15 August 2024

The Price of Equality

Funding Conditionality as a Judicial Remedy in Israel’s Conscription Case

Israel’s long-standing debate over ultra-Orthodox Yeshiva students conscription has reached a critical juncture in June 2024. The Israeli Supreme Court not only declared the absence of a legal basis for a broad and overall exemption for Yeshiva students but also introduced a remedy that I claim might be controversial: the suspension of state funding for Yeshivas whose students are subject to conscription but refuse to comply with it. This judicial use of funding conditionality, a tool more commonly wielded by political institutions, marks a significant shift in the Court’s approach to enforcing equality in military service and the rule of law. In this blog post, drawing conclusions from the EU experience, I argue that this remedy, while potentially powerful, raises serious concerns regarding its effectiveness, democratic legitimacy, and potential for misuse.

Background: Equal Conscription Duty

From its establishment in 1948, Israel was built on the noble “people’s army” model, with mandatory conscription. This model, under the visionary leadership of David Ben-Gurion, one of the state’s founders and its first Prime Minister, was designed not only to provide a military solution but also to foster participation and integration of different populations. Exemptions were initially limited to 400 for ultra-Orthodox Yeshiva students to continue Torah study, as part of a delicate and complex arrangement in state-religion relations in the new state. This decision was also a response to the severe damage to Torah study and Judaism that occurred during the Holocaust of the Jewish people as part of World War II.

Since then, given the numerous security challenges arising from Israel’s geographical location among hostile neighboring countries, Israel has been built on this model. Generally, at the age of 18, men and women are conscripted for regular service of about two to three years, and afterward, many continue to serve in reserve duty.

Over the years, the number of conscription exemptions has steadily increased. While there have been sporadic political challenges to this trend, they have not resulted in any significant changes. By 1970, the number of exemptions had already reached about 5,000. A petition was then filed with the Supreme Court, requesting the Minister of Defense to conscript Yeshiva students to ensure a more equitable distribution of the military burden. Similar petitions were filed in 1981 and 1982, but they were dismissed due to lack of standing and justiciability. In 1988, the Court ruled that the issue was justiciable, but the scope of exemptions was held reasonable.

The first judicial intervention came in 1998. The scope of exemptions then stood at 30,000 for ultra-Orthodox Yeshiva students. The Court ruled that given the high number of exemptions, the exemption arrangement is a primary arrangement. As such, the fundamental principles of public law, derived from the principle of separation of powers, require that it be established in legislation.

Left with no choice and in the absence of authorization for broad conscription exemption, the Knesset legislated the exemption arrangement into law. Over the years, various solutions emerged based on models of individual quotas, collective quotas, optional “decision year”, alternative models for military service, and more. The various statutes were repeatedly examined by the Court. In 2006, it was determined that the then-in-force statute infringed on the right to equality, recognized in the ruling as a constitutional right. Nonetheless, the Court ruled that since the statute was in force for only several years, it did not have enough time to fulfill its goals. Consequently, it was too early for the Court to declare the unconstitutionality of the statute. Hence, the Court ruled that “the statute is still constitutional”. In 2012, the Court ruled that the statute was unconstitutional. The declaration of invalidity was suspended in the original Court’s decision, and in the absence of a legislative arrangement, the suspension was extended by the Court. The new legislative arrangement established in 2015 was also ruled unconstitutional in a 2017 ruling. Again, the Court suspended the declaration of invalidity over and over again. Due to various factors (the political difficulty in reaching an agreement, repeated elections and a hanged parliament, COVID-19), it was extended for six years. As of June 30, 2023, there has been no legal basis for exemptions of Yeshiva students from conscription.

The Watershed Line Case: The June 2024 Ruling

The Israeli Supreme Court’s 2024 ruling on ultra-Orthodox conscription exemptions marks a significant shift in the judicial approach to this long-standing issue. To understand its implications, it is crucial to examine the practical and legal context. The Court, drawing from its experience with previous rulings, recognized that mandating conscription directly would neither lead Yeshiva students to the recruitment office nor succeed in bringing a broad social or communal change. Furthermore, this time, the petitioners learned to accurately assess the requested remedy and bind it to the financing ability. Consequently, the Court adopted a different approach, focusing on halting funding for Yeshiva students as long as there was no valid statutory exemption arrangement. In other words, the Court enforced the rule of law rather than equality per se.

The Court delved into the question of whether there was a connection between the funding criteria and the legal regulation of conscription exemptions for Yeshiva students. The Court viewed support for religious institutions as within the government’s authority. However, it is subject to all administrative law requirements, including the prerequisite that financial support funds be allocated equally under Section 3A of the Budget Foundations Law, 1985. The fact that the support criteria were based on a scoring system linking conscription to the level of support received by institutions indicated the connection under examination. Moreover, the Court found that the very definition of “student” in the financial support criteria was contingent on the existence of an exemption from conscription.

This time, given its decades of experience and the ineffectiveness of its earlier decisions, the Court decided to condition the funding to the Yeshivas due to the lack of an authorizing statute for the conscription exemptions. This judicial choice, which did not settle for invalidity declarations, has signaled, as aforementioned, a shift in the Court’s stance.

