Human Rights Watch: Occupation Inc.
On 19th January 2016 Human Rights Watch (HRW) published a report entitled “Occupation, Inc.“, an extensive piece of research documenting the Israeli settlement economy across the occupied West Bank and East Jerusalem. The report investigates how Israel is extending its control of the occupied Palestinian territories through the spiralling development of industrial zones and the illegal seizure of agricultural land.
Focussing in part on the Jordan Valley, the abysmal conditions of Palestinian workers in settlement agriculture are exposed. A case study on waste management also shows how a landfill site located within the Jordan Valley exclusively services settlements including Ariel, Barkan, and cities within Israel. This is to the severe detriment of the Palestinian community (see pages 81 – 84 and Annex 1, pages 108 – 111).
Recognising settlement construction as a clear breach of international law, HRW calls on businesses to withdraw from the settlement economy. It also calls on Israel to dismantle all settlements, end discrimination and restrictions on Palestinian development, and end the system of incentives for Israeli and international businesses operating right across the occupied West Bank. The report can be accessed here in pdf format and is reproduced below. It is also available in Arabic and Hebrew.
Published by Human Rights Watch, January 19th 2016
How Settlement Businesses Contribute to Israel’s Violations of Palestinian Rights
Almost immediately after Israel’s military occupation of the West Bank in June 1967, the Israeli government began establishing settlements in the occupied Palestinian territories. From the outset, private businesses have been involved in Israel’s settlement policies, benefiting from and contributing to them. This report details the ways in which Israeli and international businesses have helped to build, finance, service, and market settlement communities. In many cases, businesses are “settlers” themselves, drawn to settlements in part by low rents, favorable tax rates, government subsidies, and access to cheap Palestinian labor.
In fact, the physical footprint of Israeli business activity in the West Bank is larger than that of residential settlements. In addition to commercial centers inside of settlements, there are approximately 20 Israeli-administered industrial zones in the West Bank covering about 1,365 hectares, and Israeli settlers oversee the cultivation of 9,300 hectares of agricultural land. In comparison, the built-up area of residential settlements covers 6,000 hectares (although their municipal borders encompass a much larger area).
Israeli settlements in the West Bank violate the laws of occupation. The Fourth Geneva Convention prohibits an occupying power from transferring its citizens into the territory it occupies and from transferring or displacing the population of an occupied territory within or outside the territory. The Rome Statute, the founding treaty of the International Criminal Court, establishes the court’s jurisdiction over war crimes including the crimes of transfer of parts of the civilian population of an occupying power into an occupied territory, and the forcible transfer of the population of an occupied territory. The ICC has jurisdiction over crimes committed in or from the territory of the State of Palestine, now an ICC member, beginning in June 13, 2014, the date designated by Palestine in a declaration accompanying its accession.
Israel’s confiscation of land, water, and other natural resources for the benefit of settlements and residents of Israel also violate the Hague Regulations of 1907, which prohibit an occupying power from expropriating the resources of occupied territory for its own benefit. In addition, Israel’s settlement project violates international human rights law, in particular, Israel’s discriminatory policies against Palestinians that govern virtually every aspect of life in the area of the West Bank under Israel’s exclusive control, known as Area C, and that forcibly displace Palestinians while encouraging the growth of Jewish settlements.
As documented in this report, it is Human Rights Watch’s view that by virtue of doing business in or with settlements or settlement businesses, companies contribute to one or more of these violations of international humanitarian law and human rights abuses. Settlement businesses depend on and benefit from Israel’s unlawful confiscation of Palestinian land and other resources, and facilitate the functioning and growth of settlements. Settlement-related activities also directly benefit from Israel’s discriminatory policies in planning and zoning, the allocation of land, natural resources, financial incentives, and access to utilities and infrastructure. These policies result in the forced displacement of Palestinians and place Palestinians at an enormous disadvantage in comparison with settlers. Israel’s discriminatory restrictions on Palestinians have harmed the Palestinian economy and left many Palestinians dependent on jobs in settlements—a dependency that settlement proponents then cite to justify settlement businesses.
Following international standards articulated in the United Nations Guiding Principles on Business and Human Rights, businesses are expected to undertake human rights due diligence to identify and mitigate contributions to human rights violations of not only their own activities but also activities to which they are directly linked by their business relationships. They are also expected to take effective steps to avoid or mitigate potential human rights harms—and to consider ending business activity where severe negative human rights consequences cannot be avoided or mitigated.
