Disobedience in the reserve ranks and refusal to serve in the military. Why are the judicial amendments widely rejected in Israel?

While Israel appeared politically divided over the reform plan in the judiciary that Benjamin Netanyahu's government is about to endorse, there is a consensus among the military and security establishments and among officials in the commercial sector, that the plan will have negative repercussions on the economy and on the unity and durability of the Israeli army.

The leaders of the security establishment and the IDF Chief of Staff warned Netanyahu of the escalation of protests on the Israeli street, which has entered its third month.

With Netanyahu announcing his government's intention to finally approve the judicial reform plan and rejecting any settlement, Army Chief of Staff Herzi Halevy does not rule out the possibility that this will contribute to the disintegration of the army, while the head of the Shin Bet security service, Ronen Bar, estimated that this would lead to widespread opposition to the plan to amend the judiciary in the army and among those serving in security institutions.

• What are the assessments of the leaders of the security services regarding the repercussions of the protests against the judicial amendments on the military and security in Israel?

The leaders of the security and military services are concerned about the escalation of protests in the Israeli street, as they believe that this will lead to a widening of opposition to judicial reforms within the ranks of the army and security services, and the refusal to serve in the ranks of the reserve forces, both in the army and in the air force.

They also do not rule out the escalation of the phenomenon of refusal of compulsory military service in the army, even in regular service in the security services, the intelligence division and the Mossad, which will have future repercussions on the competence of people serving in the army and various security services, according to the head of the Shin Bet.

The same concerns were expressed by IDF Chief of Staff Halevy, who does not rule out that the rift in Israeli society could lead to the long-term disintegration of the army.

• What are the repercussions of the judicial reforms on the Israeli army and security services?

A position assessment issued by Tel Aviv University's Institute for National Security Research reviewed the repercussions of the government's plan for reforms in the Israeli judiciary, describing these repercussions as a "strategic warning."

The deepening rift in Israeli society, and the controversy in the army and security services with rising signs of refusal of service, will reduce the treatment of pressing security issues, which would threaten Israel's national security.

The research institute warned that these repercussions will contribute to affecting Israel's confrontation with security threats on various fronts, suggesting that the army, which has always been above internal controversy and disputes in Israel, will lose its unity and differences may enter it into the path of disintegration in the future, as these differences may lose its status as the "People's Army."

• How serious are the voices calling for refusal to serve in the reserve forces?

The negative repercussions of the plan to amend the law on the elimination of various units in the army appeared with loud voices to refuse reserve service, especially in the air force, intelligence, elite forces and senior officers, amid warnings to army commanders, security services and research centers against undermining social immunity in Israel and transmitting it to the army and various security services.

Israeli Defense Minister Yoav Galant, warned during closed meetings with Netanyahu that the reforms would contribute to the disintegration of the army and the loss of the ability to carry out its tasks, especially with the expansion of the phenomenon of refusal to serve within the reserve forces, and the leadership of the movement and protests against judicial reforms by senior reserve officers in the army and security services.

• Are there indications for refusal of military service and abstention from reserve service?

The protests against the government's plan to weaken the judiciary are led by dozens of reservists in the Air Force, Army, Navy, Intelligence, Cyber and Combat Units, along with a group of reservists calling themselves "Brothers in Arms".

Senior army and security reserve officers took the initiative to collect signatures on a petition to refuse military service if the judicial reform plan is finally approved.

Hundreds of reserve officers and pilots in the Air Force and intelligence carried out their threat not to comply with call-ups for military service in reserve units and to refrain from participating in the exercises.

Large segments of the Jewish community have warned that they will prevent the recruitment of their children into combat units if the judicial reforms are finally approved.

• Why are reforms in the judiciary a threat to Israel's economy?

Economic growth and prosperity require a set of laws that guarantee, among other things, respect for property rights, respect for budget laws, respect for the Central Bank Law (the Bank of Israel Law), and the preservation of competition Clear and stable rules of the game that allow for a long-term planning horizon.

A position assessment by the Israel Democracy Institute (EDI) suggests that the Netanyahu government's plan to weaken the judiciary will contribute to a decline in the ability and motivation of foreign investors to invest in Israel, leading to a sharp drop in credit ratings.

Since the start of legislation on Justice Minister Yariv Levin's Judicial Reform Plan in January 2023, the Tel Aviv Stock Exchange has underperformed compared to a large portion of the world's leading stock exchanges, and the shekel has significantly weakened by about 3% against the dollar.

From the beginning of the year until the second half of March 2023, the Tel Aviv 35 index fell by about 1.9% and the Tel Aviv 125 index by about 3.3%, compared to the leading indices the S&P 500 and Nasdaq, which rose by about 3% and 16%, respectively.

• What are the implications of judicial reforms for Israeli investments and the market?

In addition to the decline in foreign investment, according to warnings and estimates by the Central Bank of Israel, there is a tendency for companies in Israel and Jewish businessmen to withdraw their savings and balances from Israeli banks and transfer them to banks abroad, especially in the technology industry.

In the long run, many Israeli companies from all sectors may move their headquarters, businesses and economic activities outside Israel, which means a brain drain and a high unemployment rate.

Perhaps the most prominent sector affected will be the technology sector, as the Israeli Ministry of Finance estimates that the high risks would contribute to the loss of output in the technology sector by 1.6% to 4.6%, and a decrease in the number of workers in this sector in Israel by between 8% and up to 25%.

• Are there estimates of the extent of the Israeli economic losses as a result of judicial reforms?

A report issued by the Budgets Department of the Israeli Ministry of Finance showed that if legislation and reforms in the judiciary are finally approved, it will contribute to reducing Israel's credit rating, according to warnings from international credit graders Fitch and Moody's.

The budget department estimates that over the next decade, Israeli economic and commercial facilities will lose NIS 100 billion ($30 billion) in output growth, while the state treasury will lose NIS 30 billion ($9 billion) in tax income.

A downgrade in Israel's credit scale could lead to higher government interest spending and commercial sector financing costs, and slowing growth, while public debt financing is expected to rise to NIS 2.3 billion to NIS 6.8 billion per year, commercial debt financing is expected to rise to NIS 2.6 to NIS 7.8 billion per year, as well as a loss of 2.8% to 5.6% of GDP growth annually.