Upping the Ante - Moody’s Special Report a Day After the Controversial Legislation | INSS
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Home Posts Upping the Ante - Moody’s Special Report a Day After the Controversial Legislation

Upping the Ante - Moody’s Special Report a Day After the Controversial Legislation
Manuel Trajtenberg
26 July, 2023
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Moody’s latest special report on Israel reminds me of the proverb "You may be able to fool some of the people some of the time, but you can't fool all of the people all the time." Prime Minister Netanyahu personally pledged to Moody's that the bills pertaining to the “judicial reform” will be enacted (if at all) only with broad support. Based on this promise, Moody's moderated the tone of its last report in April 2023, and did not lower Israel's credit rating. The extreme version of the bill annulling the “reasonableness” cause passed its last reading in the Knesset on July 24, in spite of huge protests against it. Not surprisingly, barely a day afterwards the rating company issued us an unequivocal “red card,” and in-between the lines one can easily recognize the above proverb kicking in – indeed, one cannot fool them all the time: the Prime Minister's loss of credibility towards the rating company translated right away into a loss of confidence towards Israel's economy, simply because the direction of the economy is determined by a government that does not honor its commitments.

The price it exerts on us is already evident: investors are reluctant to come forth, the gap between Wall Street and the Israel stock market continues to widen, the dollar soars and with it the prices of most of the products that we consume. But the big damage is still ahead - investments in high-tech shrunk dramatically during the first half of the year, and even worse, 80% of the new start-ups were registered abroad and not in Israel. All of this will necessarily lead to a slowdown in economic growth, and therefore to lower a standard of living.

What happens in the economic realm repeats itself elsewhere: the reluctance to invest in the Israeli economy as a result of the loss of trust is similar to refraining from volunteering for reserve military service for the same reason. The consequences are also similar: the damage over time to economic growth from diminished investments resembles the harm to IDF’s fighting capabilities from the reservists’ abstention - in both cases the deterioration is gradual, but when it manifests itself in full it is already too late. In the past we have gone through situations in Israel where we had to pay an economic price for the sake of enhancing security, and we did that without hesitation. This time a deliberate action relentlessly pursued by the ruling coalition is harming Israel’s national security, the economy and social resilience - does the realization of a far reaching and controversial judicial agenda justify us paying such a price?! I doubt it…

Topics: Economics and National Security, The Judicial Overhaul: Social Solidarity, The Judicial Overhaul: The Civilian Arena, “The judicial revolution”
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