What are Israel's judicial reforms and why are they so contentious?

Tel Aviv — Huge protests that rocked Israel over the coalition government's judicial reforms were on pause Tuesday. The nation appeared to be taking stock of fallout from Monday's momentous vote in the Knesset, Israel's parliament, which curbed the power of the nation's Supreme Court.

It was a victory for Prime Minister Benjamin Netanyahu and his far-right and ultraconservative religious coalition partners, a bitter defeat for Israel's opposition, and a shock to the majority of Israelis who — according to most polls — were against the move.

Prominent Israeli political analyst and journalist Barak Ravid told CBS News that his country was in "uncharted waters."

"Most of the people here, both those who supported this and obviously those who were against it, are in shock," Ravid said, "because nobody knew we were going to get to that point."

What are the judicial reforms?

Monday's vote was just stage one of a package of proposed judicial reforms sought by Netanyahu's coalition government.

In a country with no formal constitution and no upper legislative chamber, Israel's Supreme Court has long served to check the legislative branch's power.

There has been wide consensus for years that some modernizing and changes were due, and Netanyahu insists his reforms will curb the power of activist judges, but critics say they're designed to bring the top court under the direct control of politicians.

Until Monday, the Supreme Court had the power to declare any proposed legislation "unreasonable" and send it back to lawmakers for review and amendment. Monday's vote removed that power. Now Israel's parliament can override an "unreasonable" ruling and simply approve the law with a simple majority.

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Later this year, Netanyahu's ruling coalition plans more legislation to politicize the appointment of judges, so the government can choose who sits on the bench. It also seeks to reduce the influence of legal advisors in government, in part by making them answerable to elected officials rather than to the country's apolitical Justice Ministry.

Why are the reforms causing such upheaval?

Already, many Israelis fear the direction things are moving. They'll tell you the current government's real objective, above everything else, is to hold onto power, and that it is making a mockery of Israel's democracy in the process.

It's worth noting that Netanyahu wants to give elected leaders like himself more power over the courts even as he faces drawn-out legal battles of his own. The prime minister has been charged with fraud, breach of trust and accepting bribes in three separate cases. He denies all the charges and insists the cases against him are politically motivated.

Many Israelis, including Ravid, believe the changes proposed by Netanyahu's government are likely to erode Israel's democracy.

"I'll give you one example," Ravid told CBS News. "Many people believe the government wants to weaken the Supreme Court in order to pass laws that will make it impossible for Arab politicians to run in Israeli elections."

"If Arabs do not run… the 20% of Israel's Arab voters would not be represented. If they're not represented, they won't vote, and if they don't vote, then the opposition can never win another election."

For decades, Israel has been described — and described itself — as the only democracy in the Middle East.

"I'm not sure how much longer we'll be able to say that," Ravid said.

The economic impact on Israel

Israel's economy has taken a hit in anticipation of more protests and the potential for widespread instability.

The Reuters news agency reported earlier in July that startup funding in Israel's thriving tech sector had dropped by nearly 70% in the first half of 2023, since the judicial reform proposals were first made public.

After Monday's vote, both the Israeli stock market and the value of its currency, the shekel, fell.

"You can see it in the numbers. It's not an opinion. It's a fact," said Ravid. "Every serious economist in the country, every credit rating agency, warned the government that this move will hamper the economy, and we're seeing it right now."

The analyst said the impact was visible "in many, many sectors," noting that in the space of just 24 hours, about 1,000 Israeli doctors had joined a WhatsApp messaging group entitled simply "Relocation."

"A thousand doctors is a lot," said Ravid, "and that's just one example. You hear this from many, many people who are now considering whether they want to stay here because they see the trajectory, and they all know that this thing is just started."

What the military does, matters

Much depends now on Israel's powerful military and the reservists it depends on. Thousands of Israel's reserve forces have signed a petition saying they won't serve a government that goes ahead with the proposed judicial reforms.

That's a dangerous development in a dangerous neighborhood.

If the reservists carry through on their threat, said Ravid, "then you'll see more and more units will have … problems functioning properly."

"If Israel's military is disintegrating, if the trust in the commanders and the political echelon is disintegrating," he said, "then this country is under huge threat."

What happens next?

As the reality of Monday's vote in the Knesset sank in, Ravid said it was still "a bit too soon to talk about what's next." But with lawmakers due to go on recess at the end of July and Netanyahu indicating a relatively short window for any discussion of a compromise with his political opponents, the clock is ticking.

It may be that both sides of this bitter divide in Israeli politics decide compromise is a better option than another round of bruising public protests. But it may not.

Netanyahu said Monday that he wanted to give four months for further negotiations on the other aspects of the judicial overhaul, and the White House and Israel's other major allies have urged some compromise.

But Ravid said both the leader of the opposition, Yair Lapid, and prominent political figure and former defense chief Benny Gantz had already made it clear they are "not interested."

He said he didn't understand statements from the White House about ongoing talks.

"I just don't see, at least in the immediate term, any real negotiations on this issue," said Ravid. "This is just not true, at least not at the moment."

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