Judicial reform plans by Israel's new government could pressure the country's sovereign credit rating even as the budget remains under control, according to an S&P analyst, as could a violent escalation with Palestinians.
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In an interview with Reuters, Global Ratings Director Maxim Rybnikov said the agency was closely following moves Prime Minister Benjamin Netanyahu's cabinet might make in Judea and Samaria, as well as the pledged judiciary overhaul that would cut back Supreme Court powers.
"This could present downside risks (to Israel's ratings), upsetting the current equilibrium," he said. "The primary concern for us would be the ... security situation which could be undermined in a scenario of more hardline policies."
The past year has seen some of the worst violence in the West Bank in years. Netanyahu's coalition government, sworn in last month, has promised to strengthen Israel's settlements. The cabinet also includes partners who advocate for the territory's annexation.
"If the announced judicial system changes set a trend for a weakening Israel's institutional arrangements and existing checks and balances this could in the future present downside risks to the ratings. But we are not there yet," he said. "Hardline rhetoric that undermines the fragile situation in the West Bank could generate risks as well," Rybnikov said "If we see more protests, this is not going to be good news also for the economy."
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