As Smotrich defends freeze, PM vows to transfer funds to Arab towns ‘with oversight’

Netanyahu says the funding must be monitored so that it ‘reaches its appropriate destination,’ as far-right minister claims money could fuel organized crime, ‘encourage terror’

File - Prime Minister Benjamin Netanyahu (right) speaks with Finance Minister Bezalel Smotrich during a cabinet meeting at the Prime Minister's Office in Jerusalem on June 18, 2023. (Amit Shabi/Pool)
File - Prime Minister Benjamin Netanyahu (right) speaks with Finance Minister Bezalel Smotrich during a cabinet meeting at the Prime Minister's Office in Jerusalem on June 18, 2023. (Amit Shabi/Pool)

Facing growing criticism, including from some coalition figures, Finance Minister Bezalel Smotrich on Wednesday defended his decision to freeze millions of shekels budgeted for Arab Israelis, as Prime Minister Benjamin Netanyahu pledged the funds would eventually be transferred.

Smotrich has taken flak over the past few days for refusing to release NIS 200 million ($55 million) for economic development in Arab municipalities, and maintaining a hold on a higher education program for East Jerusalem residents. Smotrich, head of the far-right Religious Zionism party, has drawn accusations of racism from opposition lawmakers.

The funds — aimed at boosting the economy, upgrading infrastructure and fighting crime in Arab communities — were approved by the previous government, which included the Islamist Ra’am party alongside left-wing, centrist and right-wing parties that united in opposition to Netanyahu.

In his first public comments on the far-right leader’s decision to block the money from being transferred, Netanyahu’s office said Wednesday evening that unspecified monitoring mechanisms would be put in place before the funding goes through, an apparent nod to claims by Smotrich that the reserves could end up in the hands of local organized crime groups or go toward supporting terrorism.

“Arab citizens of Israel deserve what all citizens deserve and I am committed to that. This is my demand of all government ministries and it will be done after a check that ensures the money indeed reaches its destination — Arab citizens of Israel,” Netanyahu said in a statement.

In a televised press conference Wednesday evening, shortly before Netanyahu’s statement, Smotrich touted the budgets right-wing governments have allotted for ethnic minority communities, while seeming to push back on racism charges, calling Arab Israelis “an integral part” of Israel and insisting he was “committed to all Israelis… without differentiating on the basis of religion, race, sexuality or political views.”

“This is first of all in your interest,” he asserted, in a direct appeal to the Arab community, referring to his decision to freeze the funds.

Smotrich then railed against Ra’am while claiming that government funding was fueling organized crime in Arab locales.

“Not on my watch,” he said.

Finance Minister Bezalel Smotrich speaks during a press conference at the Finance Ministry in Jerusalem on August 9, 2023. (Chaim Goldberg/Flash90)

Returning to his decision to freeze the funds, the finance minister argued that “the main motive of crime in Arab society is economic” and that he was therefore forming a special committee on the matter.

“Despite all the pressure and the false campaign, I announce here that I will not allow the transfer of these funds without clear mechanisms that will ensure they reach their destination and not crime organizations, and without it being clear if they are being budgeted for incitement and encouragement to terror,” Smotrich said.

Meanwhile, the Kan public broadcaster quoted unnamed associates of Netanyahu slamming Smotrich over the frozen money, warning there could be international fallout from the move. The report said senior treasury officials were opposed to the decision and that he was alone in the fight, noting that no one else had appeared alongside Smotrich at the press conference.

Also Wednesday, US President Joe Biden’s administration commented on the held-up funds.

Asked for comment on Smotrich’s decision, a US State Department spokesperson referred reporters to the minister to explain his stance but added: “As a general matter, the United States is deeply committed to the welfare and security of all Israeli citizens.”

The funding suspended by Smotrich was approved in part to address a wave of violent crime that has engulfed the Arab community in Israel in recent years. Many community leaders blame police, who they say have failed to crack down on powerful criminal organizations and largely ignore the violence. They also point to decades of neglect and discrimination by government offices as the root cause of the problem.

The East Jerusalem education plan is for a preparatory program (mechina) for Arab students at the Hebrew University of Jerusalem. Smotrich has said he is holding up the plan until the government can deal with what he alleges are “Islamic radical cells in Israeli colleges and universities.”

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