Prof. Nouriel Roubini, one of the few economists to forecast the US financial crisis of 2008, has published a poignant op-ed article on the Project Syndicate website opposing Israel's judicial reform. Six months ago he signed a petition against the judicial overhaul legislation signed by hundreds of senior economists in Israel. Roubini is Emeritus Professor at New York University's Stern School of Business and founder of Roubini Macro Associates economic consultancy. "Time" magazine chose him as one of the world's most influential figures in 2009.
In the op-ed article entitled "Israel's slippery slope," Roubini explains, "My current visit to Israel has coincided with a period of unprecedented political turmoil. A radical right-wing government’s package of legislation to disempower the judiciary has started to be adopted, leading many to worry that this great country’s robust liberal democracy is being eroded."
"Since Israel lacks a formal written constitution, it is crucial that it maintains an independent Supreme Court and judiciary. That, after all, is what makes a democracy liberal - not just free and fair elections but also rule of law, protections for minorities, and appropriate checks and balances on executive and legislative power."
He stresses that the judicial overhaul not only has implications for Israel's democracy but also poses a threat to Israel's economy, labor market, national wealth and security. "The government's reforms will gradually move Israel to becoming an illiberal democracy of the kind one finds in Turkey and Hungary. The long-term damage to the economy could be so severe that, if the government's judicial coup continues, this vaunted 'start-up nation' could turn into a 'fall-down nation' with severely diminishing economic prospects."
Prof. Roubini says that one of the opponents to Israel's judicial overhaul is one of the most active and significant sectors of the country's economy - the tech sector. "Israel's tech firms account for 50% of exports, 25% of government revenues, 400,000 well-paid jobs and over 20% of GDP (when accounting for their effects on other sectors."
In contrast he adds, "Ultra-Orthodox men supporting the coalition do not serve in the army, do not learn science subjects, are not an important members of the labor force and hardly pay taxes. Yet they receive major grants that grow according to the size of their family."
Roubini refers to the Israeli and foreign companies that have decided to withdraw their money from Israel and claims that this trend is also likely to soon effect Israel's credit rating. "The government's plans thus amount to a time bomb, because rating agencies could soon see fit to downgrade Israel's creditworthiness. If tech and other firms move abroad, the government's revenue base will shrink, making the growing transfer payments to the ultra-orthodox impossible."
Roubini concludes, "Israel perhaps needs judicial reform but without a formal constitution, these changes must be implemented with the support of a broad coalition and not by a narrow parliamentary majority controlled by extreme anti-democratic and theocratic parties. One hopes that Likud and its leader, Prime Minister Binyamin Netanyahu, will recognize that they are undermining not only Israel's democracy but also its economy, free market, national wealth, and security."
Published by Globes, Israel business news - en.globes.co.il - on August 1, 2023.
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