More than 250 leading American financial experts and investors signed an open letter to Prime Minister of Israel Benjamin Netanyahu, warning him that they believe the judicial reforms his government is currently pushing through the Knesset if enacted, will hurt investment in Israel. In saying this the signers backed up the sentiments expressed by the political opposition in Israel as well as a number of leading Israeli business figures.
The authors of the letter, who include former US Treasury undersecretary Jeffrey Goldstein, Gene Ludwig, former comptroller of the currency for the US Treasury Department, former Citigroup foreign exchange head Jeffrey Feig, and many more expressed concern on how investors feel about Israel writing, “Many leaders in the business community will feel compelled to reevaluate their reliance on Israel as a strategic destination for investment, sourcing talent, building engineering centers, and maintaining intellectual property.”
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And on the political and diplomatic front they added, “It will also become increasingly difficult to advocate for and defend Israel internationally.”
They made a personal plea to Netanyahu saying, “Please do not allow your legacy to be the erosion of the country’s identity as the strongest and only democracy in the Middle East, the destruction of the country’s great economic success and the creation of a colossal divide within Israel and in the business world.”
Former governors of the Bank of Israel Karnit Flug and Jacob Frenkel had already expressed such sentiments writing in an op-ed that the judicial reform plan would “deal a severe blow to the economy and its citizens.”
Local businesses have already begun to move funds out of the country. In January, Israeli startup Papaya Global, a fintech unicorn that offers a cloud based platform for companies to handle their payrolls, decided to divest itself of Israeli banks due to the judicial reform plan proposed by Benjamin Netanyahu’s government.
And just last week, Israeli startup Riskified, which offers e-commerce fraud prevention services, announced that the company would withdraw $500 million -all of its cash reserves – from banks in Israel for the same reason.
Massive protests have rocked Israel over the past two months, ever since Justice Minister Yariv Levin revealed the government’s plans to alter the nature of Israel’s judicial system. The government’s judicial reform plan would greatly curtail the power of Israel’s Supreme Court to nullify legislation passed by the Knesset and also limit the authority of Israel’s attorney general. The opposition charges this would harm Israel’s democracy, eroding foreign confidence in the country and hurting its economy. And this is why the country is now on the brink of what some are describing as the biggest societal clash in Israel’s history.
