Prime Minister Binyamin Netanyahu on March 27 announced his decision to "delay" (not "suspend", he emphasized) the second and third readings of a judge appointment committee bill, "to avoid deepening domestic rifts" and to conduct dialogue in the aim of reaching broader agreement with the opposition.

Netanyahu said the judicial changes would still be passed during the Knesset's summer assembly (lasting end April to end July). On March 28, coalition and opposition representatives met in the first round of talks under presidential auspices.

The prime minister's announcement followed a March 27 call for a "historic strike" by the head of Israel's Histadrut labor federation Arnon Bar-David. Protests have spread countrywide, and will likely continue through the dialogue period, albeit at lower intensity without major traffic obstructions; re-escalation is highly likely if the government resumes its proposed judicial changes without a negotiated agreement.

Anti-government protests with an estimated 600,000 peak turnout have taken place weekly in 2023, often several times a week, and have involved increasing levels of violence when encountering police forces or right-wing government supporters. Large-scale counter-protests occurred for the first time on March 27, particularly in Jerusalem, called for by coalition politicians.

Anti-government protests persisted after Netanyahu's statement, and will likely continue, independent of the dialogue, until the legislation is definitively halted. Right-wing counter-protests are likely to recur, increasing the probability of violence between both sides, particularly if the government decides to unilaterally legislate the judicial changes. In his statement, Netanyahu praised pro-government supporters for demonstrating that evening, warned against violence, and said he would not allow their vote (for judicial changes) to be stolen.

The contentiousness of the proposed judicial changes makes coalition collapse moderately likely if no broadly acceptable deal is reached, or if Netanyahu abandons the legislation. Two Likud coalition members, Yuli Edelstein and David Bitan, expressed solidarity with the March 25 statement of Defence Minister Yoav Gallant (Likud), who publicly called for ongoing judicial changes to be halted to allow for dialogue with the opposition. A third coalition member, Avi Dichter, had also unofficially urged a halt to the judicial changes.

If the government resumes without a negotiated settlement and expedites the final votes for the judge appointment committee and the override bills - the two most contentious bills - the likelihood rises of coalition dissenters depriving the 64-seat coalition of the minimum 61 votes required for passage into law. Given the importance the government assigns to these judicial changes, dissenting coalition members will likely face Likud party sanction, and probably leave the coalition to eventually boost the opposition's strength, including in a vote of no-confidence against the government, increasing the likelihood of collapse.

Coalition members who have previously threatened to resign if the government paused judicial change legislation include Justice Minister Yarin Levin (ranked Likud number two, after Netanyahu) and National Security Minister Itamar Ben Gvir (Jewish Power). These members have temporarily accepted to abide by Netanyahu's decision, in Ben Gvir's case following a promise by Netanyahu to receive a National Guard under his direct (rather than the police commissioner's) control by July; this promise itself has fueled additional protests.

Should Netanyahu substantially scale back or altogether cancel proposed changes (or deny Ben Gvir his promised guard without compensation), the risk of government rebellion would similarly rise. Both Ultraorthodox factions currently accept Netanyahu's lead; potential defections in this context would primarily originate from within Religious Zionism/Jewish Power, and Netanyahu's Likud party.

Single-day strikes have by now affected most of the economy and will likely become protracted if dialogue fails. Strikes initially included the technology, healthcare, education, and legal sectors. The March 27 general strike additionally affected Ben Gurion International Airport (flight disruptions), Haifa and Ashdod sea ports, malls, commercial chains, banks, hospitals (non-emergency services), and local authorities.

Histadrut general strikes have typically focused on labor and wage issues, not politics. If dialogue fails to produce a negotiated agreement, strikes will almost certainly resume for longer periods of time, especially before final bill readings in the Knesset.

Strikes have spread among military reservists, which would significantly impact Israel's security preparedness and deterrence levels if resumed. A growing number of Israel Defence Forces (IDF) reservists have threatened to not report for training and duty if the government's judicial changes persist. Insubordination risks degrading combat preparedness and deterrence, but is unlikely to hamper mobilization in cases of sustained attacks on Israel's territory.

Indicators of changing risk environment

• The coalition and the opposition reach broad agreement on the scope and content of the proposed judicial changes, particularly on the judge appointment committee and override bills, in a way that is also acceptable to the civil society organizations leading the protests.
• The coalition takes advantage of the school holidays in July, when large numbers of Israeli families travel abroad, to push through legislation.
• Increasing recriminations traded between both sides, leading to negotiations stalling or collapsing.
• Military reservists (and potentially regular service members) resume their refusal to serve, likely to again impact readiness and deterrence.
• Refusal to serve, as a result of resumed judicial changes legislation or Ben Gvir's demand for a National Guard directly subordinate to him, extends to members of the IDF, police special units, and police border guards maintaining security in the West Bank, increasing attack risks.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.