Weakening Shekel, lower credit ratings, threat of emigration and refusing military service mire Israel after judicial overhaul

One poll says that Israel's political strife is driving more than a quarter of Israelis to consider moving abroad. 

Israel's Channel 13 ran a poll on Tuesday, 25 July, after the ruling coalition succeeded in passing a divisive law that limits the powers of the Supreme Court. According to the findings, 28% of participants were mulling a move abroad, and 64% were not. Meanwhile, 8% of the participants remained undecided on the matter.

Additionally, more than half of the survey's respondents, 54%, feared that the unpopular judicial changes would threaten Israel's security, while 56% worried about the prospect of civil war, a sentiment echoed by former prime minister Ehud Olmert. 

Meanwhile, speculation about Israel's military readiness continued circulating, with more reservists threatening to boycott duty. 

On Tuesday, Israel's military took its first known internal disciplinary action over the protests. One reservist was fined US$270, and another was given a suspended 15-day jail sentence for ignoring call-ups.

Earlier, the Israeli military spokesman acknowledged that requests from reservists to halt service had increased a day after Israel passed a law which limits some Supreme Court oversight over government decisions.

"There has been an increase in requests to halt reserve duty," Brigadier General Daniel Hagari told reporters.

The spokesman did not provide further details on the number of requests. "If reservists do not report for duty for a long duration, there will be damage done to the preparedness of the military," Hagari said.

The economy also has taken a hit. Morgan Stanley cut Israel's sovereign credit to a "dislike stance" on Tuesday. 

"We see increased uncertainty about the economic outlook in the coming months and risks becoming skewed to our adverse scenario," Morgan Stanley's analysts said in a research note.

The downgrade led to a joint statement by the Israeli prime minister and finance minister refuting the decision.

"This is a momentary response; when the dust clears, it will be clear that the Israeli economy is very strong". The pair cited "bursting" military exports, foreign investments in gas exploration, and Intel's US$25 billion investment as factors enabling the economy. 

"Growth is increasing, and inflation has been blocked. Regulation is being lifted, and free market competition is increasing", the statement added. 

Things are back to normal in the Knesset: Both government & opposition voted in favor of another discriminatory law aimed at preventing Palestinian citizens from living in a long list of towns & villages. They want them purely Jewish. pic.twitter.com/ucU238wpSy

— Sami Abou Shahadeh (@ShahadehAbou) July 25, 2023

Meanwhile, the US dollar made moderate gains in front of the Shekel. 

Protests are planned in several cities on Wednesday, including Tel Aviv, Haifa and Askalan. 

Earlier, the Israeli Knesset approved a bill to amend the "Cooperative Societies Ordinance" sponsored by members of the Knesset from both the ruling coalition and opposition in the second and third readings. This law allows, in vague terms, housing segregation against Palestinian citizens.

The law allows communities to screen applicants for housing units and plots of land in hundreds of Israeli Jewish communities with near complete discretion. 

"The law allows the Admissions Committees to accept or reject applicants in communities based on arbitrary and discriminatory criteria of applicants' "social suitability" to the "social and cultural fabric" of a community", said the legal centre for Arab minority rights in Israel, Adalah. 

The Israeli Knesset will go on recess at the end of the month and will resume mid-October.