When Israel’s controversy over judicial reform reached its peak earlier this year, there were dire predictions—some almost indistinguishable from threats—that an attempt to return to the constitutional status quo ante 1995 would send technology companies fleeing the country, and possibly tank the Israeli economy. Yet, although a judicial-reform compromise might still emerge, the country’s high-tech sector seems to be doing fine, notwithstanding some bruising from a worldwide downturn. Jonah Mandel reports:

The global economic slowdown and domestic political turmoil have not impaired the long-term prospects of Israel’s vaunted high-tech industry, officials and insiders say, despite a recent decline in hiring in the sector. Nearly 18 percent of Israel’s gross domestic product comes from the tech sector, which employs 12 percent of the workforce, generates nearly a third of its income tax, and constitutes half of exports, official figures show.

Worldwide inflation and climbing interest rates had caused a drop-off in Israeli tech jobs in 2022, with the number of hirings in the sector dipping 0.2 percent in the first quarter of 2023—its first fall since 2008, said a newly issued report. The “stagnation” in tech hiring, however, had yet to have a negative impact on Israel’s GDP or exports, said Dror Bin, director of the Israel Innovation Authority (IIA) which compiled the report together with the Start-Up Nation Policy Institute (SNPI).

IIA’s Bin noted the data indicated no immediate effect of the legal crisis on Israel’s economy. “I don’t see companies taking the operations outside of Israel,” he said. “We do see a trend of more entrepreneurs deciding to establish their legal entity outside of Israel, but the operation remains in Israel.”

Israel will likely respond directly against Iran after yesterday’s attack, and has made known that it will calibrate its retaliation based not on the extent of the damage, but on the scale of the attack. The specifics are anyone’s guess, but Edward Luttwak has a suggestion, put forth in an article published just hours before the missile barrage: cut off Tehran’s ability to send money and arms to Shiite Arab militias.

In practice, most of this cash comes from a single source: oil. . . . In other words, the flow of dollars that sustains Israel’s enemies, and which has caused so much trouble to Western interests from the Syrian desert to the Red Sea, emanates almost entirely from the oil loaded onto tankers at the export terminal on Khark Island, a speck of land about 25 kilometers off Iran’s southern coast. Benjamin Netanyahu warned in his recent speech to the UN General Assembly that Israel’s “long arm” can reach them too. Indeed, Khark’s location in the Persian Gulf is relatively close. At 1,516 kilometers from Israel’s main airbase, it’s far closer than the Houthis’ main oil import terminal at Hodeida in Yemen—a place that was destroyed by Israeli jets in July, and attacked again [on Sunday].