Four weeks ago, INSS issued its “Strategic Alert,” the first publication of this sort for the Institute. The alert examined the set of threats facing the State of Israel in the wake of the internal crisis caused by the advance of the judicial revolution. Unfortunately, the warning is materializing before our eyes: during Passover we experienced a series of difficult security events in several arenas simultaneously, as well as deterioration on the political level. Now it is the economy’s turn: the Moody's credit rating company lowered Israel’s credit outlook from “positive" to “stable”.
Moody's has rated Israel for almost three decades, during which Israel gradually climbed up the scale, from a mediocre initial rating of A3 in 1995, to a positive A1 in 2018. This is a tremendous achievement that involved on the one hand a consistent and responsible economic policy, which focused on fiscal discipline, economic reforms, and the cultivation of hi-tech, and on the other hand, institutional and regime stability and the existence of an independent and high-quality judicial system. These sources of strength have allowed us to survive both difficult security events (such as the Second Lebanon War) without damaging the economy, as well as absorb external shocks, such as the major economic crisis of 2008-9.
This enormous achievement is currently in danger, not due to an external threat but due to the conduct of the government itself: Moody's economists write explicitly in the sharp report published this past Friday night that the downgrading of the rating outlook reflects the worsening of the government's performance and the deterioration of Israel's institutional-governmental establishment, following the hasty promotion of the judicial revolution without striving for a broad consensus. On the other hand, they give credit to the mass protest that has led to the suspension of the legislation, and also point favorably to the security establishment and Israeli society, which they say are "highly effective checks on the exercise of government power.” Moody's warns that if a broad consensus is not reached and the polarization in Israeli society worsens, then the rating itself may drop, and the Israeli economy would be severely harmed.
It is very disheartening that what we achieved in thirty years of hard work is undermined in three months, in the economic realm as well...
Four weeks ago, INSS issued its “Strategic Alert,” the first publication of this sort for the Institute. The alert examined the set of threats facing the State of Israel in the wake of the internal crisis caused by the advance of the judicial revolution. Unfortunately, the warning is materializing before our eyes: during Passover we experienced a series of difficult security events in several arenas simultaneously, as well as deterioration on the political level. Now it is the economy’s turn: the Moody's credit rating company lowered Israel’s credit outlook from “positive" to “stable”.
Moody's has rated Israel for almost three decades, during which Israel gradually climbed up the scale, from a mediocre initial rating of A3 in 1995, to a positive A1 in 2018. This is a tremendous achievement that involved on the one hand a consistent and responsible economic policy, which focused on fiscal discipline, economic reforms, and the cultivation of hi-tech, and on the other hand, institutional and regime stability and the existence of an independent and high-quality judicial system. These sources of strength have allowed us to survive both difficult security events (such as the Second Lebanon War) without damaging the economy, as well as absorb external shocks, such as the major economic crisis of 2008-9.
This enormous achievement is currently in danger, not due to an external threat but due to the conduct of the government itself: Moody's economists write explicitly in the sharp report published this past Friday night that the downgrading of the rating outlook reflects the worsening of the government's performance and the deterioration of Israel's institutional-governmental establishment, following the hasty promotion of the judicial revolution without striving for a broad consensus. On the other hand, they give credit to the mass protest that has led to the suspension of the legislation, and also point favorably to the security establishment and Israeli society, which they say are "highly effective checks on the exercise of government power.” Moody's warns that if a broad consensus is not reached and the polarization in Israeli society worsens, then the rating itself may drop, and the Israeli economy would be severely harmed.
It is very disheartening that what we achieved in thirty years of hard work is undermined in three months, in the economic realm as well...