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U.S. Exempts Donations to Illegal Outposts

Policy supports settlements, which gov’t opposes

Marc Tracy
July 06, 2010
An ultra-Orthodox family in a northern West Bank settlement.(Bar-On/AFP/Getty Images)
An ultra-Orthodox family in a northern West Bank settlement.(Bar-On/AFP/Getty Images)

The New York Times has a nearly 5,000-word article sure to provoke conversation amid Prime Minister Netanyahu’s meeting at the White House today. It reports that in the past decade U.S. law has allowed the tax-exempt donation of $200 million to further Jewish settlement in the West Bank and East Jerusalem—which the U.S. government opposes.

Most of the money, which must pass through an American charity to become tax-exempt, goes to established settlements near the Green Line that are permitted under Israeli law; two-state endgames typically envision land-swaps that would place these conurbations in Israel proper.

But, to the consternation even of Israeli security officials, smaller (but impactful) amounts of tax-exempt funds flow to illegal outposts inhabited by radical settlers unlikely to leave without a fight.

The Times isn’t breaking this story; if anything, the news is that this dynamic has long been an open secret. “It drove us crazy,” former U.S. Ambassador Daniel C. Kurtzer says. “It was a thing you didn’t talk about in polite company.”

The article will likely prompt closer looks at and arguments over the current state of Israeli settlements and settlement policy; the Obama administration’s relative friendliness to Israel (or lack thereof); and even The New York Times, which pretty clearly intended to publish the piece on the day that was supposed to culminate the months-long reinforcement of U.S.-Israeli ties.

The piece certainly hits home in the context of the typical locution, “I don’t want my tax money going toward” a given cause.

Says the Times:

While a succession of American administrations have opposed the settlements here, Mr. Obama has particularly focused on them as obstacles to peace. A two-state solution in the Middle East, he says, is vital to defusing Muslim anger at the West. Under American pressure, Mr. Netanyahu has temporarily frozen new construction to get peace talks going. The freeze and negotiations, in turn, have injected new urgency into the settlers’ cause—and into fund-raising for it.

The article, co-written by Jerusalem bureau chief Ethan Bronner, quotes a “senior State Department official” on the tax policy: “It’s a problem. It’s unhelpful to the efforts that we’re trying to make.” (The article notes that the Free Gaza Movement, which sponsored the flotilla, welcomes tax-deductible donations.)

Donors tend to be either right-wing Jews or Christian conservatives. The controversial Rev. John Hagee is a prominent evangelical for the cause of pro-settler philanthropy.

The Times also catches a few pro-settler groups flirting with law-breaking “by using the money for political campaigning and residential property purchases, by failing to file tax returns, by setting up boards of trustees in name only and by improperly funneling donations directly to foreign organizations.” Jack Abramoff was in the past involved with one of the sketchier charities.

The article paints a scenario whereby future forcibly evacuated settlers “will very likely be aided by tax-deductible donations from Americans who believe that far from quelling Muslim anger, as Mr. Obama argues, handing over the West Bank will only encourage militant Islamists bent on destroying Israel.”

Incidentally, the article profiles one David Ha’Ivri, a leader among some of the more radical settlers. He was born in Queens as David Axelrod—the same name as one of President Obama’s top advisers.

Marc Tracy is a staff writer at The New Republic, and was previously a staff writer at Tablet. He tweets @marcatracy.