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Finance minister faces accusations of racism after withholding millions in funding earmarked for Israeli-Arab communities

Smotrich defends himself, says he wants to vet decisions made by previous Bennett-Lapid government

Finance Minister Bezalel Smotrich at a press conference on the planned construction of a new railway line from the northern city of Kiryat Shmona to Eilat, in Jerusalem, July 30, 2023. (Photo: Chaim Goldberg/Flash90)

Israeli Finance Minister Bezalel Smotrich said he stands by his controversial decision to withhold funds earmarked for Arab local authorities.

He made the statement during a radio interview with local Kan Reshet Bet news on Tuesday morning.

Smotrich also claimed that Prime Minister Benjamin Netanyahu supported the decision to freeze a higher education plan for East Jerusalem.

"I coordinate on this matter with the prime minister and he supports my position," Smotrich confirmed.

The finance minister recently caused an outcry from members of the opposition and local politicians after announcing that several funds earmarked for projects and local authorities in the Arab community will be frozen.

Smotrich went on to say that he would not sign off on the distribution of debts to the Palestinian Authority.

"I don't see the PA collapsing, and it is absurd that the citizens of Israel would fund an authority that fights against the country and pays salaries to terrorists." 

Israel's Ministry of Finance announced the freeze of part of a 5-year development package for East Jerusalem worth NIS 2.5 billion (about $676 billion) overall.

The population of Jerusalem's eastern section, which belonged to the Hashemite Kingdom of Jordan up until the Six-Day War in 1967, is mainly composed of Arabs.

The leader of the Religious Zionism party also explained that will hold off on transferring NIS 300 million (approximately $81 million) to a number of Arab municipalities because the money was approved by the previous government.

Smotrich said he wants to vet the decision thoroughly to prevent Israeli government funds from reaching criminal organizations.

The finance minister made these announcements despite a warning from Interior Minister Moshe Arbel of the Shas party, who said the freeze could cause “significant damage to local authorities’ budgetary balance.”

"The Arab authorities receive the balance budget designed to help weak local authorities just like any other local authority in the State of Israel and on the basis of equal criteria," Smotrich claimed.

"There isn't and has never been any justification in the world to favor the Arab authorities and to give only them a special grant that the weak authorities in the Jewish sector do not receive," argued the finance minister.

On Monday, the National Unity party's chair, Benny Gantz, strongly criticized Smotrich's decision, calling it, "A decision smelling of racism."

Opposition leader Yair Lapid, who leads the Yesh Atid party, disputed Smotrich's comments, writing on Tuesday that, "Contrary to his lies, the budgets that Smotrich froze for the Arab local authorities are not related to 'the coalition commitment of the previous government to the Ra'am party.' These are balance budgets for weak authorities in Israel and stimulus budgets for employment and education that have existed for many years."

"Smotrich just wants his base to see that he remains as racist as they like and he abuses Arab citizens simply because they are Arab," Lapid added.

The head of the Federation of Local Authorities and Likud party member Haim Bibas, along with the director of the National Council of Arab Mayors called on Netanyahu to urge Smotrich to release the money to help the Arab local authorities, according to a Times of Israel report.

The All Israel News Staff is a team of journalists in Israel.

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