The management of the Jewish National Fund reacted angrily Thursday to news that draft legislation proposed by the Finance Ministry would divert most of the revenue generated by its land holdings around the country to national projects, primarily involving transportation and infrastructure.
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In a letter to Finance Minister Yair Lapid, the JNF – which is also known by its Hebrew name, Keren Kayemeth LeIsrael – called on the ministry to scrap the provision, which is included in a draft of the Economic Arrangements Bill that supplements next year’s budget.
The organization, which was founded in 1901 to buy, develop and afforest land in Palestine on behalf of the Jewish people, called the proposal a move that would deprive the JNF of its property rights. The group also claimed that the provision would run counter to a 1961 pact between the JNF and the Israeli government, which provided for JNF land holdings to be managed by an Israeli government agency, now known as the Israel Land Authority. Up to now, revenue from leases on the land is returned to the JNF.
In its letter, the organization said any attempt to redirect JNF funds would constitute “nationalization, for all intents and purposes, of assets belonging to the Jewish people around the world,” adding it would cause “disproportionate and unreasonable harm to JNF’s property rights.”
JNF called the proposed legislation a violation of the pact’s requirement that the JNF and the government give each other six months’ advance notice of any intent to change the terms of the pact or to scrap it.
Last Wednesday, the Finance Ministry’s budget division circulated the draft Economic Arrangements Bill with the provision redirecting revenue. The proposed legislation calls for the funds to be denominated in the budget as pertaining to JNF, and would require Knesset approval annually as part of the regular government budget. The budget line would be managed by a staffer from the office of the Finance Ministry’s accountant general.
The Finance Ministry said the plan is designed to create a link between the government’s national priorities and those of JNF. “The step [would] regulate cooperation that already currently exists between JNF and the State of Israel,” while promoting transparency in the annual transfer of billions of shekels. “There is no connection between the proposed step and the principles of the  pact, and the status of JNF also remains in place.”
One government source, however, said members of the cabinet had not been briefed on the proposal, and that there appears to be significant opposition to it. Housing and Construction Minister Uri Ariel has already expressed opposition to it, although not to the principle of the transfer of JNF revenues to the state. Sources close to Ariel noted that JNF has already agreed to the transfer of 2.5 billion shekels ($686 million) to the state to fund “national projects.”
Most of the revenue would go for infrastructure projects related to expanding the supply of housing around the country, including the paving of roads and construction of highway interchanges, along with water and sewer lines. The remaining funds would continue to be transferred to the JNF directly.
The bill does not specify exactly how the revenue would be split, but it would condition tax exemptions that the organization currently enjoys on the government receiving at least a 65% share.
In its letter, JNF management said the proposal runs counter to “basic legal principles of a democratic country [governed by] law,” in addition to violating the 1961 pact.