Bloomberg Interview With Benjamin Netanyahu Transcript

Prime Minister, thank you so much for speaking to Bloomberg. Now you’ve said that you will seek some broad consensus in your next changes for the judicial. What are those?

Well, I think that we’ve already done quite a bit. I’ve stopped the judicial legislation for three months, seeking consensus from the other side, unfortunately, not getting it. Then brought in a relatively minor part of the reform, passed it and then said I’m still going to give it several months to try to get another consensus. What is it? It would probably be about the composition of the committee that elects judges.

With the selection of the judges, how they’re selected?

Right. That’s basically what’s left because other things, I think we should not legislate. I don’t think we should move from one extreme where we have perhaps the most activist judicial court on the planet to getting to a point where the legislature or Knesset can just knock out any decision that the court makes. There has to be a balance. That’s what we’re trying to restore.

So Prime Minister, when you look at the change in selection for the judges, how quickly could that come?

Well, if we get a compromise, it could come immediately. If we can’t get a buy-in from the opposition in the parliament, there’s always a buy-in from the public, what is the thing that the public accepts. I’m giving it my best shot. I’m spending, I would say 24 hours a day on it. I’d say about 12 hours a day.

And if the public is not behind it, what do you do? Do you [inaudible 00:01:30]?

I think you should choose something-

Do you stop?

I think you should choose something that has broad acceptance.

Which looks like what?

Which looks like something that I’d like to negotiate not even on Bloomberg.

Okay, but give me a flavor of is it walking back some of the things that have been said by certain ministers around you?

Oh, ministers can say anything. I don’t control words in our parliamentary system. I control deeds and that has to be understood. But since you know the European system, you know that unlike a presidential system, you don’t control what is said by members of your cabinet.

But you can ask them to tone it down. Have you asked them to tone it down?

A hundred times.

And they’re listening?

I succeeded 50 times.

And you’ll continue to do so?

You don’t always succeed. You don’t always succeed. But what’s important to understand is when the dust settles, are we going to have Israel that is stronger democratically or is it weaker democratically? Is it something where you’re going to have the balance that you need between the will of the majority and the rights of the minority or individual rights? Has that been strengthened, that balance, or has it been weakened? I maintain it’ll be strengthened. It certainly will not be weakened.

Prime Minister, there are a lot of questions, especially from investors, especially from businesses because you always need a body that makes sure that anything that the government passes is legal. There’s maybe a perception problem, but this is weakened. So what is the message to business investors and to markets right now?

I don’t think it’s weakened. Actually, I think the ultimate regulator in democracies are not courts, but are the public choice. I think that’s a fundamental misconception of how democracies work.

But you always need someone to overlook them.

But if you have a lousy government, then they’re not reelected. That’s the most important thing. The most important regulator is the political markets, but I don’t think that we should, in any way, weaken the courts. There’s a difference between an independent court and an all powerful court. I think what we’re trying to do is bring back to Israel where it was in his first 50 years, where there was an adequate balance between the courts, the legislature, and the executive.

But Prime Minister, there’s a perception problem, maybe if that’s what you think, but there’s certainly a division in this country with hundreds of thousands of people protesting and market participants worried about what happens next. What’s your message to them?

When the dust settles, Israel not only will remain a democracy, it’ll be even a stronger democracy, but more importantly, it will not, in any way, impair the enormous business and economic capabilities of Israel in the new technological age.

But Prime Minister, when does this dust settle? So far, you haven’t even been prepared to say that you will follow what the Supreme Court decides come October.

Now we follow what the Supreme Court decides and the Supreme Court so far has also followed the basic rule of not striking down basic laws, which they themselves deem are the basis of the Constitution. Both things have to be maintained.

So would you tell markets and investors today that whatever they decide, there’s something big that’s going to be decided in the next couple of months? You will abide by that?

I hope that we don’t get into a constitutional crisis. I think we won’t. I think there’s a way of reaching an equitable compromise, which is what I’m trying to do now.

Right.

If I reveal to you everything that I’m trying to do, I won’t be able to do it.

But the market wants to understand. There’s nothing worse for the markets or investors to actually be in the limbo where you’re not sure exactly what will happen or how the government will react. Will you abide-

I’m absolutely sure.

… by the ruling?

I’m absolutely sure that Israel will come out stable and successful and democratic, at least as democratic, in my view, more democratic. I don’t think we’re going to tear the country apart. I don’t think you’re going to have civil war. I think right now, what you’re seeing is the natural conflict between two opposing views that have not yet meshed, but they will mesh.

Do you support your central bank governor who is very well respected internationally?

Sure. I appointed him.

Will you back him for another term? He has to decide, I think, by next month.

Well, I haven’t talked to him yet, but I will. But I’ve guarded, I would say, rigorously his independence and the independence of the central bank and that will continue to be the policy. I will talk to him, but you wouldn’t believe this, but we just not had the opportunity to discuss that.

But Prime Minister, when you talk to him, will you ask him to stay on?

Possibly. I want to think about it. I haven’t had time.

What are you thinking now?

