Budget by budget, law by law: from forcing mobile phone companies to expand coverage in the occupied territories to laws that facilitate the transfer of public funds to settlements, Netanyahu’s far-right government is working towards de facto annexation
Haaretz, 9 April, 2024
In February, in the midst of the war, Israel’s Economy Ministry sent out an announcement to journalists on behalf of Minister Nir Barkat about a new program to train 5,000 Israeli workers for the construction industry. For some reason, the announcement noted that the pilot will take place “in co-operation with the Gush Etzion Development Company and the Israel Construction Centre.”
Those who closely follow the conduct of the current government did not raise an eyebrow at the combination of an economic pilot that is supposed to serve the construction industry and a company that was established to develop the settlements in the West Bank’s Etzion bloc.
Government Initiatives to Strengthen the Settlement Enterprise
- Arnona (municipal tax) Two laws may, for the first time, transfer municipal tax revenues from councils within Israel to the settlements
- Construction Under the current government, the highest level of construction of Israeli housing units has been recorded in the West Bank since the Oslo Accords
- Cellphones Companies will be required to provide full cellular coverage to the settlements – and will suffer sanctions if they fail to do so
- Roads Even after cuts, 20 per cent of the Transportation Ministry’s road construction budget will be directed beyond the Green Line
- Settlement Administration This will be established under Bezalel Smotrich, and will replace the Civil Administration under the auspices of the Defence Ministry
- Civil Deputy in the Civil Administration Smotrich is trying to appoint an associate of his to a position that did not exist before – the IDF opposes it
- Blurring of Boundaries Expansion of the area of responsibility of the Negev Development Authority so that the settlements can receive services from it
- Environmental Issues Millions of shekels invested in nature reserves beyond the Green Line
Barkat’s announcement remains only on paper for the time being, as the pilot has not been launched. But the plan drawn up in his office is only one of a series of efforts by the current government towards the erasure of the Green Line, from an economic standpoint.
Since this government was formed, various initiatives have been promoted with the aim of strengthening the settlement enterprise, and often also of blurring the distinction between settlements and localities within the territory of Israel – even in areas where the distinction has been sharp, and with concern about potential violations of international law. Representatives of the Justice Ministry have repeatedly warned about the legal sensitivity of these efforts in Knesset committees.
(Green) lining their pockets
The current government is not the first to engage in strengthening the “young settlement” movement. However, it demonstrates exceptional activism and creativity in doing so.
The government has undertaken a series of measures towards the aim of erasing the Green Line and de facto annexation of the West Bank to Israel.
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Among them are the establishment of a new dedicated government ministry, the Settlements and National Missions Ministry; promotion of a programme – which was already signed into law – which allows the transfer of funds between local authorities in Israel and local authorities in the occupied territories; imposing obligations on private companies holding government licences to invest money in the territories; and attempting to expand the control of the settlers and their representatives in all areas of life in the West Bank, while relegating the Civil Administration, which for decades has been the military body responsible for the government’s activities in civil areas in the territories, to the margins.
In recent days, the process of erasing the Green Line has escalated after the Knesset approved in the second and third votes a Bill, introduced by MK Yaakov Asher of United Torah Judaism, which had been frozen since the start of the Gaza war. The new law (an amendment to the Municipalities Ordinance) authorises the Interior Minister to determine that economic property tax collected from industrial and commercial areas will be divided between the local authorities in which these areas are located, and adjacent authorities.
Ostensibly, this is a means for equitable distribution. But Asher sought to enact the law mainly to benefit the coffers of the Israeli settlements beyond the Green Line – including ultra-orthodox settlements.
Thus, for example, the law will make it possible to compel Modi’in-Maccabim-Reut to share the revenues from its industrial and commercial zones – which the municipality of Modi’in itself worked assiduously to establish – with the poor municipalities of Modi’in Illit and Betar Ilit, which lie beyond the Green Line. During the legislative proceedings, Asher did not hide his intention, saying: “This is about distributive justice for the settlements of Judea and Samaria as well.”
During the deliberations over the bill in the Knesset’s Internal Affairs Committee, chaired by Asher, MKs Naama Lazimi of Labor and Naor Shiri of Yesh Atid claimed that the proposal would lead to the de facto annexation of the occupied territories. To this Asher replied: “De jure, de facto, de Moshe – I don’t bother with these things.”
Despite warnings from the Justice Ministry that this may constitute a violation of international law, and despite opposition from the Federation of Local Authorities, the law passed easily in the Knesset committee and the plenary.
However, even though the bill was approved, its implementation is subject to the discretion of the Interior Minister. Any such decision on his part could lead to a significant public outcry, as well as legal opposition from the authority required to relinquish its share in favour of another authority. Therefore, the likelihood of this happening soon is low.
