In a high-stakes meeting with Moody’s Investors Service, Prime Minister Benjamin Netanyahu emphatically stressed that any future phases of his sweeping judicial reform initiative would only see the light of day if they receive broad-based public support. This significant dialogue unfolded against the complex backdrop of an imminent update on Israel’s economic health by Moody’s and a shekel that continues to lose ground compared to the U.S. dollar.

Earlier this year, the trajectory of Israel's financial stability saw a slight dip as Moody's shifted the nation's credit outlook from "positive" to "stable." The agency cited concerns related to governance and the tumultuous political climate, particularly focusing on the government’s aggressive ambitions to overhaul the judiciary. Moody's subsequently sounded alarms in July, cautioning about the "negative consequences" and "significant risks" that Israel could face in its economy and security landscape following the first legislative move to enact judicial reform.

Netanyahu, Moody’s Delegation Meet in Jerusalem - @JewishPress - https://t.co/Y9U12SeXVX pic.twitter.com/45A2dMhPh9

— JewishPress.com (@JewishPress) September 7, 2023

Reiterating Political Commitments and Domestic Realities
According to a report by Channel 12, Netanyahu reassured Moody’s representatives that any forthcoming legal changes connected to the judicial revamp would be predicated on achieving a broad societal and political consensus. This affirmation, however, mirrors a similar promise that the Prime Minister previously made to the Biden administration and other international actors.

It is worth noting that Netanyahu's 64-member coalition unanimously supported the first judicial reform bill—the so-called "reasonableness" law—in July. This happened even as the entire opposition, consisting of 56 lawmakers, chose to boycott the legislative process, casting a shadow on the Prime Minister's commitment to bipartisan support.

Skepticism from Opposition and Coalition Dynamics
Recently, Netanyahu has been reinvigorating calls for constructive dialogues with opposition parties. However, these overtures are met with skepticism by opposition members, primarily because the Prime Minister's coalition partners have shown little flexibility in their stance on the proposed reforms. Netanyahu confided in Moody’s representatives that he would soon unveil more detailed plans for the future trajectory of the judicial reforms.

The Judicial Selection Panel and the Shadow of Constitutional Crisis
During this crucial meeting, Netanyahu diverged from Justice Minister Yariv Levin’s viewpoint, stating unequivocally that there would be no government majority in the judicial selection panel. This announcement comes at a critical juncture when legal petitions against the recently enacted "reasonableness" law are slated to be heard by the High Court of Justice, thereby heightening concerns about a looming constitutional crisis.

The Shekel’s Plight and Imminent Legal Hearings
Market reactions have been adverse; the shekel has depreciated significantly, registering its lowest levels since March 2020 at around 3.85 against the U.S. dollar. This decline seems to correlate with fading hopes of finding a judicial compromise that could stave off a constitutional crisis, particularly with a significant High Court hearing looming.

While Moody's meet with Netanyahu, the Israeli shekel continues weakening Haaretz https://t.co/I7iAVmJGxF pic.twitter.com/ODzyOBNrd6

— Jewish Community (@JComm_NewsFeeds) September 7, 2023

Balancing Domestic Struggles with International Prospects
Amidst the thorny challenges on the domestic front, Netanyahu exuded a cautious optimism about potential advancements in foreign relations, particularly concerning a prospective normalization deal with Saudi Arabia. He also predicted that the wave of public protests against his administration would likely continue regardless of any negotiated settlements.

As Israel teeters on the brink of significant judicial and economic transformations, Prime Minister Netanyahu faces the daunting task of maneuvering through intricate political corridors, both nationally and internationally. His recent assurances to Moody's form a pivotal cornerstone in a broader discourse, as Israel eagerly anticipates the financial institution's forthcoming moves.