by Eliav Breuer, Azchy Hennessey, Tovah Lazaroff
Prime Minister Benjamin Netanyahu brushes off warnings of 270 economists that the reforms would damage Israel's economy.
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PRIME MINISTER Benjamin Netanyahu holds last Sunday’s cabinet
meeting at the Prime Minister’s Office in Jerusalem, as Justice Minister
Yariv Levin looks on.
(photo credit: YONATAN SINDEL/FLASH90)
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The political opposition is sabotaging Israel with false threats that
judicial overhaul will harm the country’s economy, Prime Minister
Benjamin Netanyahu said at a press conference on Wednesday evening. “The
opposite is true,” Netanyahu said as he rebuffed charges that a
proposed judicial reform would harm the country’s democratic status and
thus lower its credit rating, reduce foreign investment and prompt major
companies to relocate to other countries.
"The
opposite is true," Netanyahu said as he rebuffed charges that the
judicial reform would harm the country's democratic status and thus
lower its credit rating, reduce foreign investment and prompt major
companies to relocate to other countries.
The
proposed plan will strengthen the economy and judiciary and upgrade
Israel’s “judicial status to that of most of the leading democracies in
the world” by restoring it where it was 50 years ago, Netanyahu said.
He
compared his judicial overhaul plan with the economic reform plan he
put in place close to two decades ago when he was finance minister, in
which he removed “excess” regulation to allow for a more free-market
approach.
“If
there is one major growth engine in the State of Israel, it is the
removal of excess regulation and the removal of excess judicialization,”
Netanyahu said.
The Bank of Israel building is seen in Jerusalem June 16, 2020. Picture
taken June 16, 2020. (credit: REUTERS/RONEN ZVULUN/FILE PHOTO)
He
was joined in the press conference by Finance Minister Bezalel
Smotrich, Foreign Minister Eli Cohen and Economy Minister Nir Barkat.
They
all blamed the opposition for spreading what they claimed were
falsehoods and doomsday predictions in order to intentionally harm the
economy, instead of acting “responsibly.”
“We
reduced government spending, lowered taxes and increased competition
and as a result we got one of the strongest economies in the world and
strengthened Israel’s economy,” Netanyahu said.Cohen, who attended last
week’s World Economic Forum in Davos, said that since entering office
earlier this month, he had spoken with scores of world leaders and none
of them even hinted at concerns over the judicial overhaul plan.
“The
opposite,” he said. “They want to strengthen their economic ties with
Israel,” including six countries that want trade agreements with
Jerusalem. He pointed to the example of Great Britain, which wants to
upgrade its free-trade agreement with the Jewish state.
Even
countries that do not have formal diplomatic ties with Israel want to
increase their contacts with it, particularly because of the country’s
economic prowess, Cohen said.
He
specifically mentioned the 2020 Abraham Accords under whose auspices
Israel has normalized ties with four Arab countries, improved the
economy and led to $5 billion in trade.
Netanyahu
compared the criticism he received to that which had been leveled
against his financial overhaul, as well as against actions he took
during his last tenure as Prime Minister. This included his opening of
natural gas fields, his push for Israel to normalize ties with the Arab
world before resolving its conflict with the Palestinians, and his
leadership of Israel during the COVID-19 pandemic.
“These
days, I am holding public and secret meetings to expand the Accords,
and I am certain that when breakthroughs occur” and this work bears
fruit, it will lead to even more economic growth, Cohen said.
He
added that the current political instability has harmed Israel
economically – and the stabilization brought about by a government that
will remain in power will only help the country’s financial standing.
The
prime minister compared criticism he has received to that which was
leveled against actions he took during his last tenure as leader. This
included his opening of natural gas fields, his push for Israel to
normalize ties with the Arab world before resolving its conflict with
the Palestinians, and his leadership of Israel during the COVID-19
pandemic.
“Over the
years, many people were wrong all along the way,” he said. “The removal
of gas from the ocean, which has received many criticisms and protests
from many, has already brought in tens of billions of shekels a year.
“Today,
everyone is blessed by it, including those who opposed it. This step
was delayed for years due to excess legalization,” he said. “Unnecessary
legal processes delayed important projects for years, such as Highway 6
and the high-speed train between Tel Aviv and Jerusalem. Projects that
made the lives of millions of citizens easier were stopped and delayed
for years. The excess of legalization is like sand in the wheels of the
Israeli economy.”
Smotrich
spoke next, beginning his complaints against critics of the proposed
judicial reform by remarking that “a lie that is repeated a lot
apparently becomes the truth. A billion lies will not become the truth.
“Israel’s
macro data are fantastic due to consistent and good government
policies. Public spending has decreased and its composition is much more
growth oriented than in the past and than in most other countries,” he
continued. “We will continue with the same responsible policy of a
budget biased towards infrastructure and growth.
