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‘I can’t sleep at night’: Israel’s business elites are fully invested in the protests

  • March 24, 2023

Three months ago, the life of Erez Shachar, co-founder and managing partner at Qumra Capital, changed beyond recognition. “That was a day after the Knesset speech by Justice Minister Yariv Levin about the legislative reform.

An acquaintance called me and asked why the high-tech industry is silent about what’s happening in the country. We basically realized that they’re about to turn Israel into a country that can’t be called a liberal democracy – and our business can’t exist like that. Venture capital funds are financed with foreign money, and there’s no chance that big European and American investors will invest in a place that grants unlimited power to the sovereign and doesn’t have an independent judiciary.

“We wrote a letter to the prime minister together and sent it to people in the industry. We collected over 100 signatures very quickly and published it. Since that day, I’ve been invested in this protest 24 hours a day, seven days a week. I meet with politicians, influential people and rabbis. Before this, I’d never met anyone from the political system.”

Shachar notes that on some days he doesn’t go to work at all, and on others, he gets just a couple hours’ worth of tasks done for his day job. “My partners in the fund are taking a large part of the things I was responsible for upon themselves. My wife Neta comes from the production world and manages our social media war room and production. Our battle is organized chaos. We have no management, offices or defined jobs, but we have a growing circle of activists.

“I’m in 20 high-tech protest groups on WhatsApp, and we’re involved in the central protest leadership at the same time. Many of the members of our protest work on it for most of the day. Some of us are used to flying quite often for work, and we canceled trips that were planned in advance in order to be here and to fight for the country.”

Tal Barnoach, general partner at venture capital firm Disruptive, is in a similar position. “I left behind everything I do more or less, and I’m just preoccupied with this in recent weeks. I can’t sleep at night, either. I’m afraid of what’s going to happen in the country,” he says of the judicial overhaul plan. “The first thing that goes through my mind every morning is ‘How can I stop this madness?’ I go from meeting to meeting, talk to anyone I think can prevent this thing.”

He says that despite claims from detractors, his protest work has nothing to do with his business interests. “After all, I can move my work abroad at the push of a button, but I’ll stay here until I die. This is my country.”

These weren’t the only executives to speak out, and some of the many others are the last people one would expect to fully commit to a public protest. They are leading figures in the economy, who run companies with an annual sales turnover totaling billions of shekels.

They are responsible for tens of billions of shekels of Israel’s product – billions of which are allocated to export. They have been active in Israel’s business sector for decades and regularly appear on lists of the highest earners and the richest people in the country.

Many said that, until now, they had distanced themselves from politics in a stubborn attempt at bipartisanship. Some had strong opinions that they kept to themselves, knowing that being identified with one party or another could harm them in the future, when they need the government to listen.

Now, they are working day and night in an attempt to change the course on which Benjamin Netanyahu’s government is leading the State of Israel. It’s not altruism or human rights that motivates them, but the realization that no matter how the government feels about its critics, if it has its way and completes the judicial coup, the economic damage that they’ll suffer will be much worse.

The protest movement in Israel’s business sector started with hesitant declarations of possible damage to the economy if Netanyahu and Justice Minister Yariv Levin’s plans come to pass.

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Next came leaked comments from closed-door meetings of cabinet members on the plan, and in the weeks that followed, an organized, well-funded and creative protest took form. Several groups are at its helm, counting thousands of entrepreneurs, CEOs and senior bankers. Dozens of them have deserted their regular work almost entirely, and are devoting most of their time to the struggle.

They can already feel it starting. They explain that conversations with suppliers and customers from all over the world reflect genuine concern about the direction that the government is taking. They say that they can already see the money leaving Israel – the discontinued investments, the foreign companies and figures in negotiations that decided to put their plans to enter Israel on hold.

‘They don’t understand’

In the past, senior businesspeople kept meetings with politicians quiet, lest they face accusations of conflicts of interest or crony capitalism. But members of these protests groups are traveling the country to meet with the coalition and opposition alike, as well as people close to key economic figures. Instead of enterprise, though, these meetings are focused on the judicial coup.

Members of one of the forums protesting the judicial overhaul express profound frustration after these discussions with senior government officials. They say that they left the meetings with the sense that the coalition leaders don’t understand the magnitude of the economic shockwave they’re creating or the direction in which they’re taking the country’s economy.

“This step is lethal for the economy,” says one of the leaders of the forum. “It has already caused tremendous harm, and will cause even greater harm.”

In discussions with members of one of the forums, the coalition politicians explained that the fact that the credit rating agencies didn’t rush to lower Israel’s rating proves that the reform isn’t that aggressive, without understanding that rating companies adopt such steps only months after the damage has already been done.