Based on the findings of this report, it is Human Rights Watch’s view that any adequate due diligence would show that business activities taking place in or in contract with Israeli settlements or settlement businesses contribute to rights abuses, and that businesses cannot mitigate or avoid contributing to these abuses so long as they engage in such activities. In Human Rights Watch’s view, the context of human rights abuse to which settlement business activity contributes is so pervasive and severe that businesses should cease carrying out activities inside or for the benefit of settlements, such as building housing units or infrastructure, or providing waste removal and landfill services. They should also stop financing, administering, trading with or otherwise supporting settlements or settlement-related activities and infrastructure.
Human Rights Watch is not calling for a consumer boycott of settlement companies, but rather for businesses to comply with their own human rights responsibilities by ceasing settlement-related activities. Moreover, consumers should have the information they need, such as where products are from, to make informed decisions.
This report uses illustrative case studies to highlight four key areas where, in Human Rights Watch’s view, settlement companies contribute to and benefit from violations of international humanitarian and human rights law: discrimination; land confiscations and restrictions; supporting settlement infrastructure; and labor abuses. These case studies are not necessarily the worst examples of settlement businesses, but demonstrate how businesses operating in settlements are inextricably tied to one or more of these abuses.
How Businesses Contribute to and Benefit from Discrimination
Israel operates a two-tiered system in the West Bank that provides preferential treatment to Jewish Israeli settlers while imposing harsh conditions on Palestinians. Israeli courts apply Israeli civil law to settlers, affording them legal protections, rights and benefits not enjoyed by their Palestinian neighbors who are subject to Israeli military law, even though under international humanitarian law, military law governs the occupied territories regardless of citizenship. Israel’s privileged treatment of settlers extends to virtually every aspect of life in the West Bank. On the one hand, Israel provides settlers, and in many cases settlement businesses, with land, water infrastructure, resources, and financial incentives to encourage the growth of settlements. On the other hand, Israel confiscates Palestinian land, forcibly displaces Palestinians, restricts their freedom of movement, precludes them from building in all but 1 percent of the area of the West Bank under Israeli administrative control, and strictly limits their access to water and electricity.
In 2010, Human Rights Watch published a report, Separate and Unequal, documenting Israel’s systematic discrimination against Palestinians in favor of settlers. The report found that the impact of these policies on Palestinians at times amounts to forcible transfer of the population living under occupation, since many Palestinians who are unable to build a home or earn a living are effectively forced to move to areas under Palestinian Authority control or to emigrate entirely out of the West Bank. This new report builds on Human Rights Watch’s previous findings and considers the ways in which settlement businesses are deeply bound up with Israel’s discriminatory policies.
By virtue of facilitating the settlement regime, settlement businesses, in Human Rights Watch’s view, contribute to the discriminatory system that Israel operates for the benefit of settlements. These businesses also directly benefit from these policies in myriad ways. The report describes two such ways. One is the financial and regulatory incentives that the Israeli government provides to settlement businesses, but not to local Palestinian businesses, in order to encourage the economic development of settlements. The other is the discriminatory way that the Civil Administration, the unit in the Israeli military responsible for civilian affairs in the West Bank, issues permits for the construction and operation of settlement companies, often on land confiscated or expropriated from Palestinians in violation of international humanitarian law, while severely restricting such permits for Palestinian businesses. It is therefore Human Rights Watch’s view that businesses operating in or with settlements are inextricably linked to, and benefit from, Israel’s privileged and discriminatory treatment of settlements at the expense of Palestinians.
As an illustrative example, the report contrasts the operating conditions of a quarry in the West Bank owned and operated by a European company, to the operating conditions of Palestinian-owned quarries in the West Bank town of Beit Fajar. Whereas Israel issued a permit to the European company to operate the quarry on an area of land that Israel declared belongs to the state, Israel has refused to issue permits for nearly all of the 40 or so Beit Fajar quarries, or for almost any other Palestinian-owned quarry in the area of the West Bank under Israel’s administrative control. The World Bank estimates that Israel’s virtual ban on issuing Palestinians permits for quarries costs the Palestinian economy at least US$241 million per year. Yet Israel licenses eleven settlement quarries in the West Bank despite this exploitation of resources in occupied territory violating international humanitarian law.
