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In the next few months, the Jewish National Fund directors are planning to discuss a large land-exchange deal under which the fund would transfer all its urban lands to the Israel Lands Authority (ILA) in exchange for land in open areas, dunam per dunam, as well as monetary compensation.

The JNF has been trying to avoid this deal for years, but now that it has found itself caught between the devil - the High Court of Justice - and the deep blue sea - the Knesset - its only option may be agreeing to the deal. On September 10, the High Court will begin discussing petitions to force the ILA to lease JNF lands to non-Jews as well. Petitioners include the Arab rights group Adalah and the Association for Civil Rights in Israel (ACRI). On the other hand, the Knesset approved in a preliminary reading a draft law that would enable the ILA to continue leasing JNF lands to Jews only.

The JNF has maintained its silence on the matter. But from its response to High Court petitions three years ago, one can conjecture what it might say. The JNF's legal adviser in Israel, attorney Meir Alfia, and attorneys from S. Horowitz and Co., wrote in bold letters: "The future of the Zionist enterprise and the fate of Jewish settlement in the Land of Israel" hung in the balance. "Is 'Zionism' indeed 'racism' in Israel 2000?" the JNF representatives asked. "Have the Zionist movement and its institutions lost their appeal? Is the High Court of Justice of the Jewish state making such a declaration? These are the real questions the petitioners have brought before the venerable court."

So why doesn't the JNF begin a campaign that "Zionism is not racism," or that the JNF's lands belong to the entire Jewish people? Because of the messages it is receiving from its branches all over the world. The branch activists cannot contend with the claims that the JNF discriminates against Arabs. That is why the JNF is bowing its head and keeping mum. And that is why the JNF may agree to give up all its urban holdings to enable the High Court and the Knesset to avoid having to decide whether the campaign to redeem the land is racist. There is almost no chance they would reach a decision in the JNF's favor. The silence is for the good of the fund.

On May 17, Osnat Mandel of the Attorney General's Office sent a letter to the High Court stating, "The attorney general believes that the ILA must uphold the principle of equality and that it cannot discriminate based on nationality when acting in its capacity as director of JNF lands." This legal opinion put the JNF in a very embarrassing position.

Over the past 100 years, they became accustomed to seeing themselves as an arm of the Zionist movement. Then they suddenly found out that the attorney general, who represents the state in the High Court, had deserted them - kind of like the settlers of Gush Katif. But the JNF had not been sent to settle the land by the cabinet ministers from the extreme right, but rather by Herzl and the Fifth Zionist Congress of 1901 - and this certainly is a more significant authority.

The truth is that until 2004, Arabs could win tenders for JNF lands. The rule was that in such cases, the JNF would exchange land with the ILA, and thus the land would be leased from the ILA, not the JNF. In her statement to the High Court, Mandel claims that this was a clumsy arrangement requiring approval from the Knesset Finance Committee, and that it made things difficult. However, instead of dragging the state into a discussion on when Zionism becomes racism, it may have been easier to simplify this process. In 2004, the ILA published its first tender for JNF lands that stated explicitly that it was subject to the rules of the JNF - that is, that the land could be leased to Jews only. This tender was tantamount to an invitation to a High Court petition, and indeed they soon arrived.

The JNF says it has 2.5 million dunams of land, approximately 11 percent of the land in Israel. The fund, which does not receive state funding, claims it owns them. Some 1 million dunams were bought, plot by plot, during the British Mandate.

What hurts the JNF's claim that no one can tell it what to do with its property is the fact that about half the lands in its possession belong to absentee owners, and were sold to it by the state in 1953. The ACRI stated in its petition: "These lands are the property of the entire public, and their transfer to the JNF does not free them from coming under the purview of public law."

The JNF claimed in its response to the High Court that this was not a transfer but rather a purchase, and that the payment was used to cover security expenses. In 1953, the state and the JNF signed an agreement on the sale of 2 million dunams to the JNF. The first 1.1 million dunams - of which 98.5 percent were then defined as agricultural lands and only 1.5 percent as urban lands - were sold for 28 million lirot. The next 1.27 million - of which 99.8 percent were agricultural lands - was to be sold for 66 million lirot, but that deal was only partially upheld, and in the end the JNF bought a total of 1.25 million dunams from the state.

In its response, the JNF claimed that "the price of the land was set based on what a committee of experts determined it to be worth." The fund also quotes an article by the geographer Dr. Arnon Golan from the University of Haifa: "The taking of Arab lands by Jewish settlements during the War of Independence." Golan reports that the JNF paid 18.25 lirot per dunam for the abandoned land and writes: "By comparison, the price of a dunam of land purchased from Arabs was between 12 lirot and 28 lirot per dunam, so financially speaking, this was a realistic price."

The significance of the petitions, the JNF claims, "is the nationalization of about 2.5 million dunams, which are the property of the JNF and Jewish donors over the generations, just like the nationalization of the property of the entire Jewish people." However, it is clearly problematic if the JNF has acquired the property of absentee Arab landowners and Arabs now cannot lease the land.

The response to the court was accompanied by a blatant threat. "If the court decides contrary to the position of the JNF that the ILA cannot market JNF lands to Jews alone, the JNF will be forced to market the lands itself." To that end, it will be forced to cancel the treaty setting the relationship between it and the state.

In effect, in this matter, too, the JNF is in a trap, and its threat to shoot hangs on an unloaded revolver. The treaty addresses not only state management of JNF lands, but also authorizes the JNF to forest state lands, and that task is no less important to the JNF than taking care of the lands of the Jewish people.

The crisis over the JNF is crying out for a creative solution outside the Knesset plenum and the High Court of Justice. MK Ami Ayalon (Labor) is offering a solution of this type. Ayalon received a great deal of criticism for supporting the JNF law in its preliminary reading. In response to this criticism, he sent his supporters a position paper explaining his point of view.

"I do not accept saying that the JNF's task of settling Jews ended with the establishment of the state," he writes. However, Ayalon agrees that Israel must uphold the right to equality. "There is a built-in contradiction between the JNF as a body that deals with acquiring lands and settling Jews, and the administration of state lands by the Israel Lands Authority." Therefore "anyone interested in seeing the JNF continue to exist as a body that promotes the Jewish character of the State of Israel must make a clear distinction between the ILA and the JNF on land administration."

With this in mind, he proposes that the JNF return to the state all the absentee owners' lands. He also proposes that the JNF change its aims and start leasing lands not only to Jews, but for any objective that suits the state's needs. Thus he thinks that the JNF should lease lands to demobilized soldiers of all religions, or for the establishment of Jewish-Muslim institutions. This proposal, Ayalon believes, combines the aims of the JNF as a Zionist body, with human rights. If the changes are not made to the draft bill, he writes, he will vote against it.