As one member claims, “They don’t understand economics. They have no idea. This nonsense that Bibi is ‘Mr. Economy’ is wrong. They’ve never sold even 100 shekels worth of merchandise in their lives. They don’t understand what’s happening in the world. They don’t understand the Americans. [Finance Minister Bezalel] Smotrich doesn’t understand the magnitude of the fact that the Americans didn’t want him to visit.”

He says that “Huge amounts of money have already left Israel – belonging to private individuals and CEOs. The damage has already been done, and it’s growing by the day. Economics is a world built on trust and expectations. Even if the ‘reform’ ends this evening, businesspeople who considered investing in Israel in recent months and stopped the investment won’t now say that ‘It’s as if it never happened’ and go back to normal. The damage of the complexity and the lack of trust in Israel is already here. Someone who took money out of here will now wait to see that everything really is alright.”

When asked if anything like what’s going on in the government has happened before in this sector, one says: “This event is unparalleled in the world of business. The business world is sharp. If you’re stupid you’ll remain poor, you simply won’t make money. If you put a $1 billion price tag on something worth $10 million, they’ll throw you down the stairs. In the business world, ‘stars’ who play games like this vanish. Here there are politicians who are exploiting positions of power.”

Leaders of the high-tech protest movement also left these meetings feeling dejected. “I think that some of the politicians with whom we met, and there were quite a few of them, completely understand what we’re telling them about the damage to the economy, but everyone cares about what his voter base will think,” claims Barnoach.

“I still want to hope that common sense will prevail and they’ll understand that it’s not a good idea to destroy the fabric that’s been built here. Even Netanyahu understands that there are red lines that, if crossed, it’ll be hard to roll things back in Israel. The responsibility is on their shoulders.

“The fact that all of Israel’s high-tech sector is [out protesting] and unwilling to stay silent any longer is proof that this isn’t a political struggle. People simply see what’s happening and are terrified. When the politicians told us that we’re sowing panic and creating a self-fulfilling prophecy, I explained to them that not only is that a shallow discussion – it’s genuine stupidity, because 90 percent of investments in high-tech come from foreign money.

“The foreign investors are no less smart than most of the politicians, on the contrary. They know and hear and collect intelligence about what’s happening here. Over 30 percent of state budget sources come from high-tech, and if we aren’t here – there won’t be budgets for disadvantaged populations.

“What’s happening here now with the banks abroad is nothing compared to what will happen if there’s a constitutional crisis. Mrs. Cohen from Hadera will have to deal with 10 percent inflation, a sharp increase in the prices of electricity, water, property taxes and more. During the second and third Knesset votes [on the judicial overhaul], the dollar will reach a rate of 4.5 to 5 shekels, the interest will be sky-high and every imported product will get more expensive.”

Surprising Netanyahu

High-tech workers were the first members of Israel’s business sector to join the protests. Overnight, the demographic considered privileged and disconnected people who contributed to the increased cost of living with the high salaries they paid their employees, became gatekeepers of democracy.

Their protest started shortly after the coalition negotiations between Netanyahu and other party leaders came to light. It began with a letter claiming – arrogantly if not factually – that a blow to democracy will drive away foreign investors and cause severe damage to the Israeli high-tech industry – and as a result to government revenues.

They claimed that their protest is grounded in concern for Israel’s economy in general, and not necessarily for their private businesses, since they aren’t dependent on Israeli customers, aren’t afraid of the potential anger of customers who support the coup and can move their operations abroad. It’s easier for them to take sides against the government, because the high-tech industry is aimed mainly at foreign markets and financed mainly by foreign investors.

Senior protest leaders told TheMarker that its members have raised about 15 million shekels (over $4.1 million) to date, most of which has been used to fund operations for the high-tech protest, with some going to the general protest movement. That money came from senior industry executives, each of whom privately contributed thousands to tens of thousands of dollars.

The high-tech protest includes thousands of people, about 40 of whom are members of its leadership. Among the activists investing their private time and money are Tal Barnoach of Disruptive; Eynat Guez, CEO of Papaya Global; the entrepreneur Zohar Levkovitz; Erez Shachar of Qumra Capital; Assaf Rappaport, co-founder and CEO of Wiz; Yodfat Harel Buchris, managing director of Blumberg Capital in Israel; Rona Segev, founder and partner in TLV Partners; Shai Wininger, co-founder and CEO of Lemonade; Ofer Bengal, CEO of Redis; Yoav Izhar-Prato, CEO of Skai; Guy Tytunovich, co-founder and CEO of CHEQ; Nir Zohar, president of Wix; high-tech entrepreneur Gigi Levy-Weiss; Adam Fisher of Bessemer Venture Partners; and Jonathan Edelshaim, CEO of Natural Intelligence.