I think he’s been an exceptional central bank director and I think that’s a possibility that I’ll have to talk to him about.

One of your ministers I think called him a savage for-

[inaudible 00:06:13].

… raising interest rates.

Yeah. Well, my ministers in our hectic parliamentary system could say anything, but it’s a fact that we’ve never intervened with the independence of the central bank and we won’t.

And so you-

In fact, I think I passed some laws or corrective additional laws that safeguarded the independence of the central bank. I do not want the government broaching in on what the central bank has to do.

So do you support the interest rate hikes?

I leave that decision to the central bank. I’ve had several central bank directors because I’ve been in government a long time. I think in a few months, I’ll be probably more time in as Prime Minister than anybody in the Western world for the last half century, so I’ve had a lot of central bank directors to talk to. I always talk to them in a padded room, absolutely soundproof that we could hurl at each other whatever we want, but when I come out, I always give backing to the central back director.

But Prime Minister, it would be a pretty powerful message to the markets given the divisions and given the turmoil if you were to ask him to stay on.

Could be. That’s a consideration. I’ll consider it.

But do you agree, will that be a powerful message?

I think the powerful message is the independence of the central bank and I think the choices that I’ve made in bringing in central bank directors, whether it was Stanley Fischer and after him, the current central bank director, I think people see that we choose and choose well.

And that will not-

And some others in between. I don’t want to-

And that will not change?

No, it will.

You’re overhauling judiciary, but the central bank won’t be [inaudible 00:07:57].

I’m not overhauling the judiciary. I’m correcting the judiciary to where it was, I don’t think we’ll get there, but to where it was at Israel’s first 50 years before the judicial imbalance was created and I’m trying to bring it back modestly into line. This is described as the end of democracy. Why? Why is it described as the end of democracy? Because we say that the judiciary in Israel and in Israel alone cannot say, “I’m striking down a government decision or a parliamentary law simply because I think it’s unreasonable.” That doesn’t exist to that extent in any of the democracies.

Prime Minister, no, but it’s a check and balance and again, this is what investors are worried about.

There are plenty of checks.

I was going to ask you, what’s your message today for a business that wants to come here that’s a little bit nervous about what they can do longer term?

There is no absence of checks. In Israel, the courts have all the checks, but they have no balance. So if you’re concerned that the court will not be able to intervene in certain decisions, they’ve got a hundred different checks on that. But one thing that we want to have is not to be able to have the court intervene on anything, on any matter without any reference to any statute or any law. That is not democracy.

Prime Minister, it’s my understanding they’ve only done that a handful of times. But if you’re an investor today, right, and you look at Israel that has to deal with Saudi, that has to deal with Iran, why are you falling on the sword about the judiciary?

I’m not falling on the sword. I’m trying to correct an imbalance because millions of Israelis vote time and again for governments who want to have certain government policies. The governments are elected and they want to enact their policies and the Supreme Court often intervenes in ways that nullifies the will of the majority without any reference to a law. For example, I’ll give you an example. We have foreign workers. Israel has been able to prevent the entry of foreign workers.

And Prime Minister, we’re fully aware, but were you upset by hundreds of thousands of people in the street?

Well, there’ve been hundreds of thousands of the others. That’s a reflection of democracy.

No, but you’ve-

Nobody describes the other side. We had a quarter of a million people in the street the other day supporting the judicial reform. You didn’t hear a word about it.

But Prime Minister, you were the one that brought people together that build bridges. What’s happened?

Well, because A, it didn’t happen overnight. When I did the economic reforms that made Israel an economic juggernaut, a free market economy, technological economy, I had huge demonstrations. I had a five months national strike, three months and two months from the labor union. When I tried to take the gas out of the seabed, I had the same people who are organizing the strikes now saying, “This is the end of democracy. This will destroy our environment.” Mind you, substituting gas for coal, destroying the environment. But it’s the same thing. Now they’re saying we’re destroying the democracy. That’s nonsense. But I understand it’s nonsense in my view, it’s not nonsense in their view. They’re generally concerned. I think there’s a happy middle ground there. I’ve always found it in other matters, whether it was in defense or Iran or free market economies or taking gas out of the seabed. I’ll find it here as well.

Again, there’s so much nervousness right out there when you speak to investors and when you speak to the markets. Give me a sense of what you would be able to do or to give to normalize relationship with Saudi Arabia.

Well, Saudi Arabia, I think, is one of the exceptional things that tells you why I’m very optimistic about Israel, really one of two reasons, one of two main reasons. One is that, well, I’ll start with Saudi Arabia, but then I’ll get with the other one. I think that we are about to witness a pivot of history, maybe. I can’t guarantee that it’ll happen. But first, there is an economic corridor of energy, transport, and communications that naturally goes through our geography from Asia to the Arabian Peninsula to Europe. We’re going to realize that. By the way, my sense is we’re going to realize that despite whether we have formal peace or not.

But do you have to give concessions? We understand-

Probably.

… Saudi Arabia-

Some. Some, but I think-

So what would you give? Would you limit, for example, Jewish settlements in the West Bank?