A transfer of fund money from Israel to the settlements
A law enacted in the past year, which has also not yet been implemented, deals with the establishment of a property tax (Arnona) fund designed to redistribute income from business property taxes between local authorities, while encouraging the construction of residential apartments, whose property tax payments do not cover the cost of the services required for new residents. Finance Minister Bezalel Smotrich has put his full weight behind the establishment of this fund.
Ostensibly, this fund is also intended for equitable distribution: stronger authorities will transfer a proportional part of their commercial property tax revenues to a common fund, which will be distributed to weaker authorities. However, one of the concerns raised by opponents of the law was that the flow of money would be based on political considerations.
During the legislation process, concerns were also raised regarding the fund’s work with local authorities in the occupied territories. This was the first time a law was enacted that could see the transfer of funds from authorities within Israel’s territory to settlements.
According to some critics of the law, while international law does allow settlements to receive budgets from the state, it prohibits them from transferring funds to other local authorities within Israel’s territory. Therefore, if settlements are required to tranfer funds to the property tax fund this will be considered a violation of international law. In an attempt to address this, special provisions regarding local authorities in the West Bank were added to the law.
In any case, even though the property tax fund was already supposed to start operating, it has not actually been established yet. Petitions against it are still being discussed in the High Court, one of which raises concerns over the sensitivity of including settlements in the fund. The High Court asked the Attorney General to give her opinion on the matter.
The property tax fund, although not yet operational, may be important in the future in view of the expected construction boom in the settlements.
2023 was an exceptional year in terms of the number of construction plans promoted beyond the Green Line: more than 12,000 housing units were finally approved by the planning bodies. According to Peace Now, which monitors such decisions, this is the highest number of housing units approved since the signing of the Oslo Accords.
Establishment of a dedicated office for settlements
In order to act efficiently to erase the Green Line, the government established a dedicated office for “civilian” activity in the territories – the Settlements and National Missions Ministry. Its main goal, even if it is not stated explicitly, is to serve as an operational arm of the office of Minister Bezalel Smotrich – who serves not only as Finance Minister but also as a minister in the Defence Ministry – for a massive flow of budgets to the territories.
The National Missions Ministry, headed by MK Orit Strock of Religious Zionism, has benefited doubly: not only was it established and provides employment for the Minister and her associates, but, while the budgets of all other ministries were cut because of the war, Strock’s was not only spared – it even increased. Just before the closing of the 2023 budget, the Ministry received an additional 378m shekels ($102m), so that its budget jumped to 543m shekels ($147m) – in the midst of the war.
Recently, the government even decided to transfer the World Zionist Organisation’s Settlement Division, which operates primarily in the territories, from the Agriculture Ministry to Strock’s office, along with a generous budget supplement. Among other things, it was determined that from now on, financial control of the division’s operations will be done by the division accountant rather than by an external accountant.
In addition, Strock herself will approve the services provided by the division, without first having to go through the government. Decisions regarding the establishment of new settlements will also be made with Strock’s approval alone – without the need for approval from the Construction and Housing Minister. Along the way, the division’s overheads will be increased by 10 per cent – 40m shekels ($10.7m) per year – funded by the National Missions Ministry’s budget base.
Strock is not working alone. A Deputy Director General has been appointed in the Finance Ministry – Israel Malachi. Less officially, he is known as the person responsible for budgetary assignments beyond the Green Line. Malachi works closely with Strock, and is known at the Finance Ministry as someone who specialises in optimising the transfer of budgets to settlements in the West Bank.
The weakening of the Civil Administration
In addition, a significant shift in the management of civilian life in the West Bank began last year, because of a clause in the coalition agreements between Smotrich’s Religious Zionism party and Netanyahu’s Likud. According to the agreement, a new governmental body will be established, the “Settlement Administration,” which will be in charge of managing all aspects of life in the settlements. The Civil Administration, on the other hand, will deal exclusively with Palestinians.
The Settlement Administration, which is in the process of being established, is supposed to be an independent civil body, not under any ministry, and to control all matters of planning, construction, establishment and expansion of settlements, infrastructures and roads, without the need to consult the government.
The Settlement Administration will also be responsible for legalising outposts; for electricity, water and communication infrastructures; and will even receive responsibility for archeological sites, nature reserves and agricultural farms. In February 2023, Smotrich’s associate, Yehuda Eliahu, was appointed head of the Administration.
However, there is currently a struggle over appointing a civilian deputy head for the Civil Administration — a position that did not exist until now. Smotrich seeks to promote Hillel Roth, a West Bank settler and a senior figure in the Samaria Regional Council, to the position. The IDF opposes the appointment, arguing that it will force regional brigade commanders to justify various operations in the territories to civilian bodies rather than to the head of the IDF’s Central Command, as is the case today.
