[News] Report: Israel stole $2 billion from Palestinian workers

Anti-Imperialist News news at freedomarchives.org
Thu Feb 4 11:19:36 EST 2010

Report: Israel stole $2 billion from Palestinian workers

Jonathan Cook, The Electronic Intifada, 4 February 2010

Over the past four decades Israel has defrauded Palestinians working 
inside Israel of more than $2 billion by deducting from their 
salaries contributions for welfare benefits to which they were never 
entitled, Israeli economists have revealed.

A new report, "State Robbery," to be published later this month, says 
the "theft" continued even after the Palestinian Authority was 
established in 1994 and part of the money was supposed to be 
transferred to a special fund on behalf of the workers.

According to information supplied by Israeli officials, most of the 
deductions from the workers' pay were invested in infrastructure 
projects in the Occupied Palestinian Territories -- a presumed 
reference to the massive state subsidies accorded to the settlements.

Nearly 50,000 Palestinians from the West Bank are working in Israel 
-- following the easing of restrictions on entering Israel under the 
"economic peace" promised by Benjamin Netanyahu, the Israeli prime 
minister -- and continue to have such contributions docked from their pay.

Complicit in the deception, the report adds, is the Histadrut, the 
Israeli labour federation, which levies a monthly fee on Palestinian 
workers, even though they are not entitled to membership and are not 
represented in labour disputes.

"This is a clear-cut case of theft from Palestinian workers on a 
grand scale," said Shir Hever, a Jerusalem-based economist and one of 
the authors of the report. "There are no reasons for Israel to delay 
in returning this money either to the workers or to their beneficiaries."

The deductions started being made in 1970, three years after the 
Israeli occupation of the Palestinian territories began, when 
Palestinian workers started to enter Israel in significant numbers, 
most of them employed as manual laborers in the agriculture and 
construction industries.

Typically, the workers lose a fifth of their salary in deductions 
that are supposed to cover old age payments, unemployment allowance, 
disability insurance, child benefits, trade union fees, pension fund, 
holiday and sick pay, and health insurance. In practice, however, the 
workers are entitled only to disability payments in case of work 
accidents and are insured against loss of work if their employer goes bankrupt.

According to the report, compiled by two human rights groups, the 
Alternative Information Centre and Kav La'Oved, only a fraction of 
the total contributions -- less than eight percent -- was used to 
award benefits to Palestinian workers. The rest was secretly 
transferred to the finance ministry.

The Israeli organizations assess that the workers were defrauded of 
at least $2.25 billion in today's prices, in what they describe as a 
minimum and "very conservative" estimate of the misappropriation of 
the funds. Such a sum represents about 10 percent of the PA's annual budget.

The authors also note that they excluded from their calculations two 
substantial groups of Palestinian workers -- those employed in the 
Jewish settlements and those working in Israel's black economy -- 
because figures were too hard to obtain.

Hever said the question of whether the bulk of the deductions -- 
those for national insurance -- had been illegally taken from the 
workers was settled by the Israeli High Court back in 1991. The 
judges accepted a petition from the flower growers' union that the 
government should return about $1.5 million in contributions from 
Palestinian workers in the industry.

"The legal precedent was set then and could be used to reclaim the 
rest of these excessive deductions," he said.

At the height of Palestinian participation in the Israeli labour 
force, in the early 1990s, as many as one in three Palestinian 
workers was dependent on an Israeli employer.

Israel continued requiring contributions from Palestinian workers 
after the creation of the Palestinian Authority in 1994, arguing that 
it needed to make the deductions to ensure Israeli workers remained 

However, the report notes that such practices were supposed to have 
been curbed by the Oslo process. Israel agreed to levy an 
"equalization tax" -- equivalent to the excessive contributions paid 
by Palestinians -- a third of which would be invested in a fund that 
would later be available to the workers.

In fact, however, the Israeli State Comptroller, a government 
watchdog official, reported in 2003 that only about a tenth of the 
money levied on the workers had actually been placed in the fund.

The finance ministry has admitted that most of the money taken from 
the workers was passed to Israeli military authorities in the 
Palestinian territories to pay for "infrastructure programs." Hannah 
Zohar, the director of Kav La'Oved who co-authored the report, said 
she believed that the ministry was actually referring to the 
construction of illegal settlements.

The report is also highly critical of the Histadrut, Israel's trade 
union federation, which it accuses of grabbing "a piece of the pie" 
by forcing Palestinian workers to pay a monthly "organizing fee" to 
the union since 1970, even though Palestinians are not entitled to membership.

Despite the Histadrut's agreement with its Palestinian counterpart in 
2008 to repay the fees, only 20 percent was returned, leaving $30 
million unaccounted for.

The Histadrut was also implicated in another "rip-off," said Hever. 
It agreed in 1990 to the Israeli construction industry's demand that 
Palestinian workers pay an extra two percent tax to promote the 
training of recent Jewish immigrants, most of them from the former 
Soviet Union.

Hever said that in effect the Palestinian laborers were required to 
"subsidize the training of workers meant to replace them." The funds 
were never used for the stated purpose but were mainly issued as 
grants to the families of Israeli workers.

In one especially cynical use of the funds, the report notes, the 
money was spent on portable stoves for soldiers involved in Israel's 
three-week attack on Gaza last year.

In response, the finance ministry called the report "incorrect and 
misleading," and the Histadrut claimed it was "full of lies." 
However, neither provided rebuttals of the report's allegations or 
its calculations.

Hever said the government body responsible for making the deductions, 
the department of payments, had initially refused to divulge any of 
its figures, but had partly relented after some statistics were made 
available through leaks from its staff.

Assef Saeed, a senior official in the Palestinian Authority's labour 
ministry, said the PA was keen to discuss the issue of the 
deductions, but that talks were difficult because of the lack of 
contacts between the two sides.

Jonathan Cook is a writer and journalist based in Nazareth, Israel. 
His latest books are 
and the Clash of Civilisations: Iraq, Iran and the Plan to Remake the 
Middle East (Pluto Press) and 
Palestine: Israel's Experiments in Human Despair (Zed Books). His 
website is <http://www.jkcook.net/>www.jkcook.net.

A version of this article originally appeared in 
<http://www.thenational.ae/>The National, published in Abu Dhabi.

Freedom Archives
522 Valencia Street
San Francisco, CA 94110

415 863-9977

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://freedomarchives.org/pipermail/news_freedomarchives.org/attachments/20100204/950b7ccd/attachment.html>

More information about the News mailing list