Article 55 of the Hague Regulations of 1907 makes occupied property subject to the laws of usufruct. The generally accepted interpretation of these rules permits an occupying power to appropriate the resources of the occupied territory only for the benefit of the protected population or if justified by military necessity. Yet the settlement quarries pay fees to settlement municipalities and the Civil Administration, which cannot be said to benefit the Palestinian people, and sell 94 percent of the materials they produce to Israel or Israeli settlements, in violation of these laws.
How Businesses Contribute to and Benefit from Land Confiscation and Restrictions
This report also describes how settlement businesses depend on, contribute to, and benefit from Israel’s unlawful confiscation of and restrictions on Palestinian land for the benefit of settlements. Some settlement businesses operate in residential settlements, or provide services to them, while others operate in “industrial zones” specially built for settlement businesses.
Such businesses depend on Israel’s unlawful confiscation of Palestinian land to build the settlements in the first place. Based on the findings of the report, it is Human Rights Watch’s view that by facilitating settlements’ residential development, these businesses also contribute to the further confiscation of Palestinian land, restrictions on Palestinian access to their lands, and their forced displacement from these lands. The report highlights the case of Ariel, a settlement Israel first established in 1978. The 4,615 dunams (462 hectares) of land on which Ariel was initially built was seized by military order ostensibly for security purposes. In the decades since, Israel has built three security fences around the settlement, each time encompassing hundreds more dunams of privately owned Palestinian agricultural land.
The report examines two illustrative case studies—a bank and real estate agency active in Ariel—to demonstrate the manner in which businesses finance, develop and profit from the illegal settlement housing market on lands seized from Palestinians. Many other banks and real estate agencies are active in settlements, and the focus on these companies is purely illustrative and not intended to single them out as particularly problematic.
The first case study looks at the role of an Israeli bank in the construction of a six-building complex in Ariel called Green Ariel. The bank is financing the project and provides mortgages to Israeli buyers there and elsewhere in Israeli settlements. The bank’s website advertises the pre-sale of apartments in several other buildings under construction in settlements. This is one example of the many banks that finance settlement construction or provide mortgages to settlers.
The operations of a US-based global real estate franchise is another case study illustrating business involvement in the settlement housing market. Like other real estate agencies, the branches located inside Israel offer properties for sale and rent in Ariel and other settlements; it also has a branch in the settlement of Ma’aleh Adumim.
By contributing to and benefitting from Israel’s unlawful confiscation of land, the financing, construction, leasing, lending, selling and renting operations of businesses like banks and real estate agencies help the illegal settlements in the West Bank to function as viable housing markets, enabling the government to transfer settlers there. In this way, in Human Rights Watch’s view, companies involved in the settler housing market contribute to two separate violations of international humanitarian law: the prohibition on an occupying power expropriating or confiscating the resources of the occupied territory for its own benefit and the prohibition on transferring its civilians to occupied territory. By benefitting from the preferential access to land and financial incentives for doing business in the settlements, these businesses also benefit from Israel’s unlawful discrimination against Palestinians.
Israel’s confiscation of land for settlements and settlement businesses violates international law, regardless of whether the land was previously privately held, “absentee land” or so-called “state land.” Businesses operating on these unlawfully confiscated lands are inextricably tied to the ongoing abuses perpetuated by such confiscations.
While Israel maintains that its human rights obligations do not extend to the occupied territories, the International Court of Justice, endorsing the position of the United Nations Human Rights Committee, has refuted Israel’s position on the grounds that a state’s obligations extend to any territory under its effective control. Israel also wrongly asserts that the Fourth Geneva Convention’s prohibition on an occupying power to “deport or transfer parts of its own civilian population into the territory it occupies” does not apply to voluntary transfers. Both the plain meaning of article 49 of the Convention—which only refers to “transfer” in this clause but expressly refers to “forcible transfers” in the context of a different prohibition in the same article—and the International Committee of the Red Cross’s commentary contradict this position.
How Businesses Support the Infrastructure of Unlawful Settlements
Businesses also play a vital role in sustaining the settlements, thereby facilitating and benefitting from Israel’s violation of the international law prohibition on an occupying power transferring its civilian population into occupied territory and contributing to Israel’s discrimination against Palestinians in the West Bank. Businesses provide services of all kinds to settlers. At the same time, they contribute to the economic development of settlements by providing employment to settlers and tax revenues to settlement municipalities.
