Benjamin Netanyahu plays down US intelligence leaks as judicial reform crisis worsens

Israeli Prime Minister addresses allegations that intelligence service Mossad allowed dissent against government

Benjamin Netanyahu, Israel's Prime Minister, during a news conference in Tel Aviv. Bloomberg

Israeli Prime Minister Benjamin Netanyahu said the US was his country’s “best ally” following a major leak of US intelligence documents that revealed Washington had spied on its allies, including Israel.

A trove of documents surfaced in March on social media platform Discord, stunning analysts and intelligence agencies by revealing the full extent of western support for Ukraine.

Among the leaks was the claim that the US had eavesdropped on Israeli security services and heard that “senior members” of the Mossad intelligence agency were encouraging others in the organisation to join anti-government protests.

Since January, massive protests have rocked Israel as demonstrators try to put a stop to Mr Netanyahu’s proposed judicial reforms.

Critics of the government say the reforms would give the government influence over supreme court appointments and would give parliament the power to overturn supreme court rulings.

Mr Netanyahu has suspended efforts to pursue the reforms, but his government still insists they are necessary.

Last week, Mr Netanyahu tried to play down the leaks, saying that political dissent was accepted within the organisation.

“The truth is that the Mossad legal adviser said that under Israeli law, junior members of Mossad can participate in the demonstrations, not senior members,” Mr Netanyahu said.

He added that Israel's military and security services were “working hand in hand with me, as Prime Minister, to assure the security of the country”.

During an interview on NBC's Meet the Press, Mr Netanyahu called the reporting around the US classified material a “misunderstanding”.

The Prime Minister's tone was more mollifying than that of earlier statements released by his office, which initially called the reporting “mendacious and without any foundation whatsoever”.

Mr Netanyahu's reform push has prompted months of unrest and criticism from western allies, including stern words from US President Joe Biden.

Last month, the US President issued his strongest condemnation to date of Mr Netanyahu’s reform plans.

“Like many strong supporters of Israel, I'm very concerned,” he said. “And I'm concerned that they get this straight. They cannot continue down this road. And I've sort of made that clear.”

Economic concerns

In addition to shaking the foundations of Israel’s security establishment — thousands of security forces withheld their service in protest over the plans — the economy has also been dented by the upheaval.

On Sunday, credit rating agency Moody’s cut the outlook for Israel’s sovereign credit rating.

The assessment follows widespread critique from Israeli economists of Mr Netanyahu’s plans. They have said that if the Prime Minister weakens the rule of law in the country, it will spook foreign investors.

Israel's Finance Minister Bezalel Smotrich on Sunday said Moody's decision was “not a big drama” and reiterated his stance that the government's plan to overhaul the judiciary would help the economy.

But the head of Israel's securities agency, who weighed in on the issue as she ended a five-year term on Sunday, said the downgrade was a warning that needed to be taken seriously and should push the government to rethink its plans.

Moody's Investors Service on Friday lowered Israel's outlook to stable from positive while affirming its sovereign credit rating of “A1".

Much of its report focused on a government plan to overhaul Israel's court systems.

Mr Smotrich told a session of parliament's finance committee during a debate on the 2023-24 state budget that Israel's credit outlook was previously lowered in 2020 and raised again in 2022.

“I take the opinion seriously but it's not big drama,” he said, noting Moody's also pointed to a strong economy despite the political turmoil.

“I don’t think economists are great experts on the judicial issue” and any damage to the economy would come from the “campaigns of lies” against the reforms”, he said.

Agencies contributed to this report