Construction West Bank - AP
Construction in the West Bank settlement of Modi’in Ilit. Photo by AP
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Despite the government's promise to Washington to stop giving financial incentives for construction in West Bank settlements, the Housing Ministry recently published a tender for 213 new housing units in Efrat under a program that offers substantial discounts on the land.

In 2004, then-U.S. President George W. Bush gave then-Prime Minister Ariel Sharon a letter offering various assurances regarding a final-status solution with the Palestinians. Over the preceding year, Sharon envoy Dov Weissglas met numerous times with Bush's envoys, Stephen Hadley and Elliott Abrams, to negotiate the document. The letter was given primarily as recompense for Israel's planned disengagement from Gaza. But in addition, Israel promised four other things: not to expropriate Palestinian land for the benefit of the settlements, not to establish new settlements, to confine new settlement construction to within the settlements' existing boundaries, and not to give financial incentives that would encourage people to move to the territories. In line with this promise, the government canceled all the grants and other benefits that residents of the territories had enjoyed for years. But the new tender includes a financial incentive that could encourage people to move to Efrat.

Prime Minister Benjamin Netanyahu announced plans to build 277 new housing units in Efrat as part of a series of reprisals for the Palestinian Authority's admission to UNESCO in October. The tender was published at the end of last month and is due to close at the end of February.

But it turns out that of these 277 units, 213 are being offered under the "Mechir Lamishtaken" program, under which the government sells the land to contractors for less than its full market value. In normal tenders, the land goes to the contractor who offers the highest price for it. This is the system being used for the remaining 64 units in Efrat. Under Mechir Lamishtaken, however, the Housing Ministry sets a fixed price for the land that is well below market value - often as much as 50 percent lower. The tender is then won by the contractor who pledges to sell the houses for the lowest price. Consequently, Mechir Lamishtaken tenders usually result in consumers paying less than the market rate for new housing. And while houses of up to 100 square meters are reserved for people eligible for public housing, anything larger than that can be sold on the open market, as long as the price doesn't exceed the contractor's bid price.

The Prime Minister's Office responded that "Mechir Lamishtaken tenders are published in many cities throughout the country. Therefore, issuing a tender of this type in Efrat doesn't entail granting any kind of special benefit to this city."

The Efrat Local Council said that "Mechir Lamishtaken isn't a government subsidy. The government isn't giving a present, but selling the land to contractors for the equivalent of the land's real value. What the government does via the Mechir Lamishtaken system is give the contractors specifications for the construction and base the tender on the contractors' construction costs, so that the contractor with the lowest price [to the consumer] wins the tender."

Nevertheless, in an announcement to Efrat residents, the council said the new tender was expected to result in "significantly lower apartment prices than are the norm in the town today."