Martin Wolf, chief economics commentator of "The Financial Times," is one of the world's most influential journalists. In his latest book "The Crisis of Democratic Capitalism," which was published earlier this month, the veteran 76 year old journalist analyzes the relationship between democracy and capitalism, its fragility and how economic and political changes are undermining it.
Wolf wrote the book before Israel's new government began promoting its judicial overhaul, which has already received uncomplimentary comparisons with countries like Hungary and Poland - two countries that are described in the book as "demagogic authoritarian capitalist" regimes.
Wolf spoke to "Globes" last week as legislative procedures on enacting Israel's judicial overhaul moved up a gear, as did the protests against it.
Wolf speaks with an analytical but determined tone while measuring his words. When I ask him how the latest developments in Israel seem to him from his home in London, he opens by analyzing the composition of Israel's coalition government. He says that the combination of the economic right and religious forces in politics including "religious nationalism," is a development that he identifies in other places, including for example the different factions that make up the US Republican party.
He says, "The Republican party is an interesting example, in which you can see religious, political and cultural priorities, combined with a free market economy from the right wing. This is a kind of marriage of convenience. Each side needs the other, even though they are not natural partners, and there are clear tensions between them. But together, they can form a majority from different groups of voters.
"In Israel's case, there are a number of powerful consequences of this. Everybody (in the coalition) agrees on several things. Most likely they agree on a policy of annexation, or something close to annexation, regarding the occupied territories, or the West Bank, whatever you call it. They also agree on emphasizing the Jewish character of the state, and on their difficulty with Arab citizens of Israel. And most importantly - they agree that the judicial system and legal restrictions are an obstacle to what they want to do.
"On the other hand, I don't know how much they really agree about the free market approach that the Likud adopted under Benjamin Netanyahu. And I don't know, of course, to what extent Netanyahu shares the demands of the religious regarding the nature of the law that should replace the (existing) law. So this is clearly a complicated coalition, as with the Republicans: Is what is important to you low taxes or abortions? In its general lines, the coalition seems familiar to me from other places, and it is complex and dangerous.
"And of course, in the Israeli case, it has profound consequences regarding the rule of law, peace, civil harmony at home, and regarding the character of the state. Will it remain a liberal democracy, or will it become what is commonly called an illiberal democracy, which I think should be called a lawless state?"
Several days after being interviewed by "Globes," and following reports that Netanyahu had held a round of talks with leading foreign media figures to gauge support for his judicial reforms, I asked Wolf if he too had received a call from Israel's prime minister. "The answer to the question is yes. Mr. Netanyahu called me," but he hastens to add that he would not divulge any details about the call. "I will only mention that his aim was of course to defend the reforms as a rational response to the excesses of the judicial branch in Israel, which are partly explained by the way the judges are selected. My own opinions were expressed in my interview with you."
"Unexpected measures - worrying"
How do the possible results of the reforms in Israel fit in with the broader pattern that you describe in your book?
"One of the characteristics that we see is not a new thing but a very old trait of demagoguery, which insists that the will of the people, as it is reflected by a temporary majority, is absolute, and that any obstacle to the expression of the desire of the people, as it is set by the party leadership that puts together this majority, is an illegitimate and even traitorous obstacle.
"The obvious problem with this is that the entire democratic system is based on significant legal and institutional limits on what those who hold a majority in parliament can do. If they could do whatever they wanted, that would mean they could also take over the judicial system, and use it to persecute and harass their enemies. They could take control of the bureaucracy and use it, through the management of their appointments, against their opponents, to undermine the elections, or to change the election rules. Along the way, they could suppress the civil rights of everyone, but especially of the people who oppose the policies led by the government."
He continues, "We have seen it all over the world. For example in Turkey, Hungary and Russia, although it was never very democratic. We have seen an attempt to give absolute weight to the temporary will of the majority, while at the same time undermining independent core institutions. What Viktor Orban called illiberal democracy, which often turns into the rule of one person or at least one party, is clearly not democracy in any form. We see it in many places, and what is happening in Israel is somewhat similar."
