Report says Israel is subsidising settlements

Peace talks between Israelis and Palestinians look even less likely after a report reveals Israeli government is heavily subsidising Jewish settlements.

The US has demanded that Israel suspend housing projects, such as one on the Shepherd Hotel, in East Jerusalem.

TEL AVIV // In another sign of Israel's continuous support for Jewish settlement expansion in the occupied West Bank, a new report yesterday showed that the settlements obtain a significantly higher share of government funds than municipalities in Israel overall. According to the study by the Israeli European Policy Network, a joint project of European and Israeli scholars that explores issues on the agenda of Israel's relations with the European Union, Jewish settlements in the West Bank received 57 per cent of their budget funds from the Israeli government in recent years. That is higher than the 34.7 per cent share of budget funds attained by Israeli municipalities as a whole from the state, the report said. Roby Nathanson, an economist and one of the main authors of the report, which tracked the development of Jewish settlements since the 1967 Arab-Israeli war, said: "Settlements are being kept afloat through the financing of the government of Israel. "Not only do settlements distort priorities of the Israeli government's decision-making process on economic, political and social issues - the government of Israel proactively funds more than half of their existence too." Such findings may exacerbate a growing rift between Israel and the US, the country's staunchest ally, on the issue of settlements. Barack Obama, the US president, has insisted repeatedly that Israel should freeze all settlement construction in a bid to renew talks with the Palestinians on a peace agreement that would also decide the fate of the settlements in the territory Palestinians want as part of their future state. The dispute over the settlements is also clouding Israel's relations with the European Union, where some senior officials have hinged an upgrade of trade relations with Israel on a halt to settlement growth. On Tuesday, Germany, France and Sweden - which currently holds the EU presidency - joined Mr Obama's call pressing Israel to stop building settlements. According to the report, the settlements have drawn a bigger slice of government funds than other municipalities within Israel partly because the ministries of housing and infrastructure in the past two decades were mostly headed by figures from right-wing parties that actively supported Jewish expansion in the West Bank. But the government's financial help for settlements stretches -beyond its funds for municipalities and includes various other sources within ministries that are largely unaccounted for, the report said. It added: "In effect, the settlements have benefited from other incomes, transmitted through numerous 'hidden' channels that have been kept in the shadows and were not made public for political reasons." An example of such discreet funding channels, it said, is a department in the housing ministry called Rural Building and New Settlements Districts Administration, which had provided settlements with almost half its budget - or some $68 million (Dh250m) - between 2000 and 2002. The study described Israeli governments as having been "generous" towards settlement funding continuously since 1967, including those that conducted intense negotiations over peace agreements with the Palestinians. It added: "The main difference was that these governments refrained from establishing new settlements, while allowing the expansion of existing ones." The authors of the report said they used 185 aerial photographs of the settlements to estimate that their construction until now had cost in total about $18 billion, including the building of homes, roads, industrial areas and public institutions. The report added that a sizeable chunk of the funding has also come from "ideological supporters" of settlements who live in -Jewish communities abroad, although it said it was difficult to determine the amount of their donations. The report estimated that the number of Israelis living in the Jewish settlements has doubled since the 1993 Oslo Accords, despite the agreement aiming to bring a halt to such growth. Furthermore, the annual average population growth in the settlements, at about 5.6 per cent, is three times higher than the Israeli average. The settlements have been the main hurdle in the so far unsuccessful peace talks between Israel and the Palestinians, whose senior leaders refuse to restart negotiations with the new Israeli government until it stops the Jewish expansion in the West Bank. According to the report, Israel, in its current stance in the talks, demands the annexation of about eight per cent of the West Bank, which would include 82 per cent of the Israelis living outside the Green Line that marks the territory the country occupied after the 1967 war. The Palestinians, according to the report, agree only that Israel annex about 2.5 per cent of the territory, which would include three quarters of the settlers. [e-mail]