“We
are working hard these days and formulating a package of huge reforms,
ones that will reduce regulation and bureaucracy and strengthen
competition,” Smotrich said. “Israel is the Start-Up Nation, and
precisely against the background of the uncertainty in the world
markets, the State of Israel will be an island of stability, certainty
and responsibility, and this will be the best place [for investors] to
put their money.”
According
to critics, the proposed reform would severely diminish Israel’s
reputation among foreign investors and negatively affect the state’s
credit rating by severely limiting the legal authority of Israel’s High
Court of Justice.
Economists: Israel's credit rating will be weakened by reform
More
than 270 senior Israeli economists published a letter on Wednesday
morning warning against the proposed reforms. The signees included
experts from all sides of the political spectrum, including Nobel
Prize-laureate Daniel Kahneman.
“We,
lecturers in economics and management, express our deep concern
regarding the government’s actions intended to weaken the judicial
system and public service’s independence, which we think will cause
unprecedented harm to Israel’s economy,” the economists wrote..
Israel’s economy is small yet open, and its attractiveness to foreign investors
is due in a large part to its strong judiciary and public gatekeepers,
which ensure that investors will be shielded from capricious government
decisions, the economists argued. Weakening the judicial system would
“significantly raise” the possibility of a decrease in Israel’s credit
rating – as happened in Poland in 2016, when the credit rating service
P&S explained its decision to lower the country’s credit rating on
its weakening of its judiciary, they said.
The decrease in investments will lead first and foremost to damage to Israel’s “economic engine,” the hi-tech sector,
the economists warned. This, combined with the fact that weakening the
judiciary would lead to a weakening in the defense of personal
liberties, could also lead to a “brain drain.”
In the long term, some of the most oft-quoted papers, including those by Nobel Prize laureates,
show that the concentration of power can lead to irreparable weakening
of state economies, since the power often remains concentrated for
decades, they added.
For
these reasons, the economists “forcefully” warned against the
coalition’s current steps, which would constitute “a fundamental change
to Israel’s governing system and a danger to the future of Israel’s
economy.”
On Tuesday,
following a meeting with the president of the Bank of Israel, Netanyahu
and Smotrich issued a statement to dispel these criticisms, saying that
“the [government’s] intention is to maintain a responsible and
restrained fiscal policy, and its alignment with the Bank of Israel’s
monetary policy in order to preserve and stabilize Israel’s economy for
the next four years.”
Earlier
this week, the S&P credit-rating agency warned that the reform
could have serious consequences for Israel’s rating – a sentiment
supported by several leading experts in Israel, including Prof. Karnit
Flug, vice president of the Israel Democracy Institute and a former Bank
of Israel governor.
“Based
on the experience of some other countries that went in the same
direction, if the government goes ahead with the judicial reform as it
intends, we definitely have a heightened risk of reducing our sovereign
credit rating,” Flug told The Jerusalem Post.
In
response to Wednesday night’s press conference, opposition leaders
accused Netanyahu of not taking the economists’ warnings seriously.
Opposition
leader MK Yair Lapid said, “Netanyahu’s hysterical and perspiring press
conference does not leave room for doubt: Bibi is weak and he knows
that he is leading to severe damage to Israel’s economy. All of Israel’s
citizens will pay for it out of their pockets, and it will be costly.”
National
Unity chairman MK Benny Gantz wrote on Twitter that the prime minister
“disparages the protesters, threatens the attorney-general and cancels
the [Bank of Israel] governor – but the reason to stop the coup d’etat
is not just a dip in Israel’s credit rating or that IDF commanders
abroad will not be [legally] defended – but first and foremost because
it will ruin the basic values upon which the State of Israel was
founded.
“Netanyahu,
history will not forgive you for your destruction of the governing
system and the split you are creating among the people. It is not too
late to stop,” Gantz wrote.
Labor
chairman MK Merav Michaeli said in a video that “two hundred and
seventy of the most senior economists, some of whom Netanyahu appointed,
together with the governor of the Bank of Israel, another Netanyahu
appointee, say that the overthrow of the judicial system is a grave
danger to Israel’s economy. No matter how many press conferences
Netanyahu holds, or how many of his Likud bulldogs he sends to attack
the governor of the bank, the judicial overthrow endangers Israel. We
won’t allow it to pass.”
MK
Avigdor Lieberman said, “The press conference of the prime minister and
the three ministers proves that they are S-C-A-R-E-D, because they know
the truth and understand that no party in the world is ready to swallow
their lies and fabrications. The State of Israel is on the way to a
crisis; an economy the likes of which we have not known for decades, and
everything is Benjamin Netanyahu’s responsibility.”•
Eliav Breuer, Azchy Hennessey, Tovah Lazaroff
Source: https://www.jpost.com/business-and-innovation/all-news/article-729563
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