Israel's parliament advances contested law for judicial overhaul

Israel's parliament on Monday voted to push ahead with a contested overhaul of the country's judicial system championed by Prime Minister Benjamin Netanyahu's religious-nationalist government that has sparked mass protests.

Opposition in parliament vowed to "fight for the soul of the nation" while tens of thousands of Israelis gathered in the streets outside trumpeting their objection. Lawmakers argued late into the night before the proposed changes were approved in a first reading.

"A great night and a great day," Netanyahu wrote on Twitter after the preliminary vote.

Wielding 64 of the Knesset's 120 seats, Netanyahu looked likely to win eventual ratification for the two revisions on the agenda - one increasing the government's sway in choosing judges and the other setting limits to the Supreme Court's ability to strike down legislation.

Polls have found that most Israelis want the reforms slowed to allow for dialogue with critics - or shelved altogether.

The shekel was 1% weaker versus the dollar. Seeing instability from the reform feud, many economists, and leaders from high-tech and banking have warned of investor and capital flight from Israel. But a key coalition figure brushed this off.

Israel’s Prime Minister Benjamin Netanyahu after his speech in Israel’s parliament, the Knesset, just before a vote on a contentious plan to overhaul the country’s legal system, in Jerusalem

"There is no link between the justice system reforms and any blow to Israel's economy," said Knesset Finance Committee chairman Moshe Gafni and head of the ultra-Orthodox United Torah Judaism party. "Any attempt at linkage is politicised."

Opposition lawmakers protested Gafni's statement, calling the committee "a circus".

Earlier in the day protesters posted online videos of themselves trying to prevent lawmakers from Netanyahu's coalition leaving for the Knesset. Police said eight people were arrested for disorderly conduct and traffic rerouted after demonstrators blocked some roads.

"Demonstrators who talk about democracy are themselves bringing about the end of democracy when they deny elected delegates the fundamental right in a democracy - to vote," Netanyahu said in a statement.

The government says the reforms are designed to end overreach into politics by an unrepresentative Supreme Court. Critics say Netanyahu - who is on trial on graft charges that he denies - seeks legal changes that will hurt Israel's democratic checks and balances, foster corruption and bring diplomatic isolation.

Opposition leader Yair Lapid tweeted that demonstrations would mount "in the fight for the soul of the nation".

Israel's head of state, President Isaac Herzog, has repeatedly urged the government and opposition to hold compromise talks. But while both sides have voiced willingness, they disagree on terms.