It’s an unwritten arrangement Diaspora Jewish leaders and Israel have kept for decades — though few Jews know about it: The government of Israel uses one of world Jewry’s main Zionist funding instruments to hide money that it channels secretly to exclusively Jewish settlements in the occupied West Bank.
The funding body is the World Zionist Organization, set up to represent all Jews who support the concept of a Jewish state. For more than a century, the WZO, founded by Theodor Herzl at the first Zionist Congress, has served to gather the Zionist movement’s members under one nonpartisan umbrella.
But for decades, the Israeli government, with the tacit consent of Diaspora Jewish leaders, has taken one branch of this group, the Settlement Division, and turned it into a covert cash box for bankrolling settlement activity off the government’s own books.
Now, a sudden spike in public attention and an unexpected vote at the WZO’s governing body meeting could bring an end to this arrangement and dry up one of the key funding vehicles of West Bank settlements.
The WZO executive committee’s February 19 vote adopting two resolutions put forth by progressive Zionist groups would essentially close the loophole that allowed money to flow to settlements without public scrutiny. The resolutions require more control over the funding branch and full transparency for its activities.
“There’s never been transparency, so no one knows what money comes in and goes out,” said Judy Gelman, a representative of the progressive Hatikvah slate at the WZO that submitted the resolution. “So to see this happen is a major, major achievement. Diaspora Jewry wants to see where the money is going.”
The complex funding mechanism used by the WZO evolved through years of cooperation with the Israeli government. After the founding of the state of Israel in 1948, the WZO, as well as its sister organization, the Jewish Agency for Israel, adjusted its role and became an umbrella organization in which representatives from Israel and from Jewish communities abroad provide funding for settlements, education, immigration to Israel, and combating anti-Semitism.
In the Zionist Congress, the WZO’s top governing body, 38% of the members represent Israeli political parties; 29% are from American Zionist movements; and 33% are from other Jewish communities. For years, the head of the WZO also headed the Jewish Agency for Israel, but in 2009 the positions were separated; the WZO is currently headed by Avraham Duvdevani, a member of Yisrael Beiteinu, the right-wing party led by Foreign Minister Avigdor Lieberman.
As Israel’s settlement activity in the West Bank grew, starting in the 1970s, the WZO’s Settlement Division emerged as a key force in supporting Jewish building in the Palestinian territories. This function had been previously entrusted to its partner group the Jewish Agency, which received most of its Diaspora funding from Jewish federations in North America. The reason for shift, explained Gershom Gorenberg, author of “The Accidental Empire: Israel and the Birth of the Settlements, 1967-1977,” was to protect American donors from running into trouble with the Internal Revenue Service for sending tax exempt dollars to settlements in territories America viewed as occupied.
“It kept Jewish American philanthropists out of the settlements,” Gorenberg said. He described the creation of the WZO Settlement Division a “quasi-fiction bureaucracy.”
In the 1980s and ’90s, the Settlement Division evolved into the Israeli government’s key funding vehicle for its settlement activity in the West Bank.
While all other operations of the WZO are funded by both Diaspora funds and funds from the Israeli government, the Settlement Division is solely funded, and effectively controlled, by the government. An agreement signed in 2000 between WZO and the Israeli government defines the Settlement Division’s mandate as developing Jewish settlements in the Golan Heights, Samaria, Judea, the Jordan Valley, and, until Israel’s disengagement, the Gaza Strip. Later on, areas of the Galilee and the Negev, which are part of Israel proper, were added to the division’s jurisdiction.
What made WZO’s Settlement Division such an attractive conduit for government funds was the fact that it is not a government body. As such, it is not subject to transparency rules, nor does it have to abide by disclosure rules that regulate governmental institutions. “It’s a great hideout,” said a former Israeli government official.
Information about the Settlement Division’s financial activity is anecdotal. In a 1999 report, Israel’s state comptroller confirmed that “the entire budget of the division comes from the government budget.” The comptroller’s report found that the division’s budget that year reached nearly $50 million, all directed to settlements across the Green Line.
In 2013, the Knesset’s research center compared the Settlement Division’s approved budget to its actual budget and found that it grew massively thanks to the government’s huge undisclosed infusion of funds. The Division’s central region, which includes most of its West Bank settlement activity, was allocated $1.7 million in 2013, but ended up with an increase of 2,333%, which brought its budget up to $41.8 million.