When Erion Veliaj, the reformist mayor of Albania’s capital, promotes his plans to modernize and transform Tirana into a high-tech hub offering jobs and promise to his country, he imagines the city as “the Tel Aviv of the Balkans,” alluding to Israel’s largest city—a vibrant metropolis that was celebrated by the New York Times as the “Capital of Mediterranean Cool” and the headquarters for the country’s high-tech industries.

With its large and innovative sector, Israel, which is celebrating seventy-five years of independence next week, has produced more start-up companies on a per capita basis than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and all of Europe, and has more businesses listed on the NASDAQ than those of any other foreign country. Hence the reference to Israel as “Start-Up Nation.”

But Israel’s technological miracle has to do with more than just the success stories of several Israeli companies. It reflects in many ways the ability of that nation, with its Western outlook and first-rate higher education system, to employ its scientific instructions, financial system, and talented workforce to emerge as a winner in the global economy at the beginning of this century.

To put it differently, the achievements of “Start-up Nation” and the market economy—which turned Israel into a hotbed of innovation in software, artificial intelligence, chips, medical equipment, biotech, electronics, and wireless communications—were built on foundations that reflect first and foremost the progressive values of a modern population that was adhering to liberal democratic principles, the rule of law, women rights, free press, and religious freedom.

Relatedly, this is why Tel Aviv Pride is among the biggest annual gay events in the world and certainly the biggest in Asian continent. The open and buzzing cultural scene of what many in Israel call “the State of Tel Aviv” goes hand in hand with the spirit of innovation of its technology industry and the strength of the Israeli currency, the shekel.

From that perspective, Israel’s recent political turmoil in Israel exposed the fragility of these foundations of Start-Up Nation; they are weakened by the hard-right-wing government led by Prime Minister Benjamin Netanyahu, who tries to push through a package of legislation that would undermine the independence of the courts, ultimately weakening the shekel.

In a way, the crisis in Israel is pitting the residents of the State of Tel Aviv—Israeli professionals with academic degrees that constitute the cultural and commercial elites of Israel, including its high-tech entrepreneurs—against a coalition of ethno-nationalists and ultra-Orthodox Jews who in the name of the “people” are trying to take control of vast political power sans the checks and balances required for the functioning of a liberal democracy and a market economy, and who are turning it into an illiberal democracy a la Hungary.

It was not surprising that many of the protests against the Israeli government were directly coordinated by high-tech entrepreneurs and investors, warning that Israel’s “Startup Nation” reputation would be threatened if the rule of law became questioned at home and abroad. In one demonstration, the tech industry protesters put a mock locomotive in the middle of Tel Aviv, decorated with signs saying “High Tech is the locomotive of the Israeli economy and democracy is its fuel.” Some of these protesters are threatening to leave Israel for Silicon Valley if the government succeeds in passing the proposed legislation.

Their concern is that, even if some sort of a compromise between the government and the opposition is reached, the current uproar demonstrates the shape of things to come. The proponents of illiberal democracy in Israel want to turn the Jewish state into a theocracy, and will continue strengthening their political power in the coming years, particularly if, as expected, the percentage of ultra-orthodox in the country increases and the residents of the State of Tel Aviv become a minority.

Ultra-orthodox Jews, or Haredim, are the fastest-growing demographic group in Israel, already close to 14 percent of the total national population; with their current growth rate of 4 percent, they are expected to constitute 16 percent of the population by the end of the decade, or about a quarter of all Israeli Jews in 2040.

Young ultra-Orthodox men study religious texts in yeshiva seminaries, which are funded by the government but impart an exceedingly limited formal secular education. These individuals do not learn a core curriculum of math, science, and English. As a result, the majority of the members of the community, with the men (who unlike secular Jews don’t perform the mandatory military service) continuing to study the Torah are not part of the workforce and remain dependent on state funding.

A report published last year by the Programme for International Student Assessment, commonly known as PISA, last year suggested as the number of Jewish students learning in Yeshivas has been growing, Israel’s ranking for fifteen-year-olds has been steadily falling, with Israel ranking very low in math (32nd) and science (33rd), as the widening gap between Ultra-Orthodox and secular Jewish students continues to expand.

So while 10 percent of Israel’s workforce is now employed in the tech industry, the world’s highest proportion, many doubt that will last. Indeed, the dazzling high-tech industry is diverting attention from a changing reality in which a segment of Israeli society and economy has all the markings of a third-world culture.

As their numbers rise in the Israeli population, the political parties representing the ultra-Orthodox and other religious sects have gained more political power. For the first time in Israel’s history, with thirty-three seats in the Knesset (parliament), the religious parties constitute a majority in the governing Israeli coalition.

While in the past much of the demands by the religious parties centered on increasing government support for their religious institutions, the ultra-Orthodox and their religious allies are now trying to move beyond that limited agenda and transform the country’s political system through their proposed legislation.

That legislation weakens the current civil rights safeguards and allows the government to keep public transportation closed on the Sabbath and separate men and women in educational and public institutions. Not to mention that the religious parties are continuing to press for an ultra-nationalist agenda, including the building of new Jewish settlements in the occupied West Bank, which they want to annex to Israel.

Considering that close to 25 percent of the Israeli population is now Arab, adding the percentage of ultra-Orthodox Jews and other religious Jews to that number, suggests that Westernized liberal secular Jews, whose ancestors were the driving force in the Zionist project, are gradually a minority in their own country. This raises the following question: would their children and grandchildren want to continue living in a country where the responsibility for securing Israel and developing its economy lies exclusively on their shoulders while they defend and subsidize a sizable percentage of the country’s population?

Moreover, the growing influence of Israel’s ultra-Orthodox and ultra-nationalists could lead at some point to the annexation of the occupied Arab territories, with Arabs constituting at least 50 percent of the population in the area between the Jordan and the Mediterranean Sea. That raises the specter of Israel turning into a third-world Middle Eastern country, that, like Lebanon would be ravaged by ethnic and religious wars. The Start-Up Nation would turn into a distant memory.

Dr. Leon Hadar, a contributing editor at The National Interest, has taught international relations at American University and was a research fellow with the Cato Institute. A former UN correspondent for the Jerusalem Post, he currently covers Washington for the Business Times of Singapore and is a columnist/blogger with Israel’s Haaretz.

Image: David Cohen/Shutterstock.