The report highlights, as an illustrative example, a company providing waste management services in Israeli settlements in the West Bank, including Ariel and the nearby Barkan industrial zone. It operates a landfill in the Jordan Valley on land that Israel confiscated in violation of the laws of occupation and helps to sustain the presence of settlements. The company also benefits from Israel’s discriminatory approval requirements that favor Israeli companies servicing settlements but discriminate against Palestinian companies servicing Palestinians. In 2004, Israel invested in upgrading the facility in the Jordan Valley and the Civil Administration gave it a permit to operate there, even though the site currently exclusively services Israeli and settlement waste.
Meanwhile Palestinians have struggled to obtain funding and permits for landfills. All authorized landfills servicing Palestinians are funded by international donors. In one case, Israel has refused to retroactively approve a Palestinian site, and in another, it forces a Palestinian landfill site to accept waste from settlements established in violation of international law.
More generally, settlement businesses provide employment to settlers, which is a key to attracting and maintaining settlers. Around 55,440 settlers—about 42 percent of the settlement workforce—are employed in public or private sector jobs in Israel’s settlements. Settlement businesses also pay taxes to settlement municipalities, thus contributing to the sustenance of the settlements. Although the tax rates are often lower than rates inside Israel, they still make up a sizable share of the municipality’s income.
For example, the 2014 projected budget of the settlement of Barkan, which is associated with the industrial zone of the same name, anticipated that around 6 percent of its budget—350,000 shekels of a six million shekels ($87,500 of $1,500,000) budget—would come from corporate taxes, and that Barkan would take in another nearly million shekels ($250,000) in water taxes, a portion of which factories in the industrial zone would pay. In 2014, the subsidiary of a European cement company that owns a quarry in the West Bank paid €430,000 ($479,000) in taxes to the Samaria Regional Council for its operation of the Nahal Raba quarry.
Without the participation and support of such private businesses that service Israel’s settlements, the Israeli government would incur much greater expenses to sustain the settlements and their residents. In this way, businesses contribute to Israel’s maintenance and expansion of unlawful settlements.
How Businesses Contribute to and Benefit from Labor Abuse
While all settlement-related business activity runs afoul of international standards on the human rights responsibilities of businesses, regardless of labor conditions, the lack of clear labor protections for Palestinians working in settlements creates a high risk of discriminatory treatment and other abuses. As noted, Israeli courts apply Israeli civil law to settlers, while Palestinians are subject to Jordanian law as it existed at the start of the occupation in 1967, except as amended by military order. In 2007, Israel’s Supreme Court ruled that, in the case of labor laws, this two-track legal system is discriminatory, and Israeli law should govern employment conditions of Palestinians in settlements, giving Palestinian employees the right to sue their employers in Israeli courts for violations of Israeli labor laws. But the government has not implemented this ruling, and claims it cannot investigate and enforce compliance with these laws.
The virtually complete lack of government oversight, as well as Palestinian workers’ dependency on Israeli-issued work permits, creates an enabling environment for settler employers to pay Palestinian workers below Israel’s minimum wage and deny them the benefits they provide to Israeli employees. Notwithstanding the international humanitarian law prohibition against applying Israeli law to occupied territory, Israel is obliged by international human rights law to ensure that all civilians under its effective control enjoy all human rights without discrimination according to ethnicity, citizenship, or national origin and therefore must bring conditions for Palestinian workers in settlements in line with those of settlers.
According to the workers’ rights group Kav LaOved, at least half of settlement companies pay Palestinian workers less than Israel’s minimum hourly wage of 23 shekels ($5.75), with most of these workers receiving eight to 16 shekels per hour ($2 to $4), no vacation, sick days, or other social benefits, and no pay slips. Human Rights Watch spoke to one worker, Hani A. (pseudonym), who is employed in a factory in Barkan that produces Hanukah candles and plastic containers. He said he works 12-hour night shifts, receives only one half-hour break, and earns 8.5 shekels ($2.12) per hour. Another person, Mujahid, who worked in Barkan until September 2014, told Human Rights Watch he earned 16 shekels ($4) per hour and worked between 12 and 15 hours a day. He recalled one week during which he worked from 3 a.m. to 8 p.m.
