'If reform is passed, it will crush hi-tech' Michal Tzur-Shalev warns

The hi-tech protests against the legal reform are intensifying from week to week - more and more companies and funds are announcing their decision to transfer finances from Israeli accounts to move them abroad, dozens of companies have joined the initiative to shut down the economy on Monday and industry leaders are taking an active part in organizing the protests and civil demonstrations. 

"If the reform is passed, in its current form, it will more or less crush hi-tech," Michal Tzur-Shalev, founder and president of Caltura and one of the most prominent women in the Israeli hi-tech industry warned, in an interview with Walla!.

"The reform has already begun to give negative effects on investments and concerns of investors and entrepreneurs. There are thousands who have already quietly transferred their funds abroad and there are many businesses that are quietly building their own protection plan for their company. A lot of companies are considering whether to establish a development center subsidiary here. Things will not happen in one fell swoop and eventually, we will wake up in a few years and return to the orange season."

In the late 90s, Tzur Shalev, a doctor of law and an entrepreneur, established with former Prime Minister Naftali Bennett the startup "Sayuta", which dealt with information security.

In 2006, after a famous $145 million exit, Bennett turned to politics, and she founded Caltura, which provides a video platform and cloud services, and employs about 700 people, of which about 400 are in Israel. In recent weeks, she has been one of the leaders of the hi-tech industry to protest the revolution in the judicial system led by the government.

"In hi-tech, they are afraid of both the security and the country's economy, which relies on a relatively limited business and productive sector, which among other things includes hi-tech, which is its significant engine," she says. 

"Mostly what scares everyone is that there will be a lot of uncertainty in the country because, in a situation where the government has unlimited power, you never know what laws will be passed. Who can promise me that women will even be able to get elected to the Knesset, that they will not impose taxes, that they will not nationalize our pensions? Everybody says, 'What are you talking about? These things will not happen,' but the system should be that it ensures that any of these freedoms can be protected."

Prime Minister Benjamin Netanyahu will come and tell you – during my tenure, hi-tech thrives. Trust me

"Of course, Bibi deserves great credit for the fact that the hi-tech here in Israel has been built and prosperous. One of the reasons that hi-tech thrives is because there is a very delicate texture of governmental structures and a culture that is democratic and pluralistic. 

"All in all, we are a very conservative business sector: We say - there is a system here that works, the security and the economy are excellent. And Bibi - you have built a very strong sector here and a strong economy, something that works with very delicate balances. Don't ruin it with a wave of your hand. A moment before you go and disassemble with a 500-kilo hammer, you have to stop and think that many times there is no turning back after smashing."

Some will argue that you yourself are crushing the economy, by protesting, panicking, and withdrawing funds abroad

"Hi-tech people are not experts in economics or law but are led by the investors who invest here in the State of Israel. A significant percentage of the money that goes into hi-tech is foreign money. These are tens of billions of dollars that have flowed and hopefully will continue to flow to Israel in the coming years. But in the end, investors ask themselves whether they want to invest in a place where there is very large economic uncertainty and they sit and think about where to put the pension funds that they manage. In the US and Ireland or Hungary, Russia or Israel, which will become a similar regime?"

The cyber company Waze joined Papaya Global this week and announced the removal of some of its funds from Israel, in response to the moves led by the government. Tzur estimates that these measures will only get worse. 

"At the moment, we are seeing the first buds of reactions from investors and economists. I have not found a single leading economist who says that there is no harm and there is no risk in these moves. In the end, investors are rational, they hear and listen. If I understood correctly, the Bank of Israel also recommended that pension funds in Israel consider whether to disperse their investments and invest abroad as well, so if the Bank of Israel comes and says this, what will the companies that come and want to establish a new venture do? They will be afraid that they will not be able to raise money and will look at it a few years ahead, we are only at the beginning of the process."

Are you also considering such steps?

"I, as an entrepreneur, am first and foremost optimistic, I try to do what I can to make this move stop. I think there's still time for those in charge of the country to sit down and think about whether in one fell swoop they want to break what has been built here for 75 years. So right now I'm investing most of my efforts in trying to convince that we need to stop for a moment and reach a dialogue because there is a large stratum of people here who want to sit and talk and find a solution that will serve the country for many years to come."

Right-wing voters say - there were elections, this is a government that has won the trust of the people, and this is a protest of losers. The hi-tech protest is also said to be a protest by losers

"The elections were legitimate and so were the results. But even many Likud voters did not vote for this reform, they did not vote for a coup d'état, and no one explained to them that this is a world in which they will drop all the land under the courts and make them political. So there are ways to fix it, there are a lot of things that need to be corrected both in the political system and in our structures and institutions and probably in the judicial system, just let's stop and talk about it."

So if tomorrow Prime Minister Benjamin Netanyahu invited you to a meeting, what would you say to him, what can be corrected?

"I would tell him, 'Let's stop for a moment and listen.' One of the feelings that the public currently has is that despite the very reasonable and calculated voices that are being heard, no one is listening to them. I see the chaos in the Knesset committees, not really attentive to the voices of the experts. This is a very significant move that cannot be managed aggressively and with the wave of a hammer. Such a move, a change in the system of government in the country, is not something that is passed in a few weeks and without broad agreement. 

"I'm afraid when I read polls that say 30 percent of the public is afraid that there will be a civil war here. What prime minister wants to be a signatory to the country's only civil war? So I say to Bibi, let's stop and think. Neither Bibi nor Smotrich wants to be a signatory to crushing the economy, crushing hi-tech or civil war."

Tzur-Shalev, who also sits on the board of directors of the Israel Democracy Institute, believes that if the government stops with the legal reform, it has a "historic opportunity" to create the infrastructure for a constitution with broad consensus. 

"You have to think about how the founders of the state managed to agree on the Declaration of Independence, the nature of the state, and establish it, as a basic law, to take the rights of the individual that were never enshrined as a basic law. We are in a situation where the country is in a good situation, both economically and security-wise, so first, we need to preserve these institutions, and then we can make changes in the system, and yes, in the judicial institutions as well," she says. 

"This is a historic opportunity that Bibi has and if I could sit with him and tell him this, I would tell him that you have the opportunity to make a move that no one has been able to make before you and that is actually also to stabilize and ensure the quiet in the country here, internally, for many years."

Did you speak with former Prime Minister Bennett about the protest? Do you get a backup from him?

"I'm not looking for backing for any move because the moves here are not political, this protest that has arisen is a social and business protest that crosses political boundaries. In my family, there are ultra-Orthodox religious, right-wing, left-wing, national religious, Sephardim and Ashekenazim, all of them are ultra-Orthodox and they fear the disintegration of the social fabric and the growing tension in society, it's not a political protest, it's a social protest - the biggest ever."