Huge budgets – even during wartime
One of the clear mechanisms for erasing the Green Line is the injection of billions of shekels into settlements with the help of various budgetary mechanisms, including coalition funds. According to monitoring by Peace Now, in the 2023-2024 budgets, approximately 620m shekels ($168m) in aggregate from the coalition funds were designated for settlements.
After the war broke out, it was decided to cut some 140m shekels ($38m) in coalition funds for settlements, but at the same time it was decided to transfer additional funds – such as the addition to Strock’s office. In practice, in 2024, coalition funds for settlements will amount to more than 737m shekels ($200m), instead of the 275m shekels ($74m) earmarked for this in the original government decision from May 2023.
Additionally, the Interior Ministry currently has about 330m shekels ($89m) earmarked solely for the settlements. Of this, 75m shekels ($20m) are designated for security components, and another 75m shekels are designated for the “continuous budget for settlements.”
The blurring of the Green Line also includes investment in infrastructure in the West Bank, for example in the field of transportation and cellular networks. With the establishment of the government, the Ministries of Finance and Transportation agreed on a strategic five-year plan (2023-2027), allocating approximately 24 per cent of the road development budget to roads in the settlements.
Because of the war and pending the approval of the updated budget for 2024, the government decided in January 2024 to cut the development budget of the Transportation Ministry in 2024-2027. However, according to the draft decision discussed in the government, the investment in roads in the settlements will still be about 20 per cent of the total government investment in roads.
Another area in which the government promotes investment in infrastructure intended for settlers is communication – specifically, cellular reception. Communications Minister Shlomo Karhi has criticised the poor reception in the West Bank, and claimed that the situation could endanger human lives.
At the beginning of March, orders issued by the head of the army’s Central Command, General Yehuda Fox, came into force, obligating cell phone companies to provide cellular coverage on the roads serving settlements in the West Bank, similar to their obligation within Israel. The orders allow the imposition of fines on the companies if they do not comply with the requirements.
Moreover, the Communications Ministry announced a plan to establish cellular infrastructure in the territories with a dedicated budget of 50m shekels. This plan is supposed to be implemented during 2024. The head of the Yesha Council, Shlomo Neeman, thanked Karhi for his “determined leadership of the historic move” in the field of cellular reception.
On the other hand, it seems that Karhi, who works vigorously for the settlers, is less moved by the problems of cellular coverage in the Arab communities inside Israel, which suffer from disruptions in cellular reception and Internet connection. If the Communications Ministry would invest another 50m shekels in Arab communities in the country’s north, things would look different there.
Takeover under the guise of nature conservation
At the beginning of last week, Environmental Protection Minister Idit Silman, with Smotrich and the head of the Jordan Valley Council, David Elhayani, arrived at Nahal Yitav – the Hebrew name of Wadi Auja. At the meeting, it was announced that the place would be designated as a nature reserve, which includes trails with marked paths and signs – with the help of a financial investment of an unspecified amount. This was, supposedly, in response to an attack that occurred on Route 90 near the site, a few days earlier.
The visit of two ministers to the site may have created the impression that this is a nature site that will be used by the entire public. In fact, under the guise of working in the field of nature reserves, the Environmental Protection Ministry under Silman has been planting flags on lands in the West Bank.
For example, in May 2023, Silman announced a plan to certify Sebastia National Park with a budget of 32m shekels – which has since been partly cut. In an announcement about the project, the minister tweeted at the time: “We are bringing back former glory. The Land of Israel is ours and we will continue to expand and settle in it.”
Such attempts to blur the Green Line have been increasing over the years and continue now as well. Last Monday, MK Limor Son Har-Melech of Otzma Yehudit submitted a bill seeking to compel the Negev Development Authority to operate also in settlements in the southern West Bank – as if they were part of the territories of the State of Israel.
“The challenges of the Negev region… its peripherality and distance from the centre of the country, do not exclude the citizens in the Judea and Samaria [biblical name for the West Bank] region, who are also south of the line that defines the Negev region,” she wrote in the bill’s explanatory notes.
The proposal did not come in a vacuum: the Negev Development Authority, which is partly funded by the state, is under the supervision of Negev and Galilee Development Minister Yitzhak Wasserlauf – a member of Son Har-Melech’s party.
According to attorney Michael Sfard, an expert in international law and a left-wing activist, one of the principles of the laws of occupation is the prohibition of moving the population of the occupier to the occupied territory. Therefore, any action designed to establish an infrastructure for settlements may be perceived as a violation of international law.
Another basic principle of occupation law is the prohibition of unilateral annexation, hence the problematic nature of treating the territories of Israel and the West Bank as a single unit from a legal, bureaucratic, administrative, economic or infrastructural point of view. And this is exactly what the Israeli government seeks to normalise.
