Published On: Tue, Jan 20th, 2015

JNF set to Cancel Age Old Covenant with the State of Israel, Real Estate Market in Jeopardy

 

JNF

/Moshe Lichtman and Gur Megiddo/

The Jewish National Fund (JNF) (Keren Kayemet Le’Israel) is set to announce that it is cancelling its covenant with the State of Israel according to a letter addressed to Prime Minister Benjamin Netanyahu, of which “Globes” has obtained a copy. In the letter, JNF’s leaders explain briefly that their covenant with the State will not be renewed.

The dispute follows last year’s struggles in which JNF came under pressure to transfer funds to the State, become more transparent and subject to auditing. If JNF does not draw back from its decision to send the letter, then it will be required to start marketing land independently. This is something that the JNF is not organized to do and would have a huge effect on Israel’s real estate market. The decision by the board of directors must be approved by the World Zionist Organization executive, which will convene on Wednesday.

The letter tells the prime minister that, “the plenum of the JNF board has unanimously decided not to renew the covenant between the JNF and the State of Israel, which was signed on November 28 1961. As a result of this announcement, the covenant will expire on July 28 2015.” The letter is signed by senior JNF executives including chairman Efi Stentzler and director general Meir Spiegler.

 

Low supply

Sources in Israel’s real estate sector said today that if the JNF does separate its land from the Israel Land Authority (ILA) and then markets independently this will create chaos in marketing of land because overall national planning takes into account the land owned by both organizations. Another difficulty is that the JNF has no marketing organization because it currently markets land through the ILA. The JNF would have to hire dozens of marketing staff and the process would take months. During such a transition period, marketing would slow and land supply would logjam causing already high real estate prices to climb even further.

The JNF owns some 550, 000 acres or 13% of Israel’s available land mainly in high-demand central Israel. Nearly half this land was bought by Diaspora Jewish philanthropists and the rest was from expropriations of land left behind by Palestinian refugees after the establishment of the State. Today there is still a dispute over the payment that the State received for these expropriated lands. If the covenant is cancelled, then a bitter legal dispute of unprecedented proportions is likely to arise between the State and the JNF over these expropriated lands.

Published by Globes [online], Israel business news – www.globes-online.com

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