Israel’s looming constitutional crisis: What’s the tech sector going to do about it?

Israeli governments have long boasted about their country being an international tech haven. Israeli leaders across the political spectrum brag about national feats including the invention of the gastrointestinal pill camera, USB sticks, and even cherry tomatoes (though many argue the small fruits cannot be attributed to Israeli prowess).

Nonetheless, the Israeli government won’t be feeling tender toward the technology sector this week after hundreds of tech workers in Tel Aviv held a strike Tuesday to protest the Netanyahu coalition’s democratic backsliding. This comes after more than 120,000 Israelis took to the streets in Tel Aviv – and thousands more across the country – on Saturday night to protest the government’s proposed judicial reforms.

With many from the robust tech sector joining the anti-government cause, what's at stake for Benjamin “Bibi” Netanyahu’s government – and the country?

What triggered the unrest? The current demonstrations – the largest in over a decade – were triggered after the far-right government, led by Netanyahu, announced a series of bills that would allow the Knesset, Israel’s parliament, to override decisions made by the High Court. Moreover, the government is seeking to limit the ability of nonprofits and social activists to file petitions against its legislative decisions and to give itself more power to appoint judges.

Saturday Night’s Alright for Fighting. Saturday night is protest night in Israel. Over the past three weekends, Tel Aviv has seen the number of demonstrators jump from 20,000 to roughly 120,000. Crucially, smaller protests have also spread to Jerusalem, home to a greater number of religious Jews typically more sympathetic to right-wing priorities.

Importantly, many protesters would in fact support some changes to the separation of powers structure in Israel but don’t trust the government’s ram-it-through process.

“You don’t need to be left-wing to be concerned about what’s happening to the courts,” says Ittay Flescher, 44, who attended the Jerusalem protest and is the education director at Kids4Peace, a non-profit aimed at building bridges between Israeli and Palestinian youth.

“There is room for reforming the top court,” he says, referring to the absence of constitutionally protected rights in Israel, but adds that “it's hard to take [the government] seriously when two of its senior ministers have recently been tried or convicted” for tax fraud and corruption.

The government, for its part, says it isn’t backing down and hopes to pass this slate of legislation by spring. Still, the stakes couldn’t be higher.

Tech matters. On Wednesday, hundreds of top Israeli economists warned that the reforms would "cripple" Israel's economy. This comes just days after two former heads of the Bank of Israel sounded the alarm, saying that the government’s plans to overhaul the judiciary could negatively impact the country’s credit rating, making the scrappy start-up hub less attractive to foreign investors.

Indeed, that would be a big deal for a country where foreign direct investment accounts for 4.4% of GDP. (Consider that for Australia, the UK, and India, foreign investment accounts for 1.9%, 0.7%, and 1.4% of GDP, respectively.) To be clear, there’s no way to know what impact these reforms would have on Israel’s investment climate – particularly at a time when Big Tech is in shambles globally. But as a rule of thumb, tinkering with the rule of law doesn’t bode well for a country’s funding prospects – just ask Hungary!

For Neri Zilber, a Tel Aviv-based journalist and policy advisor at the Israel Policy Forum, such fears are well-founded. “There are genuine concerns about Israel’s credit rating, investor climate, and potential brain drain,” Zilber says, adding, “Netanyahu is banking on the fact that they will pass legislation and the next day the sun will still rise over Tel Aviv and over the Mediterranean,” but that’s a risk in a country where tech workers account for just 10% of the workforce but 25% of all income taxes.

Still, not everyone is on board with the protests – even if they might think the government is overreaching. “Many people feel like the protests are in some bubble inside Tel Aviv and it won’t help to change things," says Noam Ariel, 28, a nursing student who works for the city of Jerusalem. Blocking roads “actually helps the government” by giving it more ammunition to say “we need to get this done.”

What happens now? More protests are planned for this Saturday night and, by Zilber’s account, things couldn't be more ominous: “This is really uncharted waters for this country,” he says.

“Israel has gone through endless wars, conflicts, political turmoil, occupation, diplomatic crises, and the like, but we've never had a looming constitutional standoff like what’s at play here.”