Israeli Prime Minister Benjamin Netanyahu (photo by REUTERS/Mark Wilson/Pool )

Investment in Settlements Skyrockets Under Netanyahu

Author: Calcalist (Israel) Posted August 2, 2012

The governmental investment in Judea and Samaria skyrocketed under the Netanyahu cabinet by 38% from 2010 to 2011, reaching its high levels on the eve of the disengagement from the Gaza Strip in 2005. Over the period spanning from 2003 to the end 2011, the Israeli governments invested more than $2.5 billion (more than 10 billion shekels) in the Jewish settlements across the Green Line. This sum reflects the overall governmental investment, including economic support for the local authorities, investment across infrastructures and tax benefits entailing loss of state revenues. In fact, that amount is supposed to account for everything except the defense expenditure on ensuring the security of the settlements and on security activity in the area, a classified figure that is not meant to be exposed to the public in any form whatsoever.

SummaryPrint Israeli governments invested more than $2.5 billion in the Jewish settlements across the Green Line from 2003-2011, writes Shaul Amsterdamski for Calcalist, which revealed the secret figures for the first time. Under Prime Minister Benjamin Netanyahu's government, the investment increased by 38% from 2010 to 2011.
Author Shaul Amsterdamski Posted August 2, 2012
Translator(s)Hanni Manor

The figures exposed here for the first time by the Israeli daily business newspaper Calcalist are well known to the top economic echelon in the government, the Treasury heads and the Prime Minister. However, they have been kept secret from the public for years. Israel's Central Bureau of Statistics (CBS) collects the relevant data every quarter at the request of the Finance Ministry and the data thus collected offsets the Israeli government investments in the territories across the Green Line against the U.S. financial guarantees to Israel. The Central Bureau of Statistics submits the data to the Finance Ministry in the form of a concise report and the Finance Ministry presents the figures to the American Administration, converted into dollars. The meaning of the offsetting against the U.S. financial guarantees to Israel is that, once the Israeli government seeks to use the guarantees to raise money in the capital market, it will find that the scope of the guarantees has diminished compared with that originally planned.

1. Annual investment of about $376 million (1.5 billion shekels)

Israel's Central Bureau of Statistics started collecting data relating to the governmental investment in Judea, Samaria and Gaza towards the end of 1992, just before the Oslo accords were signed, and continued doing so until the end of 1997. At the time, the Treasury stopped asking for the data, having exhausted the U.S. guarantee framework. When a second guarantee framework was arranged in 2003, the data gathering was renewed.

According to the CBS secret document, from 1992 to 2011, the Israeli government invested in the territories more than $6.77 billion (27 billion shekels, in terms of 2011). Just for comparison, the budget allocated by the government in 2010 for the first stage of the cross-country routes project for the construction of a network of railways and highways across Israel, amounts to close to $6.9 billion (27.5 billion shekels) distributed over 10 years.

The figures show that in the first years following the signing of the Oslo accords, the government invested huge sums of money in the territories, among other things, due to the need for building extensive infrastructures in Judea, Samaria and Gaza, primarily bypass roads. In 1993 alone, governmental investment in the territories reached over $627 million (2.5 billion shekels), $605 million of which was earmarked for construction, housing and development. From 1994 to 1997, the average governmental investment in the territories stood at more than $376 million (1.5 billion shekels) per year, while in 2003, the investment in the territories reached about $527 million (2.1 billion shekels in terms of 2011).

From 2003 onward, the governmental investment in the territories gradually declined and was, in fact, cut by half in 2004-2005. From 2005 onward, following the disengagement plan and the withdrawal from the Gaza Strip, the governmental investment in the territories consistently diminished, reaching in 2009 just about $202 million (805 million shekels).

However, since 2009, following the establishment of the second Netanyahu government, governmental investment in the territories once again increased, although this time around, the funds were funneled to Judea and Samaria alone. In 2010, the government invested about $212 million (846 million shekels) in Judea and Samaria, and in 2011 governmental investment skyrocketed by some 38% to nearly $276 million (1.1 billion shekels). At the same time, the overall government budget was increased by a mere 2.7%. As a matter of fact, governmental investment in the territories reached in the past year the high level of investment on the eve of the disengagement from the Gaza Strip in 2005.

2. A gap of almost $38 million (150 million shekels) in reported governmental investment

The grading of governmental investment in the local municipal authorities in Israel exposed by Calcalist a fortnight ago shows that the investment in the local municipal authorities in Judea and Samaria in 2010 amounted to over $250 million (more than 1 billion shekels). That is, the investment in the settlers is higher by 80% than their share in the population.

