Netanyahu Shelves NGO Financing Bill After International Pushback
Six months after entering office, Netanyahu still hasn’t received the customary White House invitation, leaving him caught between promotion of controversial domestic policies and pursuit of international support
A controversial bill meant to curb the activities of nongovernmental organizations in Israel has been shelved by Prime Minister Binyamin Netanyahu, reportedly in response to significant international pushback.
Unnamed diplomatic sources, cited by Israeli media, claim that officials from the US, Germany, and France exerted pressure on the Israeli government to remove the bill from the agenda of Sunday’s weekly cabinet meeting.
German Ambassador Steffen Seibert conveyed his unease regarding the proposed legislation in a tweet last week, stating that it is “a matter of grave concern to us and to many of Israel’s international partners.” He added, “Lively and unhindered relations between civil societies are of essential value in our liberal democracies. We will continue to raise the issue with our Israeli friends.”
The draft legislation was initially scheduled for discussion at Sunday’s cabinet meeting before being presented to the Knesset, Israel’s parliament, for a vote. However, the item was allegedly struck off the agenda just hours before the meeting.
The bill mandates that any public advocacy NGO receiving funding from a foreign government would lose its status as a nonprofit public institution. Consequently, such organizations would be disqualified from tax exemptions and face a 65% income tax instead.
This change in status could also hinder these NGOs’ fundraising efforts, as local donations would also lose their tax-exempt status.
The bill specifically pertains to donations from a “foreign entity” intended to “meddle in Israeli internal matters in the past two years.” Private donations from individuals abroad, currently not subject to legal scrutiny in Israel, fall outside the bill’s scope.
Critics argue that the bill would significantly restrict the operations of human rights organizations in Israel and the West Bank, accusing Netanyahu’s far-right government of using the bill as a tool to quash opposition.
However, supporters insist it’s a legitimate method of curbing unauthorized foreign interference in Israel’s internal affairs.
Organizations funded by foreign governments are lobbyists seeking to advance the policies of those governments. They should not be given tax-deductible status.
“It is a completely valid position for a government to take,” Eugene Kontorovich, who directs the international law department at the libertarian Kohelet Policy Forum, told The Media Line. “Organizations funded by foreign governments are lobbyists seeking to advance the policies of those governments. They should not be given tax-deductible status.”
He said that a distinction must be drawn between government attempts to limit free speech, which are illegitimate, and legitimate attempts to prevent foreign meddling. Kontorovich said that the “significant penalties” the bill imposes on foreign-funded NGOs, beyond removal of tax-exempt status, do suggest government overreach.
Ariel Kallner, a member of Knesset from Netanyahu’s Likud party, promoted the bill. He justified his proposal in a tweet on Thursday, stating that “foreign financing bankrolls activities to change Israeli policy, starting with the rules of engagement, through the mechanism of demolishing terrorists’ houses, and including immigration policy,” he tweeted on Thursday, explaining his proposal.
Ran Goldstein, director of the Civil Society Protection Hub, branded the proposal as a “death sentence” for Israeli NGOs. He described the government’s opposition to foreign funding as hypocritical, noting to The Media Line that compared to the foreign funding Israel relies on for official institutions like the Iron Dome air defense system, “the amount of money received by civil society is minuscule.”
Shelving the NGO bill is one of many examples of Netanyahu’s government trying to find a balance between achieving its goals and maintaining international support.
Netanyahu has faced harsh international criticism because of the judicial reforms that the country began legislating earlier this year. Six months after Netanyahu’s swearing-in, US President Joe Biden has yet to invite him to the White House. Israeli prime ministers usually enjoy an automatic invitation to Washington immediately upon entering office.
In late March, Biden told reporters that he would not be inviting Netanyahu in the “near term.” Netanyahu later froze the proposed judicial reforms in response to increasing international and domestic pressure, although he recently said that the reforms will move forward.
While less consequential than the judicial reforms, the NGO bill is apparently seen by Netanyahu as a further impediment to the sought-after White House invitation.
“It’s implicitly understood that so long as there is a threat to Israeli democracy, like the legal reforms, an invitation is not going to happen,” Jonathan Rynhold, head of the Political Studies Department at Bar-Ilan University, told The Media Line. “This law is kind of seen as something similar.”
Critics have pointed out that the law would harm other nonprofit organizations that rely on foreign donations, such as those supporting Holocaust survivors or children with special medical needs.
Ultimately, the goal is to harm human rights organizations that deal with minority rights. But this would also be a violation of freedom of expression and association.
“Ultimately, the goal is to harm human rights organizations that deal with minority rights,” Dr. Amir Fuchs, a senior researcher at the Israel Democracy Institute, told The Media Line. “But this would also be a violation of freedom of expression and association.”
Fuchs noted that persecution of nonprofit organizations is common to totalitarian regimes or countries moving in that direction, such as Hungary or Poland. “It is part of a bigger picture of an attempt to sabotage anything that is perceived as harmful to the government,” he said.
Similar Israeli bills meant to weaken human rights organizations have been proposed throughout the years, all of which have ultimately been shelved following international pushback.
Goldstein described a long process of delegitimization of human rights organizations led by the right wing. Such delegitimization provides fertile ground for bills such as these, he said.
It is unclear for how long the NGO bill has been shelved. Fuchs suggested that a new version of the bill might be introduced that would weaken specific human rights organizations while incurring less international pushback.
The bill is just one of several controversial items on the government’s agenda. Two other recent controversial bills involve banning flying the Palestinian flag at Israeli universities and situating “Zionist values” as guiding principles for government decisions.
During his election campaign, Netanyahu emphasized his goal of normalizing Israel’s relations with Saudi Arabia. Such a move will be impossible without American support. For now, Netanyahu’s domestic policies may be keeping his international agenda out of reach.
Soon after passing a two-year state budget, Netanyahu said that judicial reform was back on the table. He said that he hopes to pass the reforms through agreements with the opposition, although his allies have suggested that the reforms will be passed regardless. That strong-arm rhetoric is making the US uneasy.
“Netanyahu will only get an invitation to Washington when the US will be convinced that the judicial reform has been shelved sufficiently,” said Rynhold. “This will mean that large demonstrations are no longer occurring and there are no longer warnings from the whole of the Israeli security and financial establishment.”
Massive public demonstrations have been taking place weekly since the government announced its judicial reform plan. Large numbers of Israeli reservists, economists, high-tech workers, and others have spoken out against the reforms.
Talks about the reforms between the government and the opposition have been ongoing for weeks now. There have been conflicting reports about progress in the talks, which are being led by President Isaac Herzog.
Since the budget’s passage has almost guaranteed Netanyahu two years of coalition stability, Netanyahu could choose to appease the White House by continuing the freeze on the reform and on the NGO bill.
For now, Netanyahu’s domestic policies seem to contradict his diplomatic aspirations, leaving the prime minister with a difficult path forward.
