Dr. Michael Sarel, head of economics at Kohelet Policy Forum, the right-wing think tank that has promoted change in Israel’s legal system, supports reform of the system, but warns of the political and economic consequences of the changes currently being legislated. Sarel supports a compromise that will "fix the severe flaws in the system of checks and balances in the current regime in Israel, without significant exposure to future damage to the character of the regime."
Sarel published an open letter this morning warning of the constitutional and economic fallout from the legal reform as currently proposed by Prime Minister Benjamin Netanyahu’s coalition.
Dr. Sarel was formerly chief economist at the Ministry of Finance and at insurance and finance group Harel. He resigned from the Ministry of Finance in protest against the zero VAT policy for first time homebuyers of then minister of finance Yair Lapid, and is thought of as someone who speaks his mind.
In his letter, Dr. Sarel writes in praise of liberal democracy and strict separation of powers in order to safeguard human rights. "The birth of the doctrine of separation of powers marked the transition from barbaric use of power in authoritarian societies to the civilized exertion of power in liberal-democratic societies. The separation of powers rests on a system of legal-political relationships between branches of government characterized by checks and balances that prevent the abuse of power by one branch," he writes.
Sarel does not cast doubt on the notion that there is currently a problem in Israel of excessive judicial activism: "Those who support the legal reform are right in their criticism of the flaws in the system of checks and balances in the current regime in Israel. They are also right in laying the main blame for these flaws on the judicial activism that has developed in Israel in the past few decades."
The problems that Sarel identifies are the majority that judges and lawyers have on the judicial selection committee, the unrestricted right of standing before the Supreme Court, the court’s unilateral declaration that the basic laws passed by the Knesset amount to a constitution, the invalidation of legitimate administrative decisions, and excessive powers of the attorney general.
Nevertheless, in Sarel’s view, "The specific reform being proposed is not the one required. The proposed reform will create a situation in which there will be no separation of powers, in that it subordinates the legal system to the will of the coalition. Through government ministers, the coalition will be able to ignore the advice of the legal advisers and advance policies as it sees fit. This proposal could be reasonable, and even very desirable, but only when at the same time there exists a powerful and independent court. Under the proposed reform, however, that will not be the situation."
Sarel writes that the government’s reform gives almost unlimited power to the coalition, and that this is liable to lead to interference with the electoral process, such as by disqualifying parties and candidates and suppressing the media. "When there is no separation of powers and the coalition has almost unlimited power, it is reasonable to suppose that it will want to use that power to raise its chances of political survival," he writes, and adds "A democratic system in which the ruling regime represents the view of the majority of the public but in which there is no proper separation of powers will find it hard to survive for long as a democracy. It is no coincidence that the saying ‘all power tends to corrupt; absolute power corrupts absolutely’ has become a truism of political science."
In Sarel’s view, the economic consequences of the reform are secondary to the political ones, but "If the reform paves the way to severe damage to liberal democracy, in the medium term there will also be severe damage to the economy. Furthermore, since investors’ and consumers’ expectations for the future affect the economy in the present, the harm to the economy will precede the harm to democracy."
Sarel sees a good reform as one that will bring about a situation in which "governance improves, the political confrontation between different camps moderates, power struggles between branches of government die down, the rule of law is strengthened, and business certainty will grow."
Sarel further writes, "The Kohelet Policy Forum of which I am part acts to secure the future of Israel as the nation state of the Jewish people, to strengthen representative democracy, to expand individual freedoms and to deepen the principle of the free market. In this context, it is important to refrain from damaging liberal democracy, which will ultimately also lead to harming individual rights and weakening of representative democracy."
"The economists' warnings are not political but professional"
The Economists Forum issued a statement supporting Dr. Sarel, "The regime coup is causing enormous damage to Israel's economy. The economic damage is severe and is expected to intensify significantly if the legislation in the Knesset is completed.
"The economists congratulate Dr. Michael Sarel, senior economist of the Kohelet Forum, who has joined the hundreds of economists, in Israel and around the world, the rating agencies, international organizations, investors and high-tech people, who have been warning for months about the unprecedented damage to the economy.
"Furthermore, Dr. Sarel's warnings demonstrate that the economists' warnings are not political, but purely professional warnings, and ignoring them could push the Israeli economy into the abyss."
Published by Globes, Israel business news - en.globes.co.il - on March 8, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.