US sounds alarm over Likud bill targeting rights groups backed by foreign governments

State Department says human rights organizations ‘should have space to raise resources’ worldwide; NIF bashes ‘government of extremists’ as coalition weighs bill to impose 65% tax

Jacob Magid is The Times of Israel's US bureau chief

An illustrative photo of a banner supporting the Breaking the Silence organization, in Tel Aviv, July 1, 2017. The banner reads 'We are all breaking the silence.' (Tomer Neuberg/Flash90)
An illustrative photo of a banner supporting the Breaking the Silence organization, in Tel Aviv, July 1, 2017. The banner reads 'We are all breaking the silence.' (Tomer Neuberg/Flash90)

WASHINGTON — US President Joe Biden’s administration came out on Wednesday against a coalition bill that would significantly limit Israeli civil society groups’ ability to accept donations from foreign governments.

The legislation, drafted by Likud MK Ariel Kallner, was slated to be brought before the Knesset’s high-level Ministerial Committee for Legislation on Sunday.

The bill states that any nonprofit group that engages in public advocacy two years before or after receiving a donation from a foreign government will lose its status as a public institution and will no longer be eligible for tax exemptions. In addition, those non-profits will be hit with a 65-percent income tax.

The bill would likely cripple the ability of human rights organizations to operate in Israel and the West Bank, as many of them rely on funding from foreign governments.

Human rights organizations — such as B’Tselem, Breaking the Silence, and the New Israel Fund — have long been targeted by the Israeli right wing and even the political center over their exposure of alleged Israeli human rights abuses against the Palestinians.

But the way right-wing lawmakers have sought to criticize the largely left-wing organizations has been by highlighting their source of funding and arguing that it represents interference in Israel’s internal affairs.

A picture taken on May 13, 2019, shows an anti-occupation billboard, by Israeli NGO Breaking The Silence, erected on a street in the Israeli coastal city of Tel Aviv. (Photo by JACK GUEZ / AFP)

Left-wing activists in turn point out that right-wing civil society groups also take funding from foreign investors. Those donors might be individuals as opposed to countries but the funds are often transferred with far less transparency, the left-wing activists maintain. Israel also funds civil society groups abroad with various political motivations.

Such Knesset legislation has been proposed in the past but, amid pushback from abroad, has never been approved.

The initiative appears to have a better chance of becoming law given the hardline, pro-settler makeup of Prime Minister Benjamin Netanyahu’s coalition. A pledge to pass such a bill was also included in the coalition deal Likud signed with the far-right Otzma Yehudit party.

Asked to comment on the bill during a Wednesday press briefing, State Department spokesman Matthew Miller said, “I won’t speculate on things that might come to pass. I will just say that as a general matter, the United States supports the essential role of NGOs that are part of civil society.”

“We believe that they are critical to democratic, responsive and transparent government, and we firmly believe that civil society should have the opportunity and space to operate and raise resources around the world,” Miller added.

The legislation would also significantly complicate landmark 2020 Congressional legislation backed by both parties known as the Middle East Partnership for Peace Act. MEPPA earmarked $250 million in US funding for coexistence organizations that promote Israeli-Palestinian dialogue and Palestinian business development.

A photo distributed by B’Tselem shows an off-duty soldier with a shirt wrapped around his face as a mask opening fire toward the village of Urif from the Yitzhar settlement on May 14, 2021. (B’Tselem)

The Biden administration has touted the legislation as critical for creating the grassroots conditions necessary for a future peace agreement between Israelis and Palestinians. But if Kallner’s bill passes, organizations that receive MEPPA grants would have to transfer massive amounts of those funds to the Israeli government.

The French Embassy in Israel also weighed in Wednesday, noting that it had already raised concern over a 2021 Israeli decision to designate six Palestinian rights groups as terror organizations, indicating that it viewed the latest bill as an extension of that effort to target Israeli and Palestinian civil society.

Kallner’s bill “is equally and deeply concerning. We reaffirm our commitment to the critical role of civil society in the life of every democracy, in Israel and throughout the world,” it said. “It is the responsibility of States to create and maintain a space and environment conducive to their work, for a vibrant civil society can also bring a culture of peace and diversity,” the French embassy added.

The New Israel Fund, which serves as an umbrella group funding dozens of progressive civil society organizations operating in Israel and the West Bank, came out harshly against the bill, calling it the “next step” of the government’s effort to overhaul the judiciary.

Daniel Sokatch, CEO of the New Israel Fund, at his office in Jerusalem, June 4, 2015. (Hadas Parush/Flash90)

“Netanyahu and his government of extremists want to tax civil society out of existence — especially those working to defend the rights of the most marginalized in Israel and under Israel’s control: women, the LGBTQ+ community, Palestinians living under occupation, and Arab citizens of Israel,” said NIF CEO Daniel Sokatch in a statement Wednesday

“This is precisely the way that autocrats shrink democratic space. This law could force the closure of hundreds of organizations in Israel — and it specifically targets the ones that speak truth to power. Choking off funding from advocates for change is not what democracies do. Strong democracies can hear criticism, even and especially when it is harsh, and work to make themselves better,” he charged.

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