The report highlights the illustrative case of a textile manufacturer in Barkan that supplied linens to an upscale American home goods chain. In 2008, 43 employees, almost half of whom were women, sued the exporter, alleging they were earning hourly wages of 6 to 10 shekels ($1.50 to 2.50) and receiving no social benefits; women workers alleged they were receiving around 2 shekels less per hour than the men. The exporter settled all the cases out of court. The co-owner of the business claims that all employees currently receive minimum wage and full benefits under Israeli law. The exporter moved its facilities from the occupied territories in October 2015.
Supporters of settlement businesses have argued that they benefit Palestinians by providing them with employment opportunities and paying wages that exceed wages for comparable jobs in areas where Israel has ceded limited jurisdiction to the Palestinian Authority. They have raised concerns that, in some cases, ceasing Israeli business activity in settlements may force the layoff of Palestinian workers. Some have even described settlement businesses as models of co-existence or an alternative path to peace through economic cooperation.
The employment of Palestinians in settlement businesses does not, in any case, remedy settlement businesses’ contribution to violations of international human rights and humanitarian law. The cumulative impact of Israeli discrimination, as documented in this report and numerous others, is to entrench a system that contributes to the impoverishment of many Palestinian residents of the West Bank while directly benefitting settlement businesses, making Palestinians’ desperate need for jobs a poor basis to justify continued complicity in that discrimination.
The World Bank estimates that discriminatory Israeli restrictions in Area C of the West Bank, most of which are directly linked to Israel’s settlement and land policies, cost the Palestinian economy $3.4 billion a year. These restrictions drive up unemployment and drive down wages in areas of the West Bank. Farmers in Area C are particularly hard hit by Israel’s unlawful and discriminatory land and water policies, causing many to lose their traditional livelihoods. Many Palestinians are therefore left with little choice but to seek employment in settlements, providing a steady source of cheap labor for settlement companies.
The head of the village council of Marda, an agricultural village which lost much of its land to Ariel, told Human Rights Watch: “We used to have 10,000 animals, now you can barely find 100, because there is nowhere for them to graze. So the economy collapsed and unemployment increased.” As a result, many of the villagers now have little choice but to work in settlements, he said.
As noted, many of the violations documented in this report under the four headings listed above are intrinsic to long-standing Israeli policies and practices in the West Bank. Companies operating in or with settlements cannot mitigate or avoid contributing to these abuses through their own operations. For this reason, Human Rights Watch recommends that, absent a radical shift in Israeli policies and practices that would allow businesses to operate in accordance with their responsibilities under international law, businesses should cease settlement-related activities, including operating in settlements or financing, administering or otherwise supporting settlements or settlement-related activities and infrastructure.
The UN Guiding Principles provide that enterprises should undertake human rights due diligence to identify and mitigate the adverse human rights impact not only of their own activities but also activities to which they are directly linked by their business relationships. In the latter case, businesses should ensure that their supply chains are not tainted by serious abuses. A business would not necessarily be expected to completely sever all its relationships with another actor that is operating in the settlements, but it would need to ensure that its relationships are not themselves contributing to or otherwise inextricably bound up with serious abuses.
Moreover, states have certain obligations given the nature of Israel’s violations in the West Bank. The Fourth Geneva Convention requires states to ensure respect for the Convention, and they therefore cannot recognize Israeli sovereignty over the occupied Palestinian territories or render aid or assistance to its unlawful activities there. In an advisory opinion, the International Court of Justice found that states also have such obligations because Israel’s settlement regime—as well as the separation barrier, the main focus of the opinion—violate international laws that are erga omnes, meaning that all states have an interest in their protection.
As a result, Human Rights Watch recommends that states review their trade with settlements to ensure they are consistent with their duty not to recognize Israeli sovereignty over the occupied Palestinian territories. For example, states should require and enforce clear origin labeling on settlement goods, exclude such goods from receiving preferential tariff treatment reserved for Israeli products, and not recognize or rely on any certification (such as organic or health and safety) of settlement goods by Israeli government authorities unlawfully exercising jurisdiction in the occupied territories.
In addition to states’ obligations under international humanitarian law, the UN Guiding Principles call on states to respect the principles and develop guidelines to implement them. A number of states are currently developing national action plans for this purpose. States should provide guidance to companies operating in conflict-affected areas, including in situations of military occupation such as the occupied Palestinian territories.
To Businesses Active in Israeli Settlements
- Cease activities carried out inside settlements, such as building housing units or infrastructure, the extraction of non-renewable resources, or providing waste removal and landfill services.
