Offir Gutelzon (in the pink bandana) helps organize the crowd at an anti-Benjamin Netanyahu protest at Crissy Field in San Francisco, Aug. 29, 2020. (Photo/Miri Ekshtein Prager)
Offir Gutelzon (in the pink bandana) helps organize the crowd at an anti-Benjamin Netanyahu protest at Crissy Field in San Francisco, Aug. 29, 2020. (Photo/Miri Ekshtein Prager)

‘No Freedom, No Hi-Tech’: This right-wing Knesset puts Israel’s tech sector in peril

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On Jan. 24, Israeli tech workers took to the streets of Tel Aviv and demonstrated against the overhaul of the judicial system and other radical laws proposed by the new right-wing government.

Many signs read “No Freedom, No Hi-Tech.”

An open letter strongly opposing the proposed judicial overhaul was circulated by Erez Shachar of the venture capital fund Qumra Capital, and was signed by 100 Israeli high-tech leaders.

On Jan. 26, Israel-based payroll processor Papaya Global, worth $3.7 billion, announced it was pulling its funds from Israel because it did not have confidence in its ability to conduct a global business based in Israel.

Israel’s new government is putting forward legislation that will shake the very foundation of Israeli democracy.

Israel lacks a formal constitution, so checks and balances between the branches of government are achieved through a strong and independent judicial and legal advisory system. The judiciary acts as the main protector of the fundamental rights of individuals and minorities.

The proposed laws are designed to remove the checks and balances that constrain the power of the executive branch. The distinction between the executive branch (the prime minister and Cabinet) and the legislative branch (the Knesset) is already blurred in Israel, since the prime minister is the head of the Knesset’s ruling coalition.

The new government seeks absolute control over all aspects of the judiciary and legal advisory functions, thereby concentrating power in the hands of the executive branch.

The first proposed legislation changes how judges are appointed. The appointment of judges is currently entrusted to an independent committee. Throughout its 75-year history, the committee included Supreme Court justices, bar association representatives, as well as ministers and members of Knesset. This proposal will allow the prime minister and his Cabinet to fully control this committee, effectively taking full political control of judicial appointments.

The second proposal will curtail the power of the Supreme Court to invalidate laws passed by the Knesset. Since Israel does not have a constitution, its so-called Basic Laws serve as the safety net to guarantee individual freedoms. According to this proposal, a simple Knesset majority will be able to override any Supreme Court decision.

This will effectively eliminate the authority of the Supreme Court and will leave the prime minister (who controls the Knesset majority) in total control of basic rights for Israeli citizens.

The third proposal limits the authority of the attorney general. The attorney general is one of the most important and influential roles in Israeli democracy. The proposed legislation would neuter the authority of the attorney general to limit the actions of the executive.

The power of the Israeli economy to attract foreign investment depends in large measure on the confidence that investors have in the country’s democratic institutions. Investors need to believe that the system of government operates according to the rule of law, the economy is predictable and stable, and property and intellectual rights of investors are protected by a strong, independent judicial system.

Israel portrays itself as a bastion of democracy in the Middle East. As such, it has attracted investment from around the world seeking to capitalize on its educated workforce, stable economy — and a strong, reliable legal system. More than 50% of Israel’s exports in 2022 were tech-related. Israel’s tech sector depends on the oxygen of foreign capital investment.

Israeli startups are often funded by U.S.-based venture capital firms. And large Israeli venture funds have foreign partners, as well. Any decrease in the confidence the international community has in the Israeli political system threatens this investment stream and consequently the very survival of the Israeli tech sector.

An analyst for the rating company S&P commented that weakening the central and vital institutions or the system of checks and balances in Israel could lead to an increase in the risk of downgrading Israel’s credit rating.

We, Israeli expats from around the world, have formed a grassroots movement called UnXeptable.

The goal of this movement is to demonstrate our support for a democratic Israel. We are mobilizing protests in the U.S. to demand the Israeli government not proceed with these reckless actions that could have destructive economic, social and moral effects on Israel’s future.

UnXeptable S.F. Bay Area will have its next demonstration in support of Israeli democracy on Feb. 5. We will meet at Crissy Field in San Francisco at 11 a.m. All are welcome!

The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of J.

Offir Gutelzon
Offir Gutelzon

Offir Gutelzon is a proud member of the Israeli American community in Palo Alto and a Silicon Valley serial entrepreneur. In 2020, he helped launch the UnXeptable grassroots movement in support of a democratic Israel.

Ben Linder
Ben Linder

Ben Linder is an Israeli American living in Palo Alto. He has been a Silicon Valley serial entrepreneur since 1987 in the database, business intelligence and mobile technology spaces. He is active in Jewish community organizations and serves on the boards of J Street, Footsteps and the Groupmuse Foundation.