals directly to international ranking companies, banks to convince them government proposals won’t damage economy, don’t justify downgrade

Prime Minister Benjamin Netanyahu leads a government conference at the Prime Minister's Office in Jerusalem on January 29, 2023. (Yonatan Sindel/Flash90)
Prime Minister Benjamin Netanyahu leads a government conference at the Prime Minister's Office in Jerusalem on January 29, 2023. (Yonatan Sindel/Flash90)

Prime Minister Benjamin Netanyahu has personally called international credit ratings firms in an attempt to tamp down mounting concerns about the economic impact of his government’s planned judicial overhaul, according to a Friday report.

Netanyahu initiated the calls with senior leaders of the firms and international banks in recent days to try to convince them that the judicial proposals will not damage the economy and do not justify downgrading Israel’s credit rating or withdrawing investments, the Kan public broadcaster reported.

The conversations were unusual because relations between Israel and the international firms are typically managed by the Treasury or the Bank of Israel.

Netanyahu spoke to senior leaders at JPMorgan to try to prevent the release of a memo that warned of a growing risk of investing in Israel due to the government’s plans for the justice system.

The memo came out on Friday, days after Netanyahu pointed to both JPMorgan and fellow US banking giant Goldman Sachs as evidence that the judicial proposals were not chasing away potential investors.

In a video posted to his TikTok channel on Monday, Netanyahu said, “They’re saying that the legal reforms will drive investors away but two of the biggest, leading, most influential investment banks, JPMorgan and Goldman Sachs, are saying the complete opposite.”

“JPMorgan says it’s just noise, Israel’s economy is strong, its institutions are strong, it doesn’t change its assessment,” he said.

“Before the reforms, the economy was strong, and it will be even stronger afterward,” Netanyahu said.

“Stop trying to harm Israel’s economy. I have some news for you: it’s not going to help,” he added in a message aimed at his political opponents.


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In the internal JPMorgan memo, which was first published by Channel 12 news, the company cited both the judicial overhaul plans presented by Justice Minister Yariv Levin, as well as an increase in “geopolitical hostilities.”

The document — which stressed that the views expressed in the memo are indeed the bank’s official positions — compared Israel to Poland, which passed similar judicial reforms and subsequently had its credit rating downgraded in January 2016.

JPMorgan flagged the possibility that the judicial shakeup could put negative pressure on Israel’s credit rating, which it said currently “stands comfortably in the investment grade bucket,” potentially slowing the flow of international investment.

The bank stressed, however, that it expects “the market impact of that to be limited.”

A source close to Netanyahu derided the report as “spin” and said many commentators aren’t knowledgeable about the actual proposals.

“A thousand reports like this won’t help. People will see if it’s worth investing or not,” the source said. “The smart money will come in because what we’re doing is balancing an unbalanced situation. The justice system will remain independent like today, the ‘judicialization’ will decrease and the economy will flourish.”

Netanyahu, who is in France for an official visit, said that he’d met with 60 French business people, who told him, “What they’re saying about investors running away is nonsense. We want to increase our investments in Israel.”

The proposals presented by Levin in December would sharply restrict the High Court’s capacity to annul 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.

Justice Minister Yariv Levin attends a hearing of the Knesset Constitution, Law and Justice Committee, January 11, 2023. (Yonatan Sindel/Flash90)

Last week, Goldman Sachs cautioned that the “growing concern over domestic political developments” puts a focus on the exposure of the shekel.

“The five most recent elections over the past three-year period have had typically limited read-through to financial markets,” Goldman Sachs economist Tadas Gedminas wrote in a report. “This is not to say that the current situation could not have a more meaningful impact this time around, and we will closely monitor ongoing developments.”

“That said, we think these structural changes and their implications for financial markets are underappreciated,” Gedminas warned.

Domestic finance institutions have also been vociferous in their concerns that Levin’s plans may negatively impact the country’s economy.

Israeli bank chiefs last week warned Netanyahu of potential economic fallout from his government’s proposals for a sweeping makeover of the country’s judiciary.

Discount Bank CEO Uri Levin said at the time: “It’s impossible to ignore all the economic figures expressing so much concern over the moves, and therefore you need to stop immediately and only advance changes cautiously and with broad agreement.”

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

Economists at Bank Hapoalim and Leader Capital Markets last week said the news that foreign investors are beginning to take their money out of Israel in response to the makeover of the judicial system led to a sharp drop in the prices of government bonds, share sale in the local market (also by foreign entities) and a considerable weakening of the shekel.

Economy Minister Nir Barkat sought to calm fears on Wednesday, telling the Cybertech Global conference in Tel Aviv that when speaking to contacts abroad, “this issue isn’t even mentioned.”

“I don’t feel that it affects the situation. That’s because investors from all over the world are interested in the best entrepreneurs, ideas, or products and are looking for solutions – as long as Israel can provide that, it will remain a leader,” he said.

On Tuesday, Verbit founder and CEO Tom Livne said he was uprooting his $2 billion hybrid AI-based and human transcription and captioning software company from Israel to protest the government’s plans, and encouraged other tech CEOs to follow suit.

On Wednesday, the Israel-founded insurance tech firm Lemonade said it had also “joined the fight for Israel’s democracy.”

“Together with other leading tech companies, we hope to help make an impact in maintaining Israel’s democracy,” Lemonade co-founder and CEO Shai Wininger said in a statement, without specifying what actions the company will take. Lemonade, now headquartered in New York, trades on the New York Stock Exchange and has a market cap of over $1.2 billion.

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