- Avoid financing, administering or otherwise supporting settlements or settlement-related activities and infrastructure, such as through contracting to purchase settlement-manufactured goods or agricultural produce, to ensure the businesses are not indirectly contributing to and benefiting from such activities.
- Conduct human rights due diligence to ensure that supply chains do not include goods produced in settlements.
- Abide by Israel’s obligations as the occupying power and dismantle settlements, including industrial zones and business operations, in the occupied West Bank, including East Jerusalem.
- Lift unlawful and discriminatory restrictions on Palestinians in occupied territory that contribute to Palestinian poverty and unemployment, including restrictions on Palestinian land and development and extraction of natural resources. End any policies on the operations of business in the occupied territories that violate international humanitarian or human rights law, including those that permit the extraction of natural resources when this does not benefit the population of the occupied territory or is not strictly required by military necessity.
- Cease providing financial incentives, including subsidies for development costs in settlements and lower tax rates, to Israeli and international businesses located in the occupied West Bank.
- Cease registering the establishment or permitting the operation of Israeli or international businesses in the occupied West Bank unless the purpose of the operations is to benefit the Palestinian people and is consistent with international humanitarian law.
To Third-Party States
- Assess trade with settlements and adopt policies to ensure such trade is consistent with states’ duty not to recognize Israeli sovereignty over the occupied Palestinian territories. This includes requiring exporters to accurately label goods produced in settlements as such, excluding such goods from preferential treatment under Free Trade Agreements with Israel, and refraining from recognizing the Israeli government’s authority to certify the conditions of production of settlement goods (such as compliance with organic or other criteria).
- Avoid offsetting the costs of Israeli government expenditures on settlements by withholding funding given to the Israeli government in an amount equivalent to its expenditures on settlements and related infrastructure in the West Bank.
- Provide guidance on implementing the UN Guiding Principles on Business and Human Rights to companies operating in conflict-affected areas, including in the context of military occupations such as the occupied Palestinian territories.
This report examines Israeli and international companies engaged in activities related to Israeli settlements and the ways in which they contribute to and benefit from Israel’s violations of international humanitarian and human rights law in the occupied West Bank. The scope of the report does not include the Golan Heights, although some of the analysis may be applicable there, nor does it include the Gaza Strip, since Israel removed its settlements from there in 2005.
The five case studies of companies selected for this report highlight the wide range of business involvement in Israeli settlements, and the range of international legal prohibitions and human rights abuses implicated in each sector examined. The case studies are illustrative of the more general problem–none imply that the businesses described are the most problematic cases.
In researching this report Human Rights Watch reviewed court decisions; data provided by the Civil Administration, Palestinian Authority officials, and non-governmental organizations; Israeli state comptroller reports; transcripts of Knesset committee meetings; and other documents.
Human Rights Watch interviewed 20 Palestinians whose land was confiscated, expropriated or subject to significant restrictions due to settlements and related infrastructure; 25 Palestinians who previously worked or currently work in Israeli settlements; and eight Palestinian businessmen. Human Rights Watch also interviewed two Israeli lawyers and two Palestinian lawyers specialized in issues related to Palestinian employment in settlements, and an additional Palestinian lawyer specialized in land cases. An Arabic translator facilitated many of the interviews with Palestinians. Human Rights Watch consulted broadly with Palestinian and Israeli trade unions and workers’ rights and human rights organizations.
All interviewees freely consented to be interviewed and Human Rights Watch explained to them the purpose of the interview, how the information gathered would be used, and did not offer any remuneration. In some cases interviewees requested to remain anonymous or to be identified only by their first names and first initial. The report indicates where pseudonyms are used.
Human Rights Watch held some of the interviews with Palestinians in small group settings, including one larger group of seven farmers who own land Israel confiscated or made subject to restrictions. Researchers sought responses to questions about each case from the relevant companies, as well as the Civil Administration. Wherever possible, we took information about settlements from Israeli government sources. Human Rights Watch staff conducted field research for three weeks in December 2014 and ten days in March 2015.
