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US lawmaker says high-tech investment 'leaving Israel' amid judicial overhaul

Ro Khanna says he told Israeli president that venture capital firms in California are worried about investing in Israel's technology sector
Ro Khanna has also faced criticism from progressives for his pro-Israel stance and also for commending the country's technology sector.
Ro Khanna has faced criticism from progressives for his pro-Israel stance and also for commending the country's technology sector (AFP/File photo)

US Congressman Ro Khanna has said he warned Israeli President Isaac Herzog that venture capital firms in California are concerned about investing in Israel's technology sector amid the country's contentious judicial overhaul.

Khanna, a Democrat lawmaker who represents the district encompassing Silicon Valley, made the remarks on Monday during a town hall meeting in San Jose, California, after he was asked about the state of Israel's democracy by members of the UnXeptable protest movement, which is in opposition to Israel's judicial reform.

The California congressman said he conveyed this point to both Herzog and his brother, US ambassador to Israel Michael Herzog, during the president's recent visit to Washington to address Congress.

Khanna told the protesters that he spoke with Herzog and his brother, saying: "I said one of the things that's happening is the high-tech investment in my district is leaving Israel."

"A lot of my venture capital friends and a lot of my tech friends … are now concerned about putting the same amount of investment [into Israel]," he said, as quoted by Haaretz.

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"It's not just a democracy issue, but it's an economic issue because you're very proud of the start-up culture that Israel has."

Investments in Israeli tech start-ups have dwindled in the past year.

A new report published last month found that in the first quarter of 2023, the number of first investments by the 10 most active venture capital (VC) funds in Israeli technology firms dropped to the lowest level since 2015. A first investment is when a VC fund adds a company to its investment portfolio for the first time.

Khanna says Israel is a 'friend and ally'

A number of Democrats in Congress have condemned the recent passage of an Israeli law that limits the power of the country's Supreme Court.

Khanna also spoke out against the decision on Monday.

"Many of us in Congress have written letters and will continue to speak out about the importance of an independent judiciary that upholds rights. I certainly believe that Israel is a friend and ally, but we want to have that grounded around democracy and the rule of law," he said.

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"The court is a key component of that in Israel because they don't have a written constitution so the court provides some of that check. I will continue to be a voice for that position as will many in Congress and I had conveyed some of that directly to President Herzog."

However, the lawmaker has also faced criticism from progressives for his pro-Israel stance and also for commending the country's technology sector.

Palestinian activists have called on Khanna to sign legislation sponsored by fellow Democrat, Betty McCollum, which promotes the human rights of Palestinian children. He has not signed the bill.

Khanna has also faced pushback from Indian activists over his work to increase ties between the US and India, whose government under Prime Minister Narendra Modi has come under fire for its treatment of religious minorities in the country and for cracking down on India's civil society.

"Mr Khanna's emphasis on expanding American jobs while turning a blind eye to Mr Modi's relentless attacks on India's democracy reveals his narrow-minded political approach and distorted worldview," Syed Ahmed, a resident in Khanna’s district, previously told Middle East Eye.

"Khanna's stance positions him unfavourably in history." 

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