A Look Behind State Funding of Settlements – and Down the Rabbit Hole

Outgoing Knesset Finance chairman Moshe Gafni threatened to reveal the billions of shekels Israel devotes to West Bank settlements, touching on the much larger issue of special interests' control of state funding.

Sami Peretz
Sami Peretz
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Sami Peretz
Sami Peretz

With all due respect to the news, the most important interview this week was given by Knesset Finance chairman MK Moshe Gafni of the United Torah Judaism party, to the Haredi newspaper Yated Ne'eman.

In case you don't subscribe to Yated, Gafni is quoted: "I serve as the chairman of the Knesset Finance Committee and I know the state budget. They receive twice the budget and twice the support. But we haven't touched this because all in all they are learning Torah over there.

"Consequently, we haven't talked about the billions that go toward the settlements," Gafni continues. "When there is a debate over major budget cuts like defense, economy, welfare and society, we will no longer be predisposed to transfer billions to a group that preaches equality in distributing of the civic burden when it is the real burden on society. When they talk about equality of the burden we will show everyone who should really be facing cuts."

Few politicians are savvier or more experienced than Gafni when it comes to the workings of the Knesset. If he says he can prove where the billions of dollars of the government budget are going, he probably can. But why did he wait until now to reveal what he knows? The answer is clear. For years, parties representing both the Haredi and the settler communities have been sitting together in government, delivering billions of shekels in state funding to each other. 

They approved the budget allotments for yeshivas, educational institutions and other bodies that provided a living to Haredim and silently transferred the state funds that laid the groundwork for the settlement enterprise, including the construction of bypass roads every time a rock was thrown at a settler's car. But now the Haredi parties are being left out of the coalition government. If there is an immediate benefit to this development, it is that as space develops between the Haredim and the settlers, daylight is flooding in to reveal crooked arrangements that were previously hidden.

Shaking things up

This will not be the first time political change exposed and overturned the way things are done in Israeli politics. The kibbutz movement was bosom buddies with the long-dominant Mapai party and its successor the Labor Party until the 1970s. Representatives of the movement held important positions in successive governments and knew how to take care of their constituents.

But the economic crisis of the 1980s caught the kibbutzim with their pants down. When the money dried up, a Menachem Begin government that owned the kibbutzim nothing was in power, and they quickly learned what the real world is like outside the embrace of a political provider that meets your ever need and funds your ever adventure. Weaning the kibbutzim of the public teat was a difficult process that disabused of many kibbutzniks of their communal ideas and introduced them to entrepreneurship, the free market and the relationship between contribution and compensation.

The public conversation about equal sharing of the civic burden and the exclusion of the Haredi parties from the developing government coalition appears to be the start of a similar process for the Haredim. Their community will increasingly have to accept work, national and military service and modern education. Along the way, there will probably be a culture war, with some factions of Israeli society becoming radicalized.  

It is not just about the Haredim or the settlers, though. The Haredim are clearly a big drain on the public's finances whose social potential has not been realized. And Gafni's promised revelation about the billions of shekels being pumped into the settlements would draw attention to another group of people who are costing the state treasury a pretty penny – thanks to the affections of a series of right-wing governments.

Such attention would be especially welcome, by the way, since Yair Lapid's Yesh Atid party and Naftali Bennett's Habayit Hayehudi party have formed a powerful alliance that it appears will grant the settlers immunity under the next government.

Tortoises all the way down

But there are other special interests getting more than their fair shares of the public pie. It is just a shame that it takes something like Gafni losing his committee chairmanship to learn anything about them. Since these things do not could along often enough, it would have been nice if he had given us a couple more leads while he was at it.

For example, he could have told us about the billions of shekels that flow into the pensions of members of the defense establishment – admittedly a political minefield for a Haredi politician who has never seen the inside of a military base. Or he could have spilled some dirt on the black and gray markets in this country. How many much money is lost there?

How much pours into tax planning, shell companies and just plain tax evasion? How effective are government incentives – including those approved by Gafni's committee – in combatting the various ploys people use to evade or reduce their tax bills?

While we are talking about taxes, we might as well get into the big lie of the reduction in taxation in recent years. As Gafni well knows, the Israeli public paid back everything it saved in direct taxes in indirect taxes on vehicles, gasoline and real estate.

Since he has some free time on his hands now, Gafni could also kick off the conversation on all the taxes the public pays for inefficient government services – like those provided by the Israel Lands Administration, the ports and the Israel Electric Corporation. Opening up all these subjects would be an honest approach to a systemic problem, and would accomplish much more than exacting a small measure of revenge on the settlers.

If the conversation must start with the Haredim and settlers – fair enough. The public is already discussing the Haredim and if their exclusion from government becomes painful enough, Gafni might tell us what he knows about the financing of the settlements.

But shady political arrangements go well beyond these communities to the defense establishment and publicly and privately owned monopolies. If we are serious about sharing the burden, we have a lot more to unload.

Israeli homes in the settlement of Matan. Behind them, the West Bank Palestinian village of Hableh.Credit: Avi Ohayon/GPO
Moshe Gafni.Credit: Tomer Appelbaum

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