Israel's Settlement Spending Rose, Even After Golan Heights Removed From the Equation

Data shows highest first-quarter spending in a decade, which rights group says comes at expense of communities inside Israel

Avi Waksman
Avi Waksman
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A new Jewish National Fund plot in Beit Jala in the West Bank, November 29, 2019.
A new Jewish National Fund plot in Beit Jala in the West Bank, November 29, 2019.Credit: Olivier Fitoussi
Avi Waksman
Avi Waksman

State spending on settlements continues to grow even after the government stopped including the Golan Heights in the category following U.S. recognition of Israeli sovereignty by President Donald Trump in March.

The data, prepared by Israel for the U.S. government, shows that in the first quarter the government spent 390 million shekels ($111.5 million) on West Bank settlements. That was the highest first-quarter total in a decade, even though previous years included spending on Golan Heights communities.

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In 2018, spending on the settlements reached 1.8 billion shekels, including the Golan Heights — 235 million shekels less than in the year before. Nevertheless, it was higher than in any years before 2017. From 2011 to 2016, spending averaged between 900 million and 1.2 billion shekels annually, in nominal terms.

Peace Now, which tracks government spending on settlements, says that the high level of spending comes at the expense of communities inside Israel.

“The government has lost all sense of shame,” the organization said after the cabinet voted two weeks ago to allocate 34.5 million shekels from the 2019 budget for security subsidies to local councils in the West Bank. The same amount had been approved in earlier years but had been allocated for 2019. In addition, 5.5 million shekels were awarded to first aid stations in the West Bank.

Israel reports on its settlement spending as part of conditions it agreed to for U.S. guarantees against international bond offerings in the 1990s. The backing was needed then because the Israeli government was not an established borrower in the global bond market; without American guarantees, the cost of raising money would have been much higher.

Washington requires the disclosure because it subtracts the amount of the spending from the level of guarantees. In practice, however, the reduction has not been implemented in the last 15 years. Since 2004, Israel hasn’t used the guarantees to issue new bonds because it can now raise money at acceptable rates of interest.

However, there remain about $3.8 billion in bond debt still backed by the United States that have yet to be repaid. The Finance Ministry says the guarantees are a safety net and that it has no intention of using them unless absolutely necessary.

The figure that Washington gets every year is based on calculations made separately by the interior, education, housing and construction, transportation, agriculture and economy and industry ministries as well as the Settlement Division of the World Zionist Organization and spending on water and the state-owned Israel Highways.

In certain cases, it’s clear which money is going to settlements. For instance, in the case of budget-balancing grants awarded to local authorities, settlements get a four-percent supplement, as do communities near hostile borders.

Settlements also get exclusive allocations, such as the so-called Oslo grant that was awarded to settlements to defray added security costs when much of the West Bank was transferred to Palestinian Authority rule.

In many cases, the ministries get to decide on their own how to classify spending as being to a settlement or not.

The costs include direct government allocations to the settlement as well as those transferred by the state to other for construction, land development, erecting power lines and other infrastructure, as well as for procurement and subsidies provided indirectly.

Roads built inside settlements and used exclusively by settlers are counted as an expense, but highways used by settlers and Palestinians are not. On the other hand, the total given to the Americans does not include defense spending or government spending, such as National Insurance Institute (social security) allowances given to all Israelis. The reasoning is that the cost would be the same with or without settlements.

With all that, trying to figure out exactly how much Israel spends over the Green Line is a difficult task for, among other reasons, the complications in trying to parse out the defense costs.

In a report published several years ago by the Macro Center for Political Economics, headed by Roby Nathanson, suggested including tax benefits granted to settlers and even the cost of boycotts that might be imposed on Israel because of the settlements.

The center estimated that vis-a-vis Israel’s 2014 budget, government support to local authorities in the West Bank amounted to 3,200 shekels per person, compared with 2,400 for residents inside the Green Line. Aid from the central government accounted for 47 precent of all revenues by West bank local authorities, compared with just 29 percent for towns and cities inside the Green Line.

Shlomo Swirski and Etty Konor-Attias, in a study published by the Adva Center, concluded that non-Haredi settlements enjoyed especially high government aid on a per capita basis for areas such as education, welfare, health and local services like garbage collection and street lighting.

For non-Haredi settlements, the amount came to 3,623 shekels per capita in 2017, compared with 3,054 for Arab towns in Israel and 1,723 for ultra-Orthodox West Bank settlements such as Betar Ilit and Immanuel.

The Adva researchers concluded that a lot of the difference was due to favored treatment of settlements by the government as well as higher security costs. In the case of Haredi settlements, the difference was attributed to the fact that ultra-Orthodox schools get only partial funding from the state or are funded through channels others the local authorities.

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