Rishi Sunak can’t afford to ignore Israel’s collapsing democracy – its everyone’s problem

As Rishi Sunak now meets the Israeli prime minister, Benjamin Netanyahu, he and other western leaders should be worried about the events unfolding in Israel over the past 11 weeks. Israel may be on the verge of transitioning from a liberal democracy to a nondemocratic weak state. There are potential geopolitical risks, not just within Israel but in the wider Middle East, that its allies should be gravely concerned about.

The recent legislation proposed by Netanyahu’s coalition government consists of curtailing judicial review of legislation, changes to the makeup of the judicial selection committee designed to ensure the government controls appointments to the bench, cancellation of supreme court intervention in cases of extremely unreasonable executive orders, and the transformation of ministerial legal advisers into political appointees.

More quietly, a number of additional laws are in the process of being enacted. These are designed to allow politicians on trial, or even convicted ones, to serve in ministerial roles. In particular, they are designed to allow Netanyahu, on trial for almost three years on corruption charges, to escape his current legal predicaments.

The proposed changes are meeting fierce resistance. Yet the governing coalition has rejected President Herzog’s compromise plan and has resorted to a change of tactics on implementing its comprehensive programme.

If implemented, these plans will spell the end of democracy in Israel. They break the power of the supreme court to counter governmental decisions and parliamentary laws, in a country with one chamber of parliament and no constitution. Inter alia, the economic consequences will be dramatic. The main socioeconomic outcome is that the linchpin of Israel’s economy, the hi-tech sector, is likely to leave. Indeed, it has actually started to do so.

This emigration shock will have far-ranging consequences, as there are large, weaker sectors that essentially live off the strength of the hi-tech sector, which contributes 25% of Israel’s income tax revenues. No wonder there are early signs of capital flight: the chief economist of the Treasury estimates a 0.8% annual decline in GDP per capita growth over the next decade; and foreign banks and credit rating agencies have issued warnings, as have prominent economists, including Larry Summers and Ben Bernanke.

These developments come in conjunction with a more subtle and slow-developing process of religious forces seeking to turn Israel into a country governed by Jewish law. If successful, it would ultimately turn Israel into a clerical state. This agenda is being pursued by two big minority groups. One is the ultra-Orthodox, who now constitute 13% of Israel’s population and are forecasted to be a third of it by 2065. The second is the so-called Zionist religious group, which is as big as the ultra-Orthodox, using conservative estimates. Together they are now represented by 32 Knesset members (out of 120) and are part of the governing coalition.

Through high rates of population growth, their size and power are likely to increase. One indication of that is the results of the November national elections in the city of Jerusalem, where the parties in question won 56% of the vote, while they got only 25% in the national vote. Jerusalem has often been a harbinger of future political developments.

As the confluence of judicial reforms and imposition of religion leave Israel economically weakened, the government will look for scapegoats. Playing by the book of illiberal, if not theocratic, states, they will target domestic and foreign “enemies”.

Domestically, the “natural” target, already disadvantaged, are Arab citizens, making up about 20% of the population. It is likely, via a gradual, disguised process, they will be denied voting rights.

Externally the enemy is, and will remain, Iran, which will have greater incentives to cross the nuclear threshold for a variety of reasons. First, an unchecked rightwing government in Israel, with plenty of irresponsible extremists in the cabinet, is a threat. Especially because it may also seek to blame its economic weakness on external enemies. Add to this, the emerging divisions within Israel, for example citizens refusing military service, may actually weaken it, and may be tempting to exploit. And finally, the US and the wider west are less likely to support a nondemocratic, belligerent Israel.

Related: Israeli president warns of civil war as Netanyahu rejects judicial compromise

This is a whole new ballgame. The western world will face a changed Middle East with the danger of nuclear confrontation. Stopping these tragic dynamics now, before legislation has passed, will be considerably more feasible than in the future. The current path looks irreversible.

True friendship with the Israeli nation requires western leaders to convey a clear message to Netanyahu and his rogue government. Thus far, President Biden, Chancellor Scholz and President Macron have indeed done so. They must have realised that Netanyahu, the self-anointed champion of the Iran issue, is ironically leading Iran down a nuclear path. Foreign pressure may provide the more moderate elements of the governing coalition with a ladder to climb down, before Israel heads into the abyss and wreaks havoc in the Middle East.

• Eran Yashiv is a professor at the Eitan Berglas School of Economics at Tel Aviv University and a member of the Centre for Macroeconomics at the London School of Economics