However, Wolf does add some clarifications. Of course, in a democracy there must be a balance between the right of the majority to legislate and the protection of the rights of the minority, "and the law should also have limits - they did not elect the lawyers to run the country." In the same breath, he is also quick to point out similarities between Israel and Britain - neither has a written constitution, and the legislators have a lot of power. In both countries the functioning of institutions depends, "and has always depended" according to him, on the fact that the legislators who have a majority, will simply show self-restraint.
As somebody who follows the Israeli economy from afar, and has also visited here over the years, what in your estimation will be the impact of the legislative initiatives currently being promoted on the economy?
"I don't follow the Israeli economy on a day-to-day basis but my impression is that at least in terms of growth and GDP, it is very successful, and Israel has become famous worldwide, and justifiably so, due to the success of its high-tech innovation and its entrepreneurship. It is my impression that it also has many of the problems of other countries, in the sense of creating good jobs and good income for everybody.
"And of course, Israel is a small and open economy, which depends on trade and foreign investments. I think that the government itself is concerned that it might be perceived as moving towards arbitrary rule. That is, a lawless government that will endanger security and stability for investors - Israelis and foreigners. And the wider implications of this kind of policy may even affect international relations, especially with the current US administration and the Europeans. There is a feeling that something is happening in Israel that takes it out of the accepted Western norms of the rule of law, and this is separate from the widespread concerns about the effect of all this on peace with the Arabs. So it is financially dangerous. How could it not be?."
I personally have no idea how investors will react," Wolf stresses. "And let's be clear, investors are certainly prepared to invest in authoritarian countries, if they think that those countries are managed well and are friendly to investors, and the legal system will protect them, that they personally will be safe and the entire system will be stable. Singapore, for example, is one of the most successful countries in the world - it has the rule of law, but of course it is a country with one political party. So it would be wrong on my part to say that these measures will necessarily scare away foreign investors. But the risk is there. And the more arbitrary and unpredictable the new government seems, and the more internal unrest and unrest with the Arabs - the more worried I would be."
On top of all this Wolf adds, "The Israeli economy ultimately relies on Israelis and especially the talent of its very educated and sophisticated people who are creating all these new businesses. I wouldn't want to presume to talk on their behalf but it would be no great surprise if from all sorts of points of view, and not just the legal one, these people will start to look at what is happening around them and say to themselves - 'This does not look like a very friendly country to me.'
"It can be assumed that all these types of people, without any exceptions, have opportunities abroad. This is perhaps the biggest concern of the government, or at least those in the government, and I am absolutely certain that Netanyahu himself is one of them, that wants Israel to economically prosper."
On a personal level, how does Wolf as a Jew, feel about the events taking place in Israel? He answers carefully. "I follow the policies and I am emotionally and morally vested in the future of Israel. How can any intelligent Jew not be? My father's family, which survived the Holocaust, he recounts, immigrated to Israel "I have relatives that I love very much in Israel," he points out. "And on the other hand I have not immigrated to Israel and I do not bear any risks or costs. So it would be very improper for me to give Israelis advice on how to live and conduct their lives. Therefore, I am very cautious.
"But of course as a liberal and fairly secular European Jew, I want Israel to be a liberal democracy and that means equal rights for all citizens, and I hope that there will also be a solution to the problem of the occupation and peace that will satisfy everyone. This is incredibly important to me morally that (Israel is) a wonderful story and great achievement which many feel proud of - but they watch what is happening 'with concern.'
"I have no doubt that the preservation of liberal democracy means a country with checks, with a prosperous and strong rule of law, and a system that protects the political and economic civil rights of all its residents - in full. And if it is under threat, as many Israelis I know and trust tell me - of course I am very worried."
Published by Globes, Israel business news - en.globes.co.il - on February 19, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.