“Netanyahu didn’t expect the high-tech workers to unite, because unionizing is something that runs counter to the industry’s perspective. We began with a few people who were afraid to voice their opinion firmly, but very soon, more and more people joined us and things heated up,” says one of the protest leaders.

‘Nobody can hide’

Two months ago, there was a watershed moment in the business sector’s protest: Netanyahu and senior business officials called a meeting with the CEOs of Israel’s major banks. According to leaks published from the meeting, the most biting statements came from Discount Bank CEO Uri Levin and Bank Hapoalim CEO Dov Kotler. Kotler warned that foreign investors have been withdrawing deposits – and not just from high-tech.

Levin, whose Discount Bank had already announced in late December that it wouldn’t grant credit to businesses that discriminate against customers following statements from the coalition, called on Netanyahu to stop the legislation immediately, and to only advance changes that are backed up by a broad consensus.

Although the meeting was called on short notice on a weekend afternoon, associates of the bank managers say that they had held talks among themselves to decide whether and how to take action in the days leading up to the meeting. Among other things, they considered taking out an ad to warn against the situation. Drafts of the ad were already prepared prior to its publication that same weekend, but the bank heads were unable to reach an agreement about the wording.

Only about two weeks later, after the president called for rapprochement, did the banks come out with a measured ad that echoed his sentiments. “The decision was that each bank would publish an identical ad in its own name, so that there would be unity and so that nobody could hide,” explains one senior official.

Two weeks after that, in a meeting with Smotrich, the bankers made similar comments. The finance minister, for his part, saw fit to reprimand them for not taking a stand during the disengagement from Gaza in 2005.

The bank heads surprised everyone when they joined the business people’s forum, which is composed of dozens of businesspeople from the fields of retail, malls, insurance, hotels and more. Some even participated in the forum’s meetings in the home of Harel Wiesel, owner of the Fox fashion group, and signed the strongly-worded warning letter distributed by the forum about two weeks ago.

According to the letter, the judicial coup can cause a chain reaction that will lead to mass firings, a continued spike in mortgage prices and harm to people who have been saving their funds. Among other things, it said that “a continuation of the legislation would be a serious blow to every home in Israel.”

Last week, the bank heads also participated in a business people’s forum meeting with President Isaac Herzog. Aside from Wiesel, the founder, its members include Danna Azrieli, Liora Ofer, Shufersal CEO Itzik Abercohn, Yair Hamburger, Nathan Hetz, Tnuva chairman Haim Gavrieli, Tzahi Nahmias and Shahar Turjeman.

Last week, the forum sent a message that could further harm its relations with the coalition. They supported the statement by the governor of the Bank of Israel regarding the serious dangers of the judicial overhaul. “The governor’s concern is our concern as well,” they wrote, adding that “It is the duty of the governor of the Bank of Israel to express an independent and professional opinion without extraneous considerations and without being subject to political pressure.”

Shachar says that “As long as there is no genuine, out-in-the-open rapprochement forum, but rather deals done in the dark, we will continue to fight with all our might and will only increase the intensity of our resistance. We’d fallen asleep at the wheel, and recent weeks were an important awakening process, and it’s a good thing. On the day after, we’ll still be here, and we’ll be a force working to turn Israel into a better place.

“I don’t know what will happen, but what’s certain is that it won’t be what it was. It’s not like the moment the legislation is stopped we’ll all go back to our usual place. After waking up, we won’t go back to being dormant. I met people I didn’t know, like rabbis of yeshivas whose names I hadn’t heard, public organizations of whose existence I was unaware. Something happened that woke us up and told us that there’s something rotten with the way we live in Israel, and we should find a way to get our shared lives in order for the coming decades.”

This Tuesday, leaders of Israel’s business community, including the CEOs of some of the country’s biggest banks, went as far as calling on Prime Minister Benjamin Netanyahu to “immediately halt” his government’s planned legislative overhaul, warning that such a move would turn the Jewish state “into a dictatorship.”

“We, the Israel Business Forum, call on you to immediately halt the planned legislative moves, chief among them the law to change the committee for the selection of judges,” the business leaders wrote in an open letter to Netanyahu, asserting that this plan, if enacted, “seriously harms the legal system and undermines the foundations of democracy based on the separation of powers and the independence of the legal system and turns Israel into a dictatorship.”

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