This week, Finance Minister Bezalel Smotrich (the Religious Zionism party) moved again to freeze major components of GR-550 (the five-year economic development plan for Arab society approved in October 2021), and GR-3790, the five-year plan for East Jerusalem. The budgets under these resolutions amount to over NIS 500 million.
Explaining his decisions, Minister Smotrich described GR-550 as political agreements made with Mansour Abbas’ Ra’am under the last government, and that funds going to Arab communities end up in the hands of crime families. This reflects a broader perception of GR-550 as a political decision rather than an acknowledgment of Arab citizens’ need for equitable resources and services, and a resurgence in public discourse about Arab citizens as a fifth column by government leaders.
Under GR-550, NIS 314 million were designated for Arab local authorities, most to address imbalances in supplementary allocations. In Israel, the central government provides grants to localities facing deficits. While both Jewish and Arab municipalities receive these grants, the formula used to calculate them disproportionately disadvantages Arab localities, resulting in Arab municipalities receiving only around 80% of the allocated funds (with 120% going to Jewish authorities). Retracting these budgets has severe implications for municipalities that are grappling with growing deficits and that have already factored the supplement into their annual budgets.
Minister Smotrich has faced growing criticism from other MKs and civil society organizations. Interior Minister Moshe Arbel (Shas party), responsible for local authorities, urged the finance minister to release these vital funds. Diaspora and Social Equality Minister Amichai Chikli also expressed opposition to the plan. Within the Ministry of Finance, there are also concerns voiced by professionals regarding the economic and social repercussions of this decision. During the gathering of the Special Committee on Young Israelis, MK Ahmad Tibi (Hadash-Ta’al) said, “The Government ministries already have mechanisms in place for supervising and monitoring, and despite the irregularities that exist in the Jewish local authorities, no one accuses any of the Jewish local authorities of this. The state is not dealing with the crime, and then blames the victim.” Federation of Local Authorities in Israel and the National Committee of the Heads of Arab Localities have submitted petitions to PM Binyamin Netanyahu, urging his immediate intervention in the matter. They declare the postponement of the upcoming school year’s opening. Moreover, providing essential services to residents, such as waste management, street lighting, and urban oversight, has become unfeasible due to the delayed budget allocations and the cancellation of planned initiatives.
Another contentious issue revolves around the Finance Minister’s refusal to incorporate funding for higher education within the five-year plan for East Jerusalem. Smotrich’s stance is rooted in his assertion that Arab East Jerusalemites students are involved in terrorist activities on campuses and incite anti-Israel sentiments. The preceding five-year plan (GR-3790), adopted during Netanyahu’s tenure, and executed between 2018 and 2023, included comprehensive funding for a preparatory year aimed at assisting graduates from the East Jerusalem education system in gaining admission to Israeli universities. Preparations for a new plan are underway, but it has yet to be ratified.
In response to Smotich’s claims, heads of universities and colleges based in Jerusalem, and Mayor Moshe Leon, have written to both the Finance Minister and the Prime Minister. They stress that such a decision would deprive young individuals in East Jerusalem of future employment opportunities, thus inflicting long-lasting damage upon Jerusalem’s societal fabric and economy. They further counter the allegations of anti-Israeli incitement in their institutions. National Security Council head Tzachi Hanegbi and Shin Bet chief Ronen Bar also appealed to the finance minister, emphasizing that higher education initiatives can actually reduce residents’ involvement in activities linked to terrorism. Intelligence Minister Gila Gamliel also criticized the move, saying on Monday that “The integration of the Arab population in the academy has social, economic, and security importance.”
Updates since this post was originally published:
On August 9, PM Netanyahu vowed to transfer the fundings to the Arab society “pursuant to an evaluation and supervision that they will be used for their designated purpose.” Nevertheless, Arab leaders maintain that they haven’t been provided with a substantial clarification regarding the assessment and allocation process.
On August 21, in response to the decision to suspend the budgets, Israel’s Federation of Local Authorities observed a one-day strike and demonstration outside the PM’s office in solidarity with the Arab authorities. Haim Bibas, the chairman of the foundation, warns, “This is a blow to the weakest authorities, which are already on the verge of collapse. Violence and crime are uncontrolled and affect everywhere. The prolonged budget freeze leaves the authorities unable to function and provide services to their residents.” Amid the protest, several hundred individuals rallied together, and tensions escalated into clashes between the demonstrators and the police when the crowd approached the gates of the Finance Ministry in Jerusalem.
Also on August 21st, Kan News reported that the Ministry of Education similarly has halted a digital Hebrew language program “Ivritana” in Arab schools due to a lack of funding sources. The program, aimed at assisting high school students from the Arab community in practicing Hebrew online, allowed them to interact with Hebrew-speaking mentors and engage in interactive activities to prepare for Hebrew matriculation exams. Last year, approximately 3,500 middle school students participated in the program. The Ministry of Education denies the allegations.
Access Complete List of Budget Cuts from the National Committee of the Heads of Arab Localities