A senior Finance Ministry official has given the clearest hint yet that the government is looking to change its long-standing agreement with the Jewish National Fund, the nonprofit organization that owns over 10% of Israel’s land.
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On Thursday, speaking at an environmental conference sponsored by TheMarker, Finance Ministry budget director Amir Levy said the government needed to reapportion the land currently held by the JNF (also known as Keren Keyemeth LeIsrael).
The suggestion prompted an angry response from the organization, which was founded in 1901 and, even in the decades prior to Israel’s establishment, was engaged in land reclamation and afforestation, as well as the purchase of tracts of land, on behalf of the Jewish people, for the future Jewish state.
Most of its landholdings are in areas of the country that are in high demand, Levy told his conference audience. On an annual basis, he added, the Israel Land Authority – a government agency that administers JNF land in addition to land owned by the state itself – sells Jewish National Fund land at high prices and in return transfers about a billion shekels a year ($289.7 million) to the JNF.
“The land is administered by the Israel Land Authority, but the JNF doesn’t pay taxes on it and the public doesn’t receive a thing in return for the land that it owns. No one knows what happens to these billion shekels, and it’s a huge amount of money,” Levy said.
The comments sparked an angry response from JNF officials, who accused Levy of being totally ignorant of the organization’s legal status and the legal relationship it has with the government, based on a bilateral agreement signed in 1961.
“The budget division director [Levy] is still new to the job, and that’s the only rational explanation for the lack of mastery of the material that he is demonstrating,” one JNF official told TheMarker. “JNF land is far from being a government resource. Rather, it is land owned by the Jewish people.”
Levy’s comments do not appear to be offhand remarks, more an indication of a concerted effort in recent weeks by some government officials to look at ways in which the relationship between the state and JNF can be revamped over how the organization’s land is administered.
The 53-year-old agreement not only recognizes the JNF’s role in afforestation on behalf of the state, but also transferred management of JNF land to the agency now known as the Israel Land Authority (and previously, Israel Lands Administration).
The agreement required the ILA to transfer the profits from the sale of any of this land to the JNF, exempting it from paying taxes on those gains.
At this point, any changes that the government might seek to the relationship are unclear, although they may relate to efforts seeking to tax profits on the sale of land, or the transfer of a portion of the JNF’s land to government ownership.
In response to the comments by Levy, the JNF’s director general, Meir Spiegler, noted that his organization does not report to the Finance Ministry. No ministry official, however senior, has the power to nationalize the JNF’s land, he added.
“For more than 113 years, the JNF has invested billions of shekels from its own sources into parks and forests that are open to the public at no charge; national initiatives; the building of new communities; environmental development; water reservoirs; the preparation of agricultural land; and education,” Spiegler said, adding that this will continue in the future. The major source of revenues for these projects is the sale of land, he noted.
“The JNF is not funded by the government,” he said, “and it’s appropriate for this to be highlighted, rather than being obscured and hidden from the eyes and ears of the public as a whole.”
Although the JNF’s board is made up of representatives of the public – including from the various political parties in proportion to their representation in the Knesset – the organization is still considered a private entity, meaning its books are not a matter of public record. Recently published reports, however, peg the value of its liquid assets at some 4 billion shekels.
The fact that such large holdings are held by a private organization has led government officials, notably at the Justice Ministry, to try and impose greater government oversight over them. Three months ago, Deputy Attorney General Avi Licht proposed that the organization’s legal status be changed to enable increased government supervision.
Last week, Licht was again asked to consider the JNF’s legal status, after the organization reached an agreement with Housing and Construction Minister Uri Ariel, through which it consented to contribute 2.5 billion shekels to fund national projects.
Licht welcomed the agreement by the JNF to transfer the funds, but said it underlined the anomalous status the organization has. “The accumulation of millions of shekels in its hands without their being used to advance public goals raises difficulties,” Licht claimed. However, he also added, “Now the JNF is seeking to designate a portion of its cash to the public it is meant to serve, and that’s in cooperation with the government. This step should be welcomed.”
JNF officials have been volubly unhappy with the recent tenor of government statements, and have accused the state of repeated violations of the 1961 agreement. They express concern that Finance Ministry officials are seeking to get their hands on funds that are not rightfully theirs.
Although the JNF’s own finance committee has approved the transfer of the 2.5 billion shekels to the government, the move has not yet been ratified by the JNF board. Officials at the organization say that current developments make it unlikely the transfer would be approved, or even voted upon, any time soon.