Human Rights Watch wrote letters to all companies that appear as case studies in the report, as well as Israel’s Civil Administration, sharing its preliminary findings and requesting relevant information. Two companies, Heidelberg Cement and a textile manufacturer, responded in writing; their responses are reflected in the report and are reproduced in the annex, unedited apart for the redaction of certain names. Human Rights Watch also met with a co-owner of the textile manufacturer and had a number of phone conversations with a representative of an American retailer that sources from the manufacturer; these conversations are reflected in the report. No other companies responded.
Note on currency conversion: this report used an exchange rate of 4 New Israeli Shekels (NIS) and .90 euros per US dollar.
I. The Problematic Human Rights Impact of Settlement Businesses
In the immediate aftermath of Israel’s occupation of the West Bank in June 1967, Israeli civilians, supported by the Israeli government and protected by Israeli security forces, began moving across Israel’s eastern border to “settle” the land in order to claim it as part of “the Jewish state.” Today, the Israeli civilian presence has grown into a network of more than half a million settlers living in 137 settlements officially recognized by the Ministry of Interior, and more than 100 settlement outposts, which are unauthorized but still receive substantial state support. The population of settlements grew 23 percent from 2009 to 2014, far outpacing growth of less than 10 percent in Israel overall.
These virtually exclusively Jewish cities, towns, and villages are, for the most part, seamlessly assimilated into Israel’s infrastructure and economy, such that they appear almost indistinguishable from Israel. In 1967, Israel also directly annexed East Jerusalem, a 72 square kilometer area of the West Bank. This area remains occupied territory under international humanitarian law.
Israeli settlements, including in East Jerusalem, violate Israel’s international humanitarian law obligations and are a central feature of Israeli policies that dispossess, discriminate against, and forcibly displace Palestinians in violation of their human rights. While the Israeli government is responsible for the unlawful and discriminatory policies that enable and encourage settlement expansion, private actors, including Israeli and international businesses across all sectors, play a critical role in developing the land that Israeli authorities appropriate into settlement cities and towns.
Israeli and international businesses choosing to locate in settlements and settlement zones, thereby becoming “settlers” themselves, make up a significant portion of Israel’s civilian presence on the ground. Israel administers approximately 20 industrial zones covering 13,650 dunams (1,365 hectares) in the West Bank, Israeli settlers oversee the cultivation of 93,000 dunams (9,300 hectares) of agricultural land, and settlement businesses operate 187 shopping centers inside of settlements as well as eleven quarries that supply around 25 percent of Israel’s gravel market. The geographic footprint of Israeli commercial activity in the West Bank exceeds the built-up area of residential settlements, estimated to be about 60,000 dunams (6,000 hectares). These numbers reflect the magnitude of commercial activity’s share in Israel’s civilian presence in the West Bank.
By locating in, establishing, expanding, and supporting settlements, businesses contribute to Israel’s rights violations. Such businesses depend on and contribute to Israel’s unlawful confiscation of Palestinian land and other resources, and facilitate the functioning and growth of settlements. The businesses also benefit from these violations, as well as Israel’s discriminatory policies that privilege settlements at the expense of Palestinians, such as by profiting from access to unlawfully confiscated Palestinian land and water, government subsidies, and Israeli-issued permits for developing land that Israel severely restricts for Palestinians.
This report describes two types of businesses engaged in settlement activity to show how businesses across a range of sectors with varying involvement in settlements contribute to rights abuses.
The first type of settlement business includes companies that manage the practical demands of constructing and maintaining settlements. Three of the report’s case studies fall into this type: a bank that finances and provides mortgages for settlement homes, a real estate franchise that sells them, and a waste management company that processes settlement trash. The direct contribution these companies make to Israel’s unlawful settlement regime is self-evident. As is discussed in more detail below in the chapter on legal obligations, the transfer of civilians, directly or indirectly, by the occupying power into the occupied territory is a war crime. Many such businesses also locate in settlements and depend on land and other resources that Israel unlawfully confiscated from Palestinians, thereby contributing to additional rights violations. Israeli settlements in the West Bank also entrench and benefit from Israel’s human rights abuses against Palestinian residents in the West Bank. This is also discussed in more detail below in the chapter on discrimination.
The second type of settlement business includes companies that engage in activities that do not directly provide services to residential settlements, yet nonetheless are based in settlements or settlement industrial zones. These businesses, which may be drawn by economic reasons, such as access to cheap Palestinian labor, low rents, or favorable tax rates, constitute the most significant commercial presence in settlements. They are principally manufacturers located in settlement industrial zones and agricultural producers, but this type also includes Israeli-administered companies engaged in extracting West Bank resources, such as quarries.
