https://www.jns.org/foreign-funding-of-judicial-reform-protests-spurs-knesset-legislation/
As billionaire Elon Musk and his youthful team of tech wizards tear through America’s administrative state, exposing waste and misuse of funds, reports emerged that the U.S. Agency for International Development (USAID) funded judicial-reform protests in Israel.
While this would constitute a blatant case of U.S. interference in Israel’s internal affairs, the way in which funds bounce from one group to another before reaching their final target makes it difficult to produce hard evidence.
However, reports of heavy foreign funding of key groups opposed to the Israeli government’s plan to reform the judiciary led Prime Minister Benjamin Netanyahu himself to weigh in last week in a Knesset speech, blasting what he called the “almost inconceivable” amounts of foreign money that drove the protest movement.
Israel’s Ministerial Committee for Legislation approved a bill on Sunday to impose an 80% tax on donations from foreign entities to Israeli non-profits. Currently, those donations are tax-free.
The heart of the current debate is Blue and White Future, an Israeli NGO that funded and ran the headquarters for the coalition of groups opposing judicial reform. A significant percentage of its funding came from foreign sources.
The HQ’s website lists some half-dozen protest groups supported by Blue and White Future, including Achim L’Neshek (“Brothers in Arms”), which called for reservists to refuse service, and Bonot Alternativa (“Women Building an Alternative”), which introduced Handmaid’s Tale costumes to the protests.
The key figures in Blue and White Future are Orni Petruschka, a high-tech entrepreneur; Ami Ayalon, a former head of the Internal Security Service (Shin Bet); and Gilead Sher, an attorney who served as chief of staff and policy coordinator to former Israeli Prime Minister Ehud Barak, one of the most vociferous of Netanyahu’s opponents.
Blue and White Future was founded in 2009 as Blue and White Peace. Its initial purpose was to “enhance and highlight” public support for the two-state solution.
It changed its name by the end of that year to Blue and White Future and then its raison d’être in January 2023 (when Justice Minister Yariv Levin announced the government’s judicial-reform plan), saying its new goal was “to preserve the democratic character of the State of Israel.”
In September 2023, it hired Washington-based PR firm Trident DMG, for a three-month contract of $75,000 for “strategic communications services” to boost its cause in the United States.
It would have found a ready ear in the then-Biden administration, which made no secret of its opposition to the judicial-reform plan. U.S. President Joe Biden himself spoke out against it several times in 2023.
Blue and White Future’s financials, filed with Israel’s Registrar of Associations, show that the NGO received a major shot of money in 2023, with donations jumping to 134 million shekels (~$38 million) from 824,730 shekels ($232,000) in 2022. Its budget in previous years hovered in that lower range.
In 2023, it spent most of its budget, or $31 million, on opposition to judicial reform.
Approximately 54%, or 83 million shekels (~$23 million), of the donations came from foreign sources and 71 million shekels (~$20 million) from within Israel.
Of the foreign funds, 78 million shekels came from two American nonprofits: the Middle East Peace Dialogue Network (MEDPN)—14 million shekels (~$4 million) and PEF Israel Endowment Funds—64 million shekels (~$18 million).
The MEDPN receives funds from NGOs that were given U.S. government funds. But it’s impossible to trace the origin of the money, as it’s already too far removed from the source.
For instance, USAID gives to Rockefeller Philanthropy Advisors, Inc., which donates to the Jewish Communal Fund, which in turn donates to MEDPN, according to DataRepublican, a website that tracks taxpayer funds.
PEF Israel’s receipt of U.S. taxpayer funds is negligible. It received $149,000 in indirect government monies, or 0.5% of its total contributions of $281 million in 2023, DataRepublican reported.
The torrent of U.S. taxpayer money streaming out of U.S. government coffers and adding to America’s $2 trillion deficit is what the Trump administration wants to bring under control.
In a Feb. 11 press conference, Elon Musk, who heads the Department of Government Efficiency (DOGE), joined President Donald Trump at the Oval Office to discuss his efforts. He noted that many payments his team found didn’t have a categorization code or description of what the payments were for, meaning there was no way to track them.
There is a “massive number” of such checks “flying out of the building,” Musk said.
With such few basic controls, it seems unlikely that Musk’s team will uncover a smoking gun pointing to USAID grants going to Israeli NGOs.
However, Knesset Member Yitzhak Kroizer of the Otzma Yehudit Party, who wrote to Musk on Feb. 16 requesting a meeting to discuss the misuse of U.S. taxpayer funds in Israel, expressed cautious optimism that much could be uncovered.
“It will be very difficult to track all the money,” Kroizer told JNS. “But we will be able to identify fund transfers from certain entities, parties and nonprofits and how it flows from the United States to groups in Israel.”
Kroizer is interested in exposing the mechanism by which the funds are piped in, not specific dollar amounts, noting that the names of the associations change but the methods remain the same.
“They find the same ways each time to transfer the funds,” he said.
The U.S. has a history of interfering in Israeli politics, along with certain European countries, he added. “It’s the same countries all the time.”
In May 2023, a bill that would have significantly limited the amount that Israeli NGOs could receive from foreign governments was dropped after harsh criticism from the United States, Germany and France. By protesting the bill, those countries were “probably” pointing a guilty finger at themselves, Kroizer said.
In his letter to Musk, he noted, “It is well known in both Israel and the United States that past administrations have used American funds to exert improper influence in Israeli affairs. The 2015 incident involving OneVoice and VI5—organizations that received funding from the Obama administration while working to oppose the Netanyahu government—left a lasting negative impression.”
Kroizer was referring to the scandal in which a U.S. Senate subcommittee found that the Obama administration’s State Department had donated about $350,000 to a group trying to defeat Netanyahu in the 2015 Israeli elections.
The Knesset passed a law the following year requiring nonprofits that receive more than half their funding from abroad to disclose it each year to the NGO Registrar at the Justice Ministry.
The United States expressed its concern with that law, too, with the Obama administration’s Ambassador to Israel Dan Shapiro meeting with the law’s sponsor, then-Justice Minister Ayelet Shaked.
A U.S. embassy statement released after the meeting put in diplomatic language American displeasure, saying Shapiro “reiterated” the United States’ view that “a free and functioning civil society is an essential element of a healthy democracy, and that governments must protect free expression and peaceful dissent and create an atmosphere where all voices can be heard.”
It remains to be seen whether the current proposed Knesset bill, whose stated purpose is “to reduce the indirect influence of foreign government and political entities on the State of Israel”—if it becomes law—will have better luck than previous efforts to sharply cut outside activity in shaping Israeli politics.
