Who Pays for Israel's Settlements? It Could Be You

Funneling monies to settlements is the most successful sustained smuggling operation in Israel's history. The Haaretz probe of tax deductible private U.S. donations is part of a nascent, widening campaign for transparency.

Bradley Burston
Bradley Burston
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Bulldozers get to work at a construction site in the West Bank settlement of Adam, on September 27, 2010, a day after the expiration of a moratorium on settlement construction.
Bulldozers get to work at a construction site in the West Bank settlement of Adam, on September 27, 2010, a day after the expiration of a moratorium on settlement construction. Credit: AP
Bradley Burston
Bradley Burston

In a country as tightly knit and loquacious as Israel, it's long been axiomatic that even where state secrets are concerned, everyone knows everything. The nuclear program, military deployments, air strikes on a Syrian reactor, cyber wars, Mossad hit teams - you name it, to a one, they've become schoolyard-level public knowledge.

With one exception.

Through it all, only one highly classified framework has managed to maintain an ironclad barrier of secrecy: settlement funding. Come what may, the artfully camouflaged money trail that leads to Israeli enclaves West Bank and East Jerusalem, remains largely a black hole.

Who, then, pays for the settlements? It turns out that if you live in Israel - or for that matter, the United States - it could be you. Like it or not.

Only recently have concerted efforts on a number of fronts begun to shed light on the many ways the funds are raised and delivered, often taking advantage of laws and statutes meant for very different goals.

In the Knesset, Finance Committee firebrand MK Stav Shaffir (Zionist Union), has taken on the Great White Whale of under-the-radar funding and land-transfer shenanigans, the World Zionist Organization's monumentally shady Settlement Division.

The battle for transparency in the WZO waged by a range of activists in Israel has been taken up by an alliance of anti-occupation, pro-Israel groups abroad, among them Ameinu, J Street, the New Israel Fund, Americans for Peace Now, Open Hillel, Habonim Dror, Hashomer Hatzair, and Partners for Progressive Israel. The Rabbis for Human Rights / T'ruah organizations and others have challenged the Jewish National Fund to come clean on its operations over the 1967 Green Line border.

Yet the drive for transparency remains a steeply uphill battle, still in its initial stages.

"I'm a member of the (Knesset) Finance Committee, and I'm telling you, I'm being conned," remarked then-coalition MK Elazar Stern last year. "Funds are hidden. Clauses are lumped together so that you vote on an item that is justified and then they slip it in."

Over time, funneling monies to settlements has become the most successful sustained smuggling operation in Israel's history. The ability to hide the truth has become something of a point of pride, even at the highest levels of government.

As then-finance minister Yuval Steinitz remarked thee years ago in an interview with a radio station with a large settler listenership: "We've doubled the budget for Judea and Samaria [the West Bank]. We did this in a low-profile manner, because we didn't want parties either in Israel or abroad to thwart the move."

Where private donations, budgetary sleight of hand, and government revenues are concerned, anything is fair game, potential gain, for the settlement project.

It is in this context that a current series of articles by Haaretz investigative journalist Uri Blau assumes particular importance. The investigation probes a little-known conduit of funding for settlements, in which private American donors can contribute to settlements and gain a tax deduction, despite longstanding official U.S. opposition to the settlement movement.

The result? More than $220 million dollars in private U.S. contributions to West Bank settlements in 2009-2013 alone, effectively facilitated by an American government on record as viewing the enclaves as a primary obstacle to a potential future accord.

Other, non-settlement-directed donations by Americans to such organizations as the Jewish National Fund, may also be used to help foster the settlement enterprise. No one, as yet, really knows for sure, because the JNF, like the WZO, was so long and so successfully shielded from public oversight.

Are the tax exemptions - and the consequent tacit encouragement of settlement growth - likely to continue? A number of factors may determine the answer. The deciding vote may be cast by the American electorate, a body whose increasing polarization is keenly felt on Israel-Palestine issues.

Polls have shown that the Evangelicals who wield telling influence on the Republican Party, are strong supporters of settlement growth. At the same time, opposition to settlements as the symbol and the stronghold of Benjamin Netanyahu's government, appears to be steadily building among Democrats, especially among younger voters, who voice marked disenchantment with Israel in general and the settlements in particular.

Time and again, the Obama administration has pledged that it would not allow its displeasure over barbs by Israeli leaders to adversely affect U.S. foreign aid for Israel's security needs.

Nonetheless, years of fiercely anti-Obama, unashamedly pro-Republican declarations by Netanyahu coalition figures may yet take their toll. The characterizations of President Obama as being proto-Islamist in outlook and anti-Israel at heart, may one day translate into a shift in U.S. policy. If there is to be a change, a re-evaluation of Internal Revenue Service policy on tax-deductible private donations to settlements, could be a logical place to start.

It's a deep well, that American fount of fellowship with Israel, but spit in it long enough, and someone's just liable to spit back.

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