Netanyahu’s Proposed Judiciary Overhaul Is Rattling Israel’s Tech Industry
Israel’s Prime Minister Benjamin Netanyahu, who proposed an overhaul of Israel’s judicial system. Photo: Pool | Reuters
Israel’s tech industry leaders are taking steps to safeguard their businesses as Prime Minister Benjamin Netanyahu’s government pushes legislation that threatens to overhaul the judiciary system. Netanyahu’s coalition proposed the overhaul in late January and approved a series of its motions in committee on February 13th. The legislation is now moving through Parliament, and final decisions will roll out in coming months. As protests against these motions escalate, Tech executives look increasingly to the future. They fear that the amount of control awarded to the right-wing government by this overhaul will scare away investors, entrepreneurs, and talent, making Israel a hostile environment for business. Executives are looking at steps to move Israel’s robust tech industry abroad, which could have a detrimental impact on Israel’s economy.
Netanyahu’s judiciary overhaul package includes legislation that gives government officials an automatic majority in selecting supreme court judges. The legislation aims to restrict the Supreme Court’s power to reject unconstitutional laws passed by Parliament. It also seeks to limit the Supreme Court’s power to reject government appointments. The overhaul will reduce the judiciary's power in favor of the current government, which is the most right-wing and religiously conservative that Israel has had yet.
The judiciary in Israel serves as the only real check on its government as Israel does not have a formal constitution, the president only serves in a ceremonial role, and the Parliament has only one house. The proposed overhaul faces widespread backlash from the people of Israel, with hundreds of thousands of people protesting and all political parties expressing concern. President Biden commented, recommending that the government consider compromising before passing these sweeping changes. Many people perceive the overhaul as threatening Israel’s liberal democracy.
Israeli citizens protest Netanyahu’s proposed overhaul. Photo: Ohad Zwigenberg | AP
Israel’s tech leaders and employees demonstrate outrage as the overhaul threatens their industry’s future in Israel. Executives believe that undermining democratic institutions will deter investors, customers, and talent. Netanyahu’s right-wing government proposed demands to segregate people by gender in public and allow businesses to refuse service to LGBT people. Guy Tytunovich, chief executive of CHEQ, a notable cybersecurity company, claims that some of his staff who identify as LGBT requested to relocate in fear of discrimination by the government should the overhaul pass. The overhaul would empower Netanyahu’s coalition to move forward with discriminatory demands, giving Israel a poor reputation in the global business world.
Scaring away the robust tech industry poses detrimental economic impacts to Israel. Around 54 percent of Israel’s exports are tech products and services. The sector also makes up 15 percent of Israel’s GDP. Most of the country’s top earners and corporations come from the tech industry, and in Israel, 81 percent of taxes come from the top 20 percent of earners. Economists are warning Netanyahu that democratic countries do far better economically than illiberal countries and that such an aggressive overhaul can make Israel lose money, power, global influence, and credibility in the business world.
Business leaders wasted no time in safeguarding their companies. They fear that a more controlling government that lacks judicial oversight will demand high taxes and capital controls. Many leaders started moving money abroad and look to move their businesses, startup ventures, and investments abroad too. American tech companies with Israeli subsidiaries are considering not returning, and new Israeli companies are incorporating in the US, which makes cutting ties with Israel easier should the overhaul pass. The future of Israel’s robust tech sector remains uncertain, but strong leaders are taking steps to ensure their businesses' survival.