The choice of funding conditionality is not only an exceptional remedy by itself but is also exceptional to the Israeli Supreme Court’s tendency to prefer dialogic and non-coercive alternatives. These include doctrines that leave the decision in the political arena and soft remedies. In particular, the extensive use of suspended invalidity, invalidity warning, giving normative status to legislative initiatives, babysitting, and more.

Comparative Experience: Funding Conditionality in the EU

The funding conditionality doctrine, even if generally employed by political institutions rather than judicial ones, is a well-known doctrine in the EU regime. The CJEU in the EU approved the practice of European institutions applying economic sanctions as a condition for enforcing compliance with EU values and principles in Hungary and Poland.

Funding conditionality mechanisms were required due to the unique structure of the European Union, as a supra-national political institution, which in certain contexts faces difficulties in enforcing the organization’s principles against the states. Accordingly, the doctrine of funding conditionality resulted from the enforcement gaps in protecting the rule of law in the European Union when both institutional enforcement mechanisms and individual enforcement mechanisms proved to be rather weak. This doctrine is not new, and it has been used before by the Union and its institutions, for example, to influence the foreign policy of Member States.

However, the use of funding conditionality as a tool to protect the rule of law within the Union is a relatively new phenomenon. The significant turning point was in 2010, with Viktor Orbán’s rise to power in Hungary, a point that symbolized to the Union and to a large extent to the rest of the world the beginning of the process of democratic backsliding in several Member States. In the following years, the European Union tried to deal with the problem, which began to expand to other countries, and to Poland in particular, through various means at its disposal such as an infringement procedure or through diplomatic means, including political dialogue.

However, with the understanding that these tools are failing in the face of democratic retrogression, in 2017 as part of the discussion on the multi-annual financial framework (MFF) for 2021-2027, the European Union began to examine the possibility of using various tools to condition the funding given to countries that violate the Union’s values. A new funding conditionality doctrine was designed, including several different tools, for the European response to the wave of populism and autocratic tendencies that accelerated in Europe. Simultaneously, the coronavirus and the acceleration in the distribution of recovery budgets from the Union served as an additional leverage for funding conditionality. In practice, starting in 2020, budgetary conditionality began to be used through three different tools: the Budgetary Conditionality Regulation, conditionality within the framework of the coronavirus recovery program (RRF), and conditionality in the Union’s structural funds.

Funding Conditionality as a Remedy: Red Flags

Conceptually, the doctrine of funding conditionality can be given great weight. However, it comes with its own set of challenges. The experience gained in the European Union has raised several difficulties with this remedy. Some are endemic to the European Union and its institutions, focusing on concerns about the effectiveness of funding conditionality, its unintended consequences, and the legal and political challenges it raises within the institutional and political framework of the European Union and its legitimacy.

Nevertheless, there is another set of difficulties, which are not idiosyncratic to the European Union but to the judicial use of the doctrine. These are the canaries in the coal mine, necessitating appropriate attention.

It is doubtful whether this tool works at all. When political motivation is strong enough as can be seen in Hungary even financial sanctions become a means that can be withstood. It is no coincidence that some of the arguments raised regarding the use of this tool in the European Union are pragmatic and deal with the tool’s effectiveness. When the struggle is framed as a titanic battle between ideology and principles versus money, sufficiently broad political support can continue to exist even in the absence of funding.

Moreover, the doctrine of funding conditionality may become a double-edged sword. It is dangerous when budgets are not distributed equally but according to a democracy-enhancing perspective according to the perception of a particular court in a particular composition. Once funding conditionality becomes a constitutional remedy, it may be directed towards purposes different from those for which it was intended. Given that the Israeli Supreme Court has not yet developed a coherent theory of constitutional remedies, it is appropriate to treat this tool with caution.

Additionally, in the European Union, the tool was ultimately imposed as a political policy rather than as a judicial decision. Although the European Union suffers from legitimacy problems, it is still an institution that enjoys a greater degree of representativeness than courts with appointed judges. Despite the criticism voiced against this tool and against the concrete measures used in the European Union, it was a declared policy, carefully and thoroughly considered, which reflected a deliberate democratic will. In this sense, the judicial borrowing of the remedy needs to take this fundamental difference into careful account.

Finally, and returning to the practical context, it’s important to remember that funding conditionality can be circumvented. If the funding conditionality is dependent on the existence of statutory exemption, the Government and the Knesset can still enact a new (unconstitutional) statute in order to pull the rug out from under the Court’s decision. Once the Knesset establishes a new legislative arrangement, there will be a legal anchoring for the exemption that will allow the reinstatement of state budgeting. In Israel, there were even several proposed Basic Law bills concerning this matter. Moreover, given the extensive capabilities of the Ministry of Finance to bypass parliamentary oversight of the budget, when necessary, it can be assumed that at least some of the money will find its way to the Yeshivas through other means.

All these arguments raise questions about the Court’s new tool, and time will tell if the new remedy leads to political and social change that reflects the principle of equality and is committed to the rule of law.

The seeds of this post were sown in conversations with Antonia Baraggia and Yaniv Roznaimy – sincere thanks to both.