The said grading by Calcalist was based on the budgets of the various government ministries and the CBS reports. However, according to the secret CBS report exposed here for the first time, governmental investment in Judea and Samaria in 2010 was actually lower, standing at some $212 million (846 million shekels). The gap of almost $38 million (over 150 million shekels) is surprising, all the more so considering the fact that in both cases it's data gathered by the Central Bureau of Statistics and the lower figure of the two is supposed to reflect a larger number of investment items, for instance, investment in infrastructure.

Since in both cases the data under discussion is official figures of the State of Israel, one may wonder whether the figures reported by the Israeli Treasury to the American Administration are lower than other figures collected by the Central Bureau of Statistics regarding investment in the territories. The Finance Ministry has stated in response to queries that "the ministry receives the data from the Central Bureau of Statistics as is and delivers it to the relevant sources."

3. An increase of 272% in the education budgets

In the Yesha Council (the umbrella organization of municipal councils of Jewish settlements in the West Bank and formerly also in the Gaza Strip), they maintain that the figures, in particular the decline in governmental investment up to two years ago, indicate that there is no surplus investment in Judea and Samaria. "A decade ago, a trend of decline was set off in the development budgets of the Ministry of Construction and Housing and other government ministries," they say in the Yesha Council. "While in the past, the Ministry of Construction and Housing was investing in budgetary construction (whereby the land is given gratis and development costs are covered by the State of Israel), this practice is no longer accomplished these days." And the housing prices in the territories, which have risen, according to the Yesha Council, by 30%-40% in the past five years, testify to it, they further argue in the Yesha Council.

The share of the Ministry of Construction and Housing in the government investment [in the territories] has indeed been reduced over the years; however, it has been replaced by other ministries. Up until 2008, the three governmental bodies that accounted for 70% - 80% of the governmental investment in the territories were the Interior Ministry (investing, for the most part, by balance grants), the Ministry of Construction and Housing and the National Roads Company of Israel [a government-owned corporation in charge of planning, construction and maintenance of road infrastructure in Israel; the successor of the Public Works Department (PWD) of the Ministry of Transportation]. The overall investment in the territories of all three bodies amounted in 2003 to $426.5  (1.7 billion shekels).

However the territories investment budgets of the Ministry of Construction and Housing have declined over the years, reaching a low of only some $14.5 million (58 million shekels) in 2011, accounting for a mere 8% of the ministry's investments in the past year. At the same time, the education budgets allocated to the Jewish settlements in Judea and Samaria have consistently grown, by no less than 272% between the years 2003 and 2011.

The investment of the National Roads Company of Israel in Judea and Samaria has always been high, about $58.5 million (233 million shekels) on average each year. Compared against the overall annual budget of the National Roads Company of Israel for 2011, we are talking here of 20% of the company's road maintenance budget.

Furthermore, up until 2003, the government granted tax breaks to the Jewish settlers of Judea and Samaria, amounting to over $25 million (100 million shekels) in the last year such benefits were granted. From 1993 to 1997, the settlers in the territories received some $200 million (800 million shekels) in tax benefits (in terms of 2011).

4. The Yesha Council: The only investments are currently "coexistence investments"

"The Jewish population in Judea and Samaria is growing at a rate of 5% per year, almost two and a half times the population growth rate in Israel on the whole," they note in the Yesha Council. "The Jewish residents in Judea and Samaria number 345,000–360,000. In the Mateh Binyamin regional council [covering 42 Israeli settlements in the southern Samarian hills of the West Bank] alone the number of first graders is growing by 10%-15% each year. This population growth calls for additional infrastructures, nursery schools, [elementary and high] schools and transportation [to and from school]. The increased budget is a function of the population growth."

They argue in the Yesha Council that the governmental investments manifest in the territories are investments in joint infrastructures, which they dub "coexistence investments:" Investments in infrastructures that both the Jewish settlers and the local Palestinian inhabitants benefit from, such as sewer lines or water supply lines, as well as power grid lines and roads.

"In the past, the State of Israel encouraged the settlement enterprise by allocating budgets. At present, it does it in other ways. It is true that the attitude displayed by the government today is more sympathetic. However, except for discounted public transportation, there are no special benefits these days [for the Jewish settlers] in Judea and Samaria," they say in the Yesha Council.

With reference to the above, the following comment has been made by the Prime Minister's Bureau: "The claims in the news article are totally unfounded."

Read More: http://www.al-monitor.com/pulse/business/2012/08/calcalist-exposure-the-secret-do.html

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