How Netanyahu Filled His Primary Campaign Coffers With Foreign Donations

About half the prime minister's campaign funds came from three wealthy U.S. families, records show. Labor politicians take a more grassroots Israeli approach.

Ariel David
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Netanyahu during a Likud press conference in Tel Aviv, January 1, 2015.Credit: Tomer Appelbaum
Ariel David

Foreign donors almost entirely bankrolled the primary campaigns of Prime Minister Benjamin Netanyahu and other leading right-wing politicians, data compiled by the state comptroller show.

While donations from foreigners in party primaries are legal, wealthy non-Israelis might be wielding undue influence on the country’s politics, analysts say.

To retain leadership of the Likud party in last month’s primary, Netanyahu received donations from 29 individuals for a total just under 1.1 million shekels ($282,000). Each payment came from the United States except for one from Spain and one from Germany.

According to the records, complied by all parties that hold primaries and audited by the state comptroller, about half of Netanyahu’s financing was provided by members of three wealthy U.S. families, with several members of each family making payments just shy of the 46,000-shekel limit for a single donation.

The largest donor, at around 179,000 shekels, was the Florida-based Falic family — the owner of Duty Free Americas, an international retail chain operating at Israel’s Ovda Airport. At around 173,000 shekels came New Jersey’s Book family, which heads Jet Support Services, a provider of maintenance services for aircraft.

The Schottenstein family of Columbus, Ohio, which controls a retail empire including American Eagle Outfitters, donated some 157,000 shekels.

Past records show that all three families are longtime supporters of Netanyahu and donated to his 2012 primary campaign. An American Eagle spokeswomen said CEO Jay Schottenstein was traveling and could not be reached for comment. Requests for comments to organizations and companies linked to the other families were not immediately answered.

Likud officials declined to comment, but a spokesman for the Netanyahu primary campaign said financing had been obtained in accordance with Israeli law. He said the prime minister intentionally seeks funds abroad to avoid suspicions that his government may be unduly influenced by local donors.

While other Likud members and right-wing politicians overwhelmingly rely on foreign funding, their donor base is slightly broader than Netanyahu’s.

MK Danny Danon, Netanyahu’s main challenger for the Likud leadership, received only four donations in Israel, with the rest coming from the United States. Interior Minister Gilad Erdan, now just behind Netanyahu on the party slate, had 22 donors from Israel out of 50.

Outside Likud, Habayit Hayehudi leader Naftali Bennett raised 1.2 million shekels, with just 27,000 shekels coming from Israeli donors.

Labor politicians appear less reliant on foreign donations, with party leader Isaac Herzog the most international in his approach. In 2013, when he captured the party’s leadership from Shelly Yacimovich, more than a third of the 1.2 million shekels he raised came from abroad. The rest came mainly from large Israeli donors.

In contrast, Yacimovich raised some 400,000 shekels from more than 1,000 people across Israel, most of whom donated just a few hundred shekels each. She repeated this strategy for the latest primary, as did MK Stav Shaffir. Following Wednesday’s primary, the two women are now just behind Herzog on the Labor slate.

Spokespeople for Habayit Hayehudi and Labor did not return calls seeking comment.

Analysts said there were pros and cons in bringing foreign donors in.

Raising money abroad indeed reduces the risk that special interests and Israeli businesses will demand payback after an election, said Prof. Gideon Rahat, a political scientist at the Hebrew University and a senior associate at the Israel Democracy Institute.

“On the other hand, people from abroad who are not even citizens get this influence on Israeli politics and can use it to support their interests or ideology,” Rahat told Haaretz. “They probably believe that their candidate is the best person to lead Israel; they think this is good for Israel, but it’s still questionable if this is okay.”

Raising small donations in Israel, as Yacimovich and Shaffir do, would be healthier for Israeli democracy because small sums don’t buy favors; instead, they increase participation in the political process, Rahat said.

“With 50 shekels I’m not buying anyone, I’m participating,” he said. “But it’s much easier to go to your American friends and get money that for them is probably pocket money.”

Rahat suggested that if politicians wanted to reform the fundraising rules for primaries they should not only ban foreign donations – already the case for general elections – but also encourage grassroots campaigns by lowering the threshold for individual donations while introducing a matching mechanism with state funds.

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