Israel Is Being Attacked by Political Short-Sellers

So this columnist plans to increase his investments in the Jewish state.

The newest weapon in the campaign against the ill-advised and overreaching judicial “reforms” being advocated by some Israeli politicians is the equally ill-advised and overreaching effort by some opponents to endanger Israel’s economy.

They claim that the judicial reform proposals, if enacted, would make Israel a less attractive venue in which to invest. There is, though, nothing in the proposals themselves that would have any direct negative impact on Israel’s economy in general or on the “startup nation” aspect of its high-tech sector. 

It is the false claim itself — not the true workings of the economy — that is affecting the economic standing of the nation-state of the Jewish people. This is an example of a self-fulfilling prophecy, in which the prediction itself, even if baseless or overstated, can hurt a company or a country.

Short sellers have long been aware of this phenomenon and some have used (misused?) it to their unfair advantage. They spread false rumors in the hope and expectation that they will lower the prices of stocks they are shorting. That is analogous to what some opponents of judicial reform are trying to do in an effort to create pressure against the proposed reforms.

It may be working, at least in the short run. Some companies have threatened to pull their investments, and Israel’s credit rating has been downgraded. These actions are not a direct result of the judicial reforms themselves, which have not even been enacted. They are more a function of the alleged instability reflected in the demonstrations and counter-demonstrations.

And also in the frequency of Israeli elections and the appointment of extremists to the recently organized Netanyahu government. These alleged manifestations of “instability” are the best evidence that Israel is a thriving democracy. France too has demonstrations and extremists but they are not seen as reasons to doubt that country’s democratic character. 

Israel is a stable democracy that is undergoing demographic, political, religious. and other changes. It is dealing with these changes democratically, by elections, demonstrations, debates, and (hopefully) compromises. Israel is not Hungary, Poland, Slovakia, or Turkey, where autocracy has long been the norm.

Israel, on the other hand, has a 75-year history of raucous but generally nonviolent disputation. Israel is much more like the United States, which is also deeply divided politically, racially, regionally, and religiously.  

The most recent Israeli demonstrations have been models of nonviolence, especially as compared with other democracies. Israel has a free press, academic freedom, and among the most opinionated citizens in the world. The press and academia are ferociously anti-government for the most part, and the government rarely tries to interfere with their right to criticize it.

I am personally opposed to several aspects of the proposed reform, especially those granting the Knesset the power to override judicial decisions that protect minority rights and fundamental civil liberties.

If they were to be enacted, Israel would remain a democracy,  which means rule by majority vote. It would be a better and fairer democracy, though, if the Supreme Court retained its authority to strike down laws that compromise minority rights and civil liberties.

The compromises currently under consideration seem to recognize the need to preserve the Supreme Court’s legitimate power in these areas. In recent interviews Prime Minister Netanyahu has suggested that he is open to compromises that produce “balance.”  

The appropriate balance between democratic majority rule and minority rights is always a difficult one to strike, and reasonable people can and do disagree in many democratic countries. This has been evidenced most recently in the United States by decisions regarding a woman’s right to choose abortion in states where a majority opposes that right, or decisions involving race-based affirmative action.

There is no good reason for opponents of the reform to deploy the unfair weapon of endangering the economy of Israel by creating self-fulfilling prophecies that hurt all Israelis and weaken its security against its enemies. I, for one, will not participate in this dangerous and disingenuous tactic.

I plan to continue to oppose certain of the proposed reforms, while seeking balanced compromises. At the same time, I plan to increase my investments in Israel, because I trust it to resolve the judicial reform dispute in a democratic and stable manner.