“I send you letters through the wind, and every time I hope for a reply”, are the famous words written by songwriter Yossi Banai.
Lately, we’ve been hearing about many such letters, letters “sent through the wind”. The doctors’ letters, the lawyers’ letters, the pilots’ letter, the police-officers’ letters and lately, the hi-tech industry employees’ letters, and there are more.
All the letters lead to the conclusion that the judicial reform will lead to severe trust issues for investors in the State of Israel, severely harm its economy and drive investors away from investing in its hi-tech companies, which are the main source of financial growth for Israel’s economy.
This is what senior officials in the hi-tech field wrote in the "Hi-tech Employees’ Letter": “..subverting the trust in Israel’s judicial system, and by doing so, subverting the trust in Israel’s democracy, might drive the investors, who have prompted this wonderful industry, away.”
And if those letters weren’t enough, some of the financial newspapers recently published a series of articles about the true concerns of major investment entities and their refusal to continue investing their funds in Israel.
The interesting thing about this is that none of these articles mention any specific names of “investors” or “major investment entities”.
I am also an owner of a hi-tech company that has raised quite a bit of money and is facing an additional round of fundraising. All over the world, I’ve been meeting many investment entities, private investors, and heads of investment funds, and not even one of them has said anything about avoiding investing in Israeli companies due to the judicial reform.
Actually, it’s quite the opposite. Nowadays, more than ever before, investors are looking for companies with innovative products, with real vision, with records of sales, and a well-based expectation of profit.
This type of company is what interests them around the globe, and Israel is considered to be one of the most promising and interesting countries in that respect, the quintessential “start-up nation”.
Moreover, the British magazine The Economist published the list of countries whose economy showed the best performance in 2022, and Israel was ranked fourth "despite the political chaos," referring of course to the many inconclusive election campaigns that took place before November's voting.
The Dun & Bradstreet company, in its economic forecast for 2023, stated that: “...they expect the government that has been established these days ... will know how to support local businesses and how to be able to overcome the crises expected for the Israeli economy during 2023."
The Bank of Israel, in its macro-economic forecast for 2023, compares Israel to the rest of the world and has published an estimate which states that: "In Israel, according to the forecast, GDP is expected to grow at a rate of 2.8% in 2023 and at a rate of 3.5% in 2024, while we presume the rest of the world will see a growth of 0.1% in 2023 and 1.4% in 2024”.
Israel's debt-to-GDP ratio for 2022, which is an indication of Israel's financial strength, has dropped to 61%, while in other highly developed countries, such as Germany, its debt-to-GDP ratio is 71%, the US has a rate of 122%, Greece has 178% and Japan has a debt-to-GDP rate of 264%.
If the writers of those letters feel the need to worry about the state of the judicial system, they had better look into why Israel is rated 35th out of 190 countries in the “easy-to-do-business with” list, when, for instance, enforcing a contract in Israel’s courts takes about three years.
We shall ask them to look back at 1995, at the judgment in the Apropim Case, led by Aharon Barak, of course,a decision which seriously violated the principles of commercial and legal certainty in the context of contract interpretation.
This is what the court ruled: "When interpreting a contract, one must investigate the true and common intention of all parties involved without being limited to the expressions or pronouns they used. In a conflict between the language of the contract and the intention of its makers - the latter prevails."
In simpler words, the court ruled that regardless of what is written in the contract, we, the court, will interpret and determine what the parties intended!!!
Prof. Daniel Friedman, the former Minister of Justice, said about this judgment: "The Apropim judgment created an atmosphere in which no clear contract can exist, everything is out in the open, and anything can be achieved through interpretation”.
So, to the various authors of the plethora of letters, and those who see nothing but the worst regarding Israel’s financial stability and fear that investors might stop investing in hi-tech companies - chill down!
The writer is the co-founder and president of Lavaa Digital health Ltd