Op-Ed – Foreign Investors Should Not be Concerned about Political “Turmoil” in Israel

Op-Ed – Foreign Investors Should Not be Concerned about Political “Turmoil” in Israel

Edited by: TJVNews.com

The recent violent demonstrations in Israel have captured international attention, with images of the attack on the Knesset broadcasted worldwide. However, for investors in the USA, Germany, or India, these scenes evoke memories of attempted coups in third world countries, leading them to reconsider investing in Israel. The country’s political unrest and reported claims of Israel being in the midst of a civil war have caused significant worry among foreign financial institutions.

Credit rating agency Moody’s Investors Service on Tuesday warned about “negative consequences” and “significant risk” for Israel’s economy and security situation following the passage of the first bill of the government’s contested judicial overhaul, as was reported by The Times of Israel.

Back in April, Moody’s lowered Israel’s credit outlook from “positive” to “stable,” citing a “deterioration of Israel’s governance” and upheaval over the government’s bid to dramatically overhaul the judiciary, the report said.

“More specifically, we believe the wide-ranging nature of the government’s proposals could materially weaken the judiciary’s independence and disrupt effective checks and balances between the various branches of government, which are important aspects of strong institutions,” Moody’s wrote in the issuer comment it released late on Tuesday. “Israel has no written constitution and its institutional set-up relies to an important extent on judicial oversight and review.”

“The executive and legislative institutions have become less predictable and more willing to create significant risks to economic and social stability,” Moody’s warned.

Moody’s also cautioned that, “Venture capital investments in Israeli high-tech firms have declined materially, with the sector raising $3.7 billion in the first six months of the year, the lowest figure since 2019. While the slowdown reflects global trends in the sector triggered by tighter financing conditions and a degree of normalization after the pandemic, there are also signs that Israel is decoupling from global trends.”

Upon witnessing scenes of turmoil and political instability in Israel, foreign investors have become hesitant to invest their money in the country. They are not interested in the nuances of legal reform or repeal; what matters to them is the perception of instability and the potential risks associated with investing in a country on the verge of a purported civil war.

Many foreign financial institutions expressed their concerns and fears about the situation in Israel, leading some to remove their investment recommendations. Consequently, the Israeli stock market experienced a significant decline of approximately 5 percentage points, and the shekel weakened against the dollar. These tangible consequences underscore the impact of political turmoil on the country’s financial landscape.

Panic producers within Israel have exacerbated the concerns of foreign investors. These individuals harbor a deep hatred for the Israeli government and its Prime Minister, Benjamin Netanyahu. They have used their power to disrupt business activities and impose a political position on their employees, creating an atmosphere of uncertainty and instability.

Their actions and political agenda contribute to the negative perception of Israel as a stable and attractive investment destination. Investors worry that these extremist actions may lead to a damaging economic crash, further discouraging them from investing in the country.

Amidst the multitude of investment warnings and the fear of real economic damage, Israeli business leaders are realizing the destructive nature of the current situation.

With the exception of a few extremists who are willing to cut off their leg so that the other side will have a disability (and unfortunately there are some), most businessmen, company owners and economic leaders understand that their moves are mainly destructive for them. They really don’t want investors to lose their footing, for their partners to get into difficulties, for customers to boycott them because they are politically identified, for their stock to crash and for some of their employees to feel humiliated and violated.

The Netanyahu led coalition announced this week that it is genuinely seeking constructive and productive dialogue and negotiations with the opposition in order to reach agreements on the future. The heads of the economy should also stop for a moment, distance themselves from the extremists who are trying to wreak economic disaster on Israel and return to sanity.

Despite the recent crises, it is essential to recognize that the Israeli economy remains strong and solid, with a high credit rating that reflects its economic resilience. To maintain this strength, it is crucial for business leaders and investors to concentrate on their core interests and leave political debates out of business.

It is also imperative to remember that the Israeli economy has proven its strength and resilience time and again. By focusing on their businesses and distancing themselves from adverse forces, Israeli business leaders can create a more stable and attractive investment environment for both local and foreign investors.