Top Israeli Economists Warn Government-Judiciary Clash Risks Driving Away Foreign Investors

Senior figures in Israel's economic leadership have expressed serious concerns that the ongoing conflict between the government and the Supreme Court could deter foreign investors and international companies from participating in major government tenders. Officials from the Finance Ministry and the Bank of Israel warn that government non-compliance with Supreme Court rulings undermines legal certainty, which is crucial for attracting foreign investment in large-scale infrastructure projects.

A senior Finance Ministry official told Channel 12 News that "major companies are calculating their risks carefully, and this is a very negative event." Bank of Israel Governor Professor Amir Yaron emphasized that defying court decisions threatens the foundations of democracy and creates regulatory uncertainty, which harms the economy.

The primary concern is that foreign companies will fear arbitrary government decisions and legal instability, leading them to avoid bidding on significant infrastructure tenders. This concern is already manifesting in cases like the contested acquisition of control over Channel 13 by a group of tech investors, where tender procedures have been questioned.

Government sources, however, argue that investors are already pricing in the institutional risks associated with the current political situation and believe the present government is nearing its end. They suggest that foreign companies understand the temporary nature of the current crisis and are adjusting their risk assessments accordingly.

This issue has gained prominence amid heightened tensions between the government and the Supreme Court, particularly regarding the Second Authority Council and fears of a constitutional crisis. The economic leadership's warnings echo similar concerns raised in 2023 during the promotion of judicial reforms.