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Against the background of the recent public dispute surrounding the connection between the government and the Jewish National Fund (Keren Kayemet LeYisrael), the subject of the historic land transactions, termed "the transactions of millions," is once again on the public agenda. The issue involves a series of transactions that resulted in about half of the land owned by the JNF having been confiscated or seized from Palestinian refugees of the 1948 War of Independence.

The JNF purchased the land from the state starting in 1949 and early 1950. Then prime minister David Ben-Gurion initiated the sale of land to the JNF to prevent any possibility of international pressure forcing Israel to restore it to the Palestinian refugees.

The first transaction was carried out despite the opposition of then-attorney general Yaakov Shimshon Shapira, who had doubts regarding its legality.

The land sale was halted after the JNF ran out of money, among other reasons. The matter of the "transaction of millions" has been investigated in recent years by a number of researchers, including Dr. Arnon Golan of Haifa University, Dr. Michal Oren of the Schechter Institute for Jewish Studies in Jerusalem and Prof. Yossi Katz of Bar-Ilan University.

Since 1961, the state has administered the JNF lands through the Israel Lands Administration (ILA). Until recently, only Jews were permitted to participate in the tenders for the leasing of JNF land, but Attorney General Menachem Mazuz decided last week that the ILA could not continue this policy because it discriminated between Jews and non-Jews.

Haaretz revealed last week that the JNF and the state are involved in advanced stages of negotiations to separate the JNF from the ILA, in order to enable the JNF to market its lands at its own discretion. Mazuz's decision was made in the wake of petitions to the High Court of Justice against the policy of the ILA, and after the State Prosecution concluded that the policy would be disqualified by the High Court of Justice.

The blue box

The JNF was established December 29, 1901, by a decision of the fifth World Zionist Congress that met in Basel that year. The leaders of the Zionist movement who established the JNF intended to use it to raise money from Jews all over the world to purchase land in the Land of Israel, to be used for the establishment of a national home for Jews. The main source of the JNF's funding was from the hundreds of thousands of "blue boxes" used to collect contributions, which were distributed to Jewish communities throughout the world, though mainly in Europe and the United States.

In the initial decades following its establishment, the JNF worked to purchase land alongside other organizations. But following the great Arab revolt of 1939, private land dealers halted almost all dealings out of fear for their lives, and the JNF remained almost the only organization still involved in land purchase. After this period, the JNF managed to increase the land it owned from 350,000 dunams (1 dunam=.25 acre) to some 640,000.

The establishment of the state in 1948 posed a question regarding the continued existence of the JNF. "The JNF actually lost its raison d'etre after the establishment of the state," says Oren. "The feeling was that they had done the dirty work and were no longer needed. Some said that now that there was a state, it would not be proper for Jews from abroad to dictate what to do in Israel. Other voices, especially from the right, wanted to dismantle the JNF because they viewed it as one of the Mapai-Labor party establishment's centers of power."

At first prime minister David Ben-Gurion led those that favored dismantling the JNF, but an unexpected event caused him to change his mind from one extreme to the other.

On December 18, 1948, Ben-Gurion summoned Yossef Weitz, the director of the JNF land department, for an urgent meeting. Six days earlier, debates in the UN General Assembly regarding the question of the land of Israel had culminated with Resolution 194, which resolved that "that the refugees wishing to return to their homes and live at peace with their neighbors should be permitted to do so at the earliest practicable date." According to Oren, the resolution awakened a fear among the country's leadership of a wave of refugees that would demand their property back.

At the time, Israel held about 3.5 million dunams of abandoned land that had belonged to Palestinian refugees. Ben-Gurion believed then that this land reserve - equivalent to one-sixth of Israel's total area - was vital to ensure the existence of the state. According to Golan, Ben-Gurion feared that appropriation of the land would be interpreted as a provocation and a challenge to the UN resolution. The only solution he could come up with was to quickly transfer the lands to private Jewish hands. Money was an additional consideration: The state was in desperate need of money that the JNF was holding in order to buy arms and food and to absorb the waves of mass immigration.

At the beginning of their meeting, Ben-Gurion informed Weitz that the government had decided to sell the JNF one million dunams of "abandoned lands" at a low price. The details of the transaction - the largest real estate transaction ever carried out in Israel - were concluded three days later in another meeting that was attended, in addition to Ben-Gurion and Weitz, by the chairman of the JNF, Avraham Granot, finance minister Eliezer Kaplan, and the chairman of the settlement division of the Jewish Agency, Levi Eshkol.

In return for 11 million Israeli pounds, the JNF received full ownership of about one million dunams in the areas of the Jerusalem Corridor, the southern coastal lowlands, the southern Carmel and the Galilee Panhandle.

At the meeting, Weitz and Granot raised with Ben-Gurion the question of the legality of the transaction. Ben-Gurion got angry and told both men that they were still thinking in terms of the British Mandate, and that they did not understand the urgent political and security need to settle those lands.

The attorney general was opposed

Weitz and Granot were not satisfied with this answer, and expressed fear of future suits by the Arab owners. In order to dispel their fears, they were promised that the state would defend them from any suits by owners. Golan notes that the transaction was endorsed despite opposition from Shapira, the attorney general at the time.

"The problem was that the law at that time did not permit the government to sell the land contrary to the agreement of their original owners," says Golan. Nevertheless, he notes, the problem was resolved after the fact by means of the Development Authority and Absentee Property Law.

In the wake of the success of the first "transaction of millions," the country's leaders and the JNF planned to gradually transfer all the abandoned lands to the ownership of the JNF. In fact, however, only about 250,000 additional dunams were transferred. The practical reason for that, says Oren, was that the JNF ran out of money, but another reason was that "the state saw that their fear of international pressure was not as bad as it had expected."

The JNF response: All its lands were purchased at full price at the market prices then in effect. "There is not a single dunam for which we did not pay down to the last penny," says Yehiel Leket, current chairman of the JNF's board of directors.

Golan also notes that the prices for which the lands were sold to the JNF were close to market prices at the time.

The cream of Israeli land

In 1960, the JNF and the government of Israel signed a convention to establish the Israel Lands Administration. In the context of the convention, it was agreed that the JNF would receive responsibility for all the forests located on state lands, whereas the ILA would administer the lands. This involved about 39 percent of all Israel's land, including state lands, JNF lands and lands belonging to the Development Authority, an agency set up to administer land formerly belonging to 1948 refugees not sold to the JNF.

The JNF, which owns 13 percent of the lands, received the right to appoint half of the members of the ILA's board of directors, and representation on the committees of the ILA almost equal that of the state. Over the years, complaints were voiced that the state had given the JNF exaggerated representation and strength, but these complaints did not take into account the high value of the lands or their location.

Almost all the JNF lands are located in areas of high demand in the center and north of the country, whereas over 60 percent of state lands are located in the Negev, Golan and Arava, which are in relatively low demand. In the central district, for example, the JNF holds almost 40 percent of state land, and in the country's three largest cities, its holdings average about 30 percent.

Dr. Michal Oren notes that in the areas of high demand, the JNF made sure to obtain better lands than those that remained in state hands. "The JNF always knew how to choose the lands best suited to farming and settlement, la cr?me de la cr?me," she says. "The state was left with uncultivated and rocky lands."