Well, again, you have a good penchant as a good journalist to try to eke out for me my negotiation stance. Of course, you’re not going to succeed, but you could keep on trying. But do I think it’s feasible to have that and do I think that political questions will block it? I doubt it. If there’s political will, there’ll be a political way to achieve normalization and a formal peace between Israel and Saudi Arabia.

But Prime Minister, I’m-

That has enormous economic consequences for your investors. And if they have to bet on it right now, I’d bet on it, but I can’t guarantee it.

And Prime Minister, this is why. I’m not trying to ink out negotiation taxes.

Of course, you are.

I’m trying to understand what you’re willing to give because this is such an important partnership for Israel.

Well, I’ll tell you what I’m not willing to give. I’m not willing to give anything that will endanger Israel’s security. That, I will not do, but I think there’s enough room to discuss possibilities.

Will that look like-

I don’t think the Palestinian thing is brought in all the time. It was always brought in and it’s sort of a checkbox. You have to check it to say that you’re doing it. Is that what is being said in corridors? Is that what is being said in discreet negotiations?

I don’t know. You tell me. What’s being said?

The answer is a lot less than you think.

Okay. So if you look at, for example, giving the Palestinians their own state, is that a red line?

It won’t be their own state. It’ll be an Iranian-controlled state in an area that is about the width of the Washington Beltway. If you take Israel and the Palestinian areas in [inaudible 00:14:13] and the West Bank together, it’s a little more than the width of the Washington Beltway. You put Palestinian state, which will be controlled by Iran, in half of that or in the middle of that, you won’t have a Palestinian state. You’ll have an Iranian terror state and that’s-

So that’s a no?

Of course, it’s a no, yes.

So under no circumstances would you allow that?

No. What I said often is that the way that I would have a solution is two things about that. One, that the Palestinians should have all the powers to govern themselves and none of the powers to threaten Israel. This means that in whatever final settlement, peace settlement we have with the Palestinians, I would say Israel has the overriding security power in the entire area, ours and theirs. Otherwise, we collapse. They collapse.

Prime minister, you’re going to UNGA in New York, I believe, second week or third week of September.

Yes.

Will you meet with Donald Trump?

I don’t know.

Have you spoken to him on the phone?

You’re the first to have suggested it. No, I haven’t.

Are you expecting an invitation to the White House from President Biden?

Well, he said that we are going to be, so I’ll leave it up to him.

What are you most excited for going to UNGA?

Well, I’ve been there many years.

I know, many times.

What am I most excited about? The possibility of broadening the already historic Abraham Accords. I think this will change history. I think it’ll not only end the Arab-Israeli conflict, not the Palestinian-Israeli conflict, but our conflict with 98% of the Arab world. It’ll also, I think, create a new peace between the Jewish state and the Muslim world.

But Prime Minister, the countries of the Abraham Accord, some of them have been frustrated about some of the noise that’s been coming out of your government. Will you meet with them to try and reassure them?

Well, we meet with them all the time and we reassure them all the time, but I think some of them are habituated to the fact that noise is noise. I think that’s true of the markets too. There’s a lot of noise in the market. But if you look at the fundamentals of Israel, if you look at the growth rate, which is double the United States expected now, you look at the deficit, which is 1.5 at most percent compared to 5.5% in the US, if you look at the debt-to-GDP, which is 60%, which is less than 100% in the US, and you know what it’s like in the EU, and if you look at the investments, I mean, Nvidia builds here the supercomputer. Intel just puts $25 billion for a chip plant.

These are prospects longer term, but you’re right, they are committed.

That’s my point, that there’s noise in the short-term markets. There’s clarity in the long-term markets. Now, Amazon just invests seven billion in cloud services here. Why are they doing that? Because they know something I’m going to do and those thing that I’m going to do and I’d like to bring it to your investors’ attention. A few years ago, 10 years ago, I decided that Israel would be one of the 10 cyber powers in the world, one of the five. We’ll become one of the more than five, higher than that. Now I think that what we’re going to do and what I’m organizing is a government policy and a government board with money to make Israel one of the three top AI powers in the world.

Prime Minister, what do you say to investors that worry that you’ve changed in terms of priorities?

I haven’t. My priorities are peace, prosperity, and security. I think that they’re all dependent on prosperity to have the ability to fund the defense needs that we have and to expand the peace. The prosperity is based on Israel’s supreme technological prowess. People rated us seventh on the AI list. You know why? Because of the absence of government policy. I’m changing that and I’m going to announce in about six weeks the government policy, the organization, the project leader for a host of civilian and military AI that will thrust Israel right up there. If you’re an investor and you are not seeing that the added value that is going to accrue to national economies is based on their ability to generate AI-

But they’re worried. I-

… and use that. This is not hype. This is Israel and we have done that.

I know, but they’re worried about the shorter term, but thank you so much for your time, Prime Minister.

Oh, but remember this. Here’s a good one. This is recorded today. Now we should look at one year from now. That’s pretty short term. And we’ll see, was I right in telling you that Israel right now is undervalued? You should invest in Israel. Smart money is coming into Israel now like these big firms because they understand that we’re going to a good place.