Prime Minister Benjamin Netanyahu held a meeting with officials from Moody’s Investors Service, where he reportedly emphasized that further changes to the judicial overhaul in Israel would require broad public support. This meeting occurred before Moody’s was expected to issue an update to Israel’s sovereign country rating the following month. The judicial overhaul has coincided with a decline in the value of the shekel relative to the US dollar, leading to concerns in international financial circles.
Netanyahu informed senior Moody’s representatives that any additional legislation related to the judicial overhaul would only proceed with widespread agreement, as reported by Channel 12. However, it’s worth noting that he had previously made similar assurances to the Biden administration and other international actors before the government passed the first overhaul law in July, albeit with a narrow majority of 64 lawmakers.
Netanyahu has also called for compromise talks with the opposition, although there remains skepticism regarding his ability to be trusted or deliver on these promises, particularly as his hard-line coalition partners continue to support the proposed changes.
According to the Channel 12 report, Netanyahu intends to announce his future plans for the overhaul package soon. Up to this point, only one element of the package has been passed—the so-called “reasonableness law,” which limits the judiciary’s oversight over the Knesset. Petitions against this law are scheduled to be heard by the High Court of Justice, raising concerns about the potential for a “constitutional crisis” if the legislation is invalidated, and the government refuses to comply with the ruling.
Furthermore, Netanyahu reportedly indicated during the meeting that there would not be a government majority on the judicial selection panel, a key demand of Justice Minister Yariv Levin. He also predicted that mass protests against his government would continue even if a negotiated deal were reached.
In addition to these domestic issues, Netanyahu expressed cautious optimism about a breakthrough in a normalization deal with Saudi Arabia.
Moody’s had previously warned about “negative consequences” and “significant risk” for Israel’s economy and security following the passage of the initial bill related to the judicial overhaul. The agency had also lowered Israel’s credit outlook from “positive” to “stable” earlier in the year, citing concerns about the deterioration of Israel’s governance and the upheaval surrounding the government’s efforts to overhaul the judiciary.
Meanwhile, the shekel’s value fell to its lowest level in over three years, with hopes for a compromise on the judicial overhaul fading and tensions rising ahead of the High Court of Justice hearing scheduled for the following week. The shekel depreciated by more than 1 percent against the US dollar, trading at around 3.85, its weakest level since March 2020.