Judicial Reform in Israel and its Impact on the Economy

The long-term impact of the judicial reform process in Israel and the opposing demonstrations is not yet known. If the thought of extracting your existing investments in Israel has crossed your mind, or if you're holding back on future investments due to the potential negative impact of the judicial reform process, you should at least keep the following in mind – the adamant and violent response to the process being led by the Netanyahu government is not necessarily about the reform itself or its supposed danger to democracy, but rather about ousting Netanyahu and toppling his government.

On May 24th, 2020, the Netanyahu Trial began after being indicted for breach of trust, accepting bribes, and fraud – this, following a police investigation that began in 2016. The accusations and trial have stirred up quite a debate in Israel, some calling for his removal from power, yet on December 29, 2022, he formed a new government (his 6th) with a significant majority of 64 Mandates.

Some claim that the current demonstrations have been planned for some time, and that despite their stated goal of preventing Israel from becoming a dictatorship, following the judicial reform process, their true agenda is ousting Netanyahu for good. And there is some evidence upon which this claim is made. In March 2020 a group called Forum 555 Patriots was established to "address" the fact that the Prime Minister was accused of breach of trust, accepting bribes, and committing fraud, as explained by its leader, Guy Poran, in an interview on Israeli TV Channel 14, which took place on July 23, 2023.

The interview centered on a video conference this Forum held in July 2020 with former Prime Minister Ehud Barak where it appears plans were made to ignite civil unrest, which would lead to violence and the toppling of the government, after which Barak himself might take the lead.

In that video conference (the following is my own translation and summary), Barak guides his listeners to avoid using the term "Leftist" and instead call themselves "democrats" so that even people on the Right will support their cause. He goes on to explain that their struggle should rely on four main principals – security above all, unity of the people before unity of the land, the Declaration of Independence is de-facto Israel's Constitution, and Israel's achievements are due to its citizens, not Netanyahu. 

Barak specifies that greater violent interactions with the police will only strengthen the protesters' cause, especially if protesters suffer from irreversible injuries.

When asked how likely it would be for him (Barak) to repeat his success in 1999 (when he won the elections), he responded that if Netanyahu happened to disappear and things escalated with Hizballah or Iran, he would be a better fit than anyone else to lead the country. He continued with a story about what a friend of his once told him – that he (Barak) would be called upon when bodies of Jews, killed by other Jews, floated in the Yarkon river (near Tel Aviv). 

In a Forum 555 discussion that took place two years afterwards, in 2022, Guy Poran summarized Barak's points: "his response, in summary, was that you, former Air Force pilots, who are a strong brand in Israeli society, you need to find among you a significant group that's willing to plan and execute provocative actions, on the border of illegal, which will draw public attention and ignite a large revolt."

There are different views on whether the judicial reform in Israel will be better or worse for the country, but the question is – does this debate justify violence and efforts to hurt the economy? When determining your next steps in this market, it would be prudent to focus on the fundamentals of the economy and on facts, as opposed to being impacted by baseless claims about dictatorship, made by people who appear to have a different agenda altogether.

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