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Israel's President Isaac Herzog addresses the European Parliament plenary ahead of Holocaust Remembrance Day in Brussels, on Jan. 26.Virginia Mayo/The Associated Press

Israel’s president Tuesday called on Prime Minister Benjamin Netanyahu’s coalition to seek dialogue and compromise after it pushed ahead with a controversial judicial overhaul in a turbulent parliamentary session overnight.

Isaac Herzog said it was a “difficult morning” following the late-night parliamentary vote that saw two contentious pieces of legislation pass a preliminary hurdle.

The legislation is part of sweeping changes proposed by the government that have prompted vocal criticism in Israel and abroad, drawn tens of thousands of protesters to the streets and spooked investors and financial markets.

On Tuesday, the dollar gained over 2% against the shekel, continuing a monthlong slide that has seen the Israeli currency lose over 5% of its value against the dollar. Several Israeli companies have said they are withdrawing money from the country, while Israeli newspapers have reported even larger withdrawals of cash as investors have grown jittery about the business climate.

Critics say the judicial overhaul underway will concentrate power in the hands of the ruling coalition in Israel’s parliament, the Knesset, and erode the democratic system of checks and balances.

Netanyahu and his allies insist the changes will better curb an overly powerful Supreme Court.

“Many citizens across Israeli society, many people who voted for the coalition, are fearful for national unity,” Herzog said at a conference organized by the Yedioth Ahronoth newspaper. He urged Netanyahu and his allies to enable dialogue to reach a consensus on judiciary reform.

Late on Tuesday, Netanyahu issued an appeal for dialogue, saying he believed that the gaps could be reduced or closed. “Let’s talk, here and now, without preconditions or excuses, so together we can achieve a broad agreement for the good of all citizens of Israel,” he said.

His critics have called on Netanyahu to freeze the legislation and start negotiations. Opposition leader Yair Lapid mocked the premier’s appeal.

“Citizens of Israel, I have no pleasant way to say this: Prime Minister Netanyahu is lying,” Lapid said in a statement. “We have been trying to hold talks with them for many weeks.”

Herzog’s remarks came the morning after tens of thousands of Israelis protested outside the parliament ahead of the vote, the second mass demonstration in Jerusalem in recent weeks.

Israeli Palestinians, a minority that may have the most to lose by the overhaul, have mostly stayed on the sidelines, due to discrimination they face at home and Israel’s ongoing 55-year occupation of their Palestinian brethren in the West Bank.

After more than seven hours of debate that dragged on after midnight, Netanyahu and his allies passed two clauses in the package of proposed changes that seek to weaken the country’s Supreme Court and further empower ruling parliamentary coalitions.

With a 63-47 vote, the Knesset approved measures that give the governing coalition control over judicial appointments and curtail the Supreme Court’s ability to review the legality of major legislation known as “Basic Laws.” The bills still require two additional readings in parliament to pass into law.

Also planned are proposals that would give the parliament the power to overturn Supreme Court rulings and control the appointment of government legal advisers. The advisers currently are professional civil servants and critics say the new system would politicize government ministries.

The United States has called for restraint, and on Tuesday, the United Nations human rights chief called on Israel “to pause the proposed legislative changes and open them up for wider debate and reflection.”

“Such issues at the heart of rule of law deserve the fullest consideration in order to ensure that any changes promote, rather than diminish, the ability of the judiciary – and other branches of Government – to protect the rights of all people in Israel,” Volker Turk, the U.N.’s high commissioner for human rights, said in a statement.

German Justice Minister Marco Buschmann appeared to express concerns about the Israeli plan after a two-day visit that included a meeting with the overhaul’s architect, Justice Minister Yariv Levin, and two of the people targeted by the changes, Attorney General Gali Baharav-Miara and Supreme Court President Esther Hayut.

It is “clear for me that we must fundamentally protect and strengthen the institutions of our liberal democracies,” Bushmann said in a statement, “because fundamental rights are, by their nature, minority rights and the majority must never have the last word.”

According to a survey by the Israel Democracy Institute think tank published Tuesday, 66% of respondents think the Supreme Court should have the authority to strike down laws incompatible with the Basic Laws, and 63% think the current system for picking judges – a panel made up of politicians, judges and attorneys – should be maintained.

Almost three-quarters of the 756 respondents – 72% – said there should be compromise between the opposing political camps about proposed judicial changes.

Herzog, who serves as the largely symbolic head of state, has tried to broker dialogue between the increasingly polarized camps and has called on Netanyahu and his allies to delay the contentious judicial overhaul.

Netanyahu’s governing coalition is made up of ultranationalist and ultra-Orthodox parties and took office in late December, after the country’s fifth parliamentary elections in less than four years. The political deadlock was largely over the long-time leader’s fitness to serve as prime minister while on trial for fraud, breach of trust and accepting bribes, charges Netanyahu has denied.

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