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Time to crack down on settlement funding

Palestine Center Brief No. 206 (20 July 2010)

By Yousef Munayyer

To say that the proliferation of Israeli settlements in Occupied Palestinian Territory is an impediment to peace is an understatement. As Israel continues to gobble up Palestinian land, the individual rights of landowners and the Palestinian people are trampled upon, leaving no realistic peace process of which to speak.

Ever since the Israeli occupation began in 1967, the United States has held that the transfer of Israel's civilian population into those territories is illegal and contrary to the Fourth Geneva Convention, an agreement that both Israel and the United States are party to. Consecutive presidential administrations have taken public stances against settlement building.

President Obama's recent national security strategy identifies securing a peace agreement as a key national security interest. Last year, in Cairo, President Obama restated the importance of a peace agreement and said that the United States does not recognize the legitimacy of continued Israeli settlements.

This makes the premise of a recent New York Times story exposing the extent of funds from American tax payers to support the continuation of Israeli settlements so disturbing. The story highlighted an issue that has long been problematic for activists and policy-makers alike. Hundreds of millions of U.S. tax dollars in deductible contributions are funneled into occupied territory through American charities to fund the enterprise that is killing the very peace process the United States aims to champion.

The extent of the networks operating here in the United States to support Israel's settlements is vast and likely much greater than what the Times story revealed. Certainly, charities in the business of subsidizing colonization have made efforts to disguise their contributions, and these efforts will continue as more light is shed on these controversial transactions.

The time has come for a comprehensive effort to crack down on this obvious loophole in U.S. foreign policy. Stating opposition to settlements, while allowing pro-settlement groups in this country to funnel tax dollars to Israel's hilltop colonies, undergirds the perception of hypocrisy Middle Easterners are all too accustomed to associating with the United States.

Thus far, actions to counter the efforts of pro-settlement funders using a tax-deductible status have been limited to filing complaints with the Internal Revenue Service (IRS). Through this method, activists have been able to register a complaint with the IRS, usually claiming a settlement-funding charity either engages in misleading fundraising or funds discriminatory practices.

Yet even though these efforts are noble attempts by activists to halt funding to settlements, they have yielded few results and rely on the IRS to follow through on complaints with little precedent or the tangible evidence necessary to open investigations.

A new approach is necessary to ensure that U.S. tax dollars are in line with U.S. foreign policy. Instead of a citizen-initiated, grassroots effort to mobilize the IRS, a government-led interagency approach to comprehensively crack down on the funding of illegal Israeli settlements in occupied territory is needed.

Luckily, such an approach would not require significant changes in policy, the rearranging of agencies or even significant expansion of any particular agency. The mechanisms for enforcement are already in place.

FinCEN, or the Financial Crimes Enforcement Network, became an official branch of the Treasury Department with the passage of the USA PATRIOT act in 2002. It is tasked with enforcing laws and regulations relating to financial crimes like money laundering and foreign terrorism finance. The foreign component of this policy, of course, involves the State Department. When it comes to combating international terrorism finance, for example, the agencies work together to prevent funding to organizations designated by the State Department as Foreign Terrorist Organizations.

In fact, in 1995, then President Clinton issued Executive Order 12947 which stated that acts that "disrupt the Middle East peace process constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States" and funding of these acts is illegal and prohibited. In this context, the Executive Order was targeting militant organizations, Arab and Jewish alike, who used violence against civilians.

Minor changes in legislation or an Executive Order could allow the State Department to maintain a similar list of settlement organizations which American banks and charities would not legally be allowed to deal with, and would give FinCEN the appropriate authority to crack down on organizations in the United States which direct U.S. tax dollars to settlements.

These settlements continue to prolong the Arab-Israeli conflict which General Petraeus recently cited as a significant complicating factor for U.S. objectives throughout the region.

Few problems facing the United States are so obvious. Even fewer have such obvious solutions. The rest is just a matter of political will. So long as American interests are the first priority, lawmakers should have an easy time correcting such a glaring and dangerous problem.