2023-04-25 22:12:58
Last week, tens of thousands of Israelis again took to the streets of Tel Aviv and various cities across the country for the sixteenth consecutive Saturday to join the largest protests in Israel since the summer of 2011. At that time, hundreds of thousands of calls outraged They demanded for weeks more “social justice” after the disproportionate increase in the cost of living, especially housing, which continues to be an unattainable right for many citizens, especially for the poor. for Tel Aviv o residents of Tel Aviv, the third most expensive city in the world –behind only New York or Singapore–, according to the latest world index of the cost of living published by The Economist.
Netanyahu promised order and security, but Israel is experiencing episodes of violence on almost all its fronts
Further
Almost 12 years after those more promising than fruitful demonstrations that led to the birth of parties like Hay Futuro (Yesh Atidin Hebrew) and whose leader, Yair Lapid, became prime minister months before the last elections –the fifth since 2019–, Tel Aviv is once again the epicenter of social unrest, this time aggravated by what the Israelis consider the latest existential threat to their democracy: reform of the judiciary.
Promoted last January by the ultranationalist Executive of Benjamin Netanyahu, the amendment would limit the ability of the Supreme Court to revoke the decisions made by the legislature and the executive, weakening in fact the separation of state powers.
“By continuing with the judicial coup, the government is opening a deeper rift within Israeli society, damaging Israel’s economy and security,” protest organizers said on Saturday, who have not let up after more than four months. and despite the announcement made by the prime minister at the end of March to freeze, at the request of the president of Israel, Isaac Herzog, and until after the Jewish Passover, the processing of the law to seek a proposal agreed with the opposition.
“The risk is that if the ongoing negotiations do not bear fruit and the government decides to go ahead, the rating agencies could even downgrade the credit rating to negative,” former Bank of Israel Governor Karnit Flug said last Thursday after learning of the latest report by the risk rating agency Moody’s, in which the North American entity has already lowered the outlook for the country from positive to “stable”.
catastrophic consequences
“The way in which the Executive has tried to implement a far-reaching reform without seeking a broad consensus points to a weakening of institutional strength and the predictability of policies,” the agency’s analysts warned in a statement.
And not only institutional weakening, because after the latest Moody’s report was released, the Israeli shekel traded at 3.66 to the dollar and 4 to the euro. Moreover, in the long term the rating agency warns of “the risks to Israel’s economic prospects, particularly capital inflows into the high-tech sector,” which is the country’s main engine of economic growth, contributing 49 % of total exports and generating around 15% of GDP in 2022.
Also, earlier in the month, the OECD pointed to a moderation in the rate of economic growth noting that the risks are also “related to high global and national uncertainty”. The organization forecasts a slowdown in Israel’s GDP, which would go from a rate of 6.4% last year to 3% in 2023 and 3.4% in 2024.
Less rosy prospects than in previous years and which could be aggravated if the Moody’s agency ends up lowering the credit rating to negative. “This would imply higher borrowing costs for both the Israeli government and the private sector. The government would have to spend more on debt service, raise taxes, or spend less on social services such as education, health, or investment in infrastructure, which will hurt each and every citizen,” observed the former Bank of Israel governor. Karnit Flug, who recommends that Benjamin Netanyahu’s government “read Moody’s report more prudently and take it as a warning.”
For the moment, from the most ultra-right wing of the Executive they turn a deaf ear. Finance Minister Bezalel Smotrich went so far as to affirm that the US agency’s decision to cut Israel’s credit rating outlook “was not a big drama” and reiterated his position: the government’s plan to reform the judiciary will help to the economy.
“What worries me most about the current situation is that the Finance Minister is not worried,” said Karnit Flug: “I think that this reaction shows that the risk to the economy derived from the progress of the judicial reform has not been internalized if not a broad agreement is reached.”
Netanyahu falls in the polls
While the government and opposition continue negotiations to reach such a consensus, the alleged judicial reform is already costing Netanyahu his collapse in the polls. According to the latest poll by the public station Kan, 60% of Israeli citizens say they do not feel represented by the current Executive, while 53% believe that judicial reform is detrimental to the country.
In another survey published by the daily Maariv, The current government coalition, led by Benjamin Netanyahu and made up of an amalgamation of far-right and ultra-Orthodox parties, would not revalidate the government if elections were held again today, adding only 47 seats compared to the 64 it currently has in a Knesset or Parliament of 120 deputies. Likewise, his party, the Likud, would not be the most voted this time either, achieving only 26 seats compared to the 32 it currently has. It could even be surpassed by the center-right National Unity party, led by former Defense Minister Benny Gantz.
On the other hand, the formations that make up the opposition bloc would bring together 68 deputies, a sufficient majority to govern, with Gantz at the helm. Since the former general decided to make the leap into politics in 2018, he has progressively established himself as a moderate and centrist figure capable of gaining support on both sides of an increasingly polarized political arc.
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