What sectors can be affected by the reform?
Workers in the technology industry have participated in the protests and say that this sector will suffer if foreign firms lose their confidence in the legal system and democratic principles.
This reform worries the technology and financial sectors that fear being harmed by a flight of investors.
The proposal may deal “a heavy blow to the economy,” warned two former Bank of Israel governors in a country that sees itself as a nation of entrepreneurs.
Several key figures in Israel’s tech sector — which accounts for 15% of GDP and more than half of exports — have played key roles in protests that have drawn crowds in Tel Aviv and other cities.
Some analysts say that uncertainty surrounding the reform has already weighed on the economy and that since the end of January the value of the local currency, the shekel, has fallen 7% against the dollar.
Dror Salee, a prominent entrepreneur, says the impact is already being felt.
“There is still no data on the drop in foreign investment, which accounts for 85-90% of high-tech investment, but I don’t know of any company that manages to raise investment at the moment,” Salee said.
“Everything we have built in the last 20 to 30 years is collapsing,” added the businessman, who has participated in the protests.
For Omar Moav, professor of economics at the University of Warwick, in the United Kingdom, and at Reichman University near Tel Aviv, “there is a close link” between economic growth and investment and, on the other hand, the democratic system.
“When the judicial system is weakened and the executive can set the rules of the game at its discretion, this opens the door to corruption and uncertainty, two things that scare away investors and markets,” he explained.
The tech sector expanded significantly during Netanyahu’s previous 12-year term, which ended in 2021. That year, the tech sector accounted for 54% of Israel’s exports, according to the most recent figures from the Israel Innovation Authority.
With information from AFP and EFE