In Human Rights Watch’s view, such businesses also contribute to and benefit from Israel’s rights abuses. First, they support residential settlements by providing employment to settlers and paying taxes to settlement municipalities. Second, their large physical footprint and disproportionate consumption of resources substantially contribute to Israel’s unlawful confiscation of Palestinian land and natural resources. Third, settlement manufacturers and farmers benefit from Israel’s discriminatory policies and its violations of international humanitarian law–in fact, many may choose to locate in settlements to take advantage of the benefits conferred by these policies and violations.
Many settlement manufacturers and agricultural producers rely heavily on exports, such that businesses around the world become implicated in the abuses described in this report through their supply chain. These imports also implicate third-party states in a way that other kinds of settlement businesses do not, since the settlement goods pass through their borders, frequently labeled as made in Israel and benefitting from tariff agreements between the importing state and Israel.
The report includes two case studies of this second type of business. The case of a quarry highlights how settlement businesses benefit from Israeli policies that discriminate against Palestinians. The case of a textile manufacturer examines labor conditions for Palestinians working in settlement businesses. Because of the significance of settlement industrial zones and agriculture for international businesses and third-party states, an annex to this report provides an in-depth analysis of the scale and human rights impact of these sectors.
The United Nations Guiding Principles on Business and Human Rights provide that enterprises should undertake human rights due diligence to identify and mitigate the human rights harm not only of their own activities but also activities to which they are directly linked by their business relationships. Businesses should ensure that their relationships with other businesses, including those in their supply chain, are not tainted by abuses.
Many of the violations and abuses that companies operating in or with the settlements facilitate or benefit from are intrinsic to long-standing Israeli policies and practices in the West Bank and therefore beyond the control of companies to avoid or mitigate. For this reason, Human Rights Watch recommends that businesses cease settlement-related activities.
Businesses should not locate in settlements, or provide financing, services, or other support to settlements; they should also cease trading with settlement businesses. A business would not necessarily be expected to completely sever all its relationships with another actor that is operating in the settlements, but it would need to ensure that its relationships are not themselves contributing to or otherwise inextricably bound up with serious abuses.
Moreover, states have certain obligations given the nature of Israel’s violations in the West Bank. The Fourth Geneva Convention requires states to ensure respect for the Convention, and they therefore cannot recognize Israeli sovereignty over the occupied Palestinian territories or render aid or assistance to its unlawful activities there. In an advisory opinion, the International Court of Justice found that states also have such obligations because Israel’s settlement regime—as well as its separation barrier, the main focus of the opinion—violate international laws that are erga omnes, meaning that all states have an interest in their protection.
As a result, Human Rights Watch recommends that states review their trade with settlements to ensure they are consistent with their duty not to recognize Israeli sovereignty over the occupied Palestinian territories. For example, states should require and enforce clear origin labeling on settlement goods, exclude such goods from receiving preferential tariff treatment reserved for Israeli products, and not recognize or rely on any certification (such as organic or health and safety) of settlement goods by Israeli government authorities unlawfully exercising jurisdiction in the occupied territories.
II. International Legal Obligations
International Humanitarian Law
Settlements violate Article 49 of the Fourth Geneva Convention, which governs occupied territories: “The occupying Power shall not deport or transfer parts of its own civilian population into the territory it occupies.” The Fourth Geneva Convention also prohibits individual or mass forcible transfers of protected persons in an occupied territory, or their deportation from that territory. In 2004, the International Court of Justice, citing the Fourth Geneva Convention and other sources of international law, affirmed that “the Israeli settlements in the Occupied Palestinian Territory (including East Jerusalem) have been established in breach of international law.”
The Rome Statute, the treaty establishing the International Criminal Court (ICC), includes among its list of war crimes within the Court’s jurisdiction “[t]he transfer, directly or indirectly, by the Occupying Power of parts of its own civilian population into the territory it occupies, or the deportation or transfer of all or parts of the population of the occupied territory within or outside this territory.” Although Israel is not a member of the ICC, Palestine acceded to the Rome Statute on January 2, 2015, which entered into force April 1, 2015 for the territory of the State of Palestine. The Palestinian government lodged a declaration giving the court a mandate to investigate crimes committed in or from Palestine back to June 13, 2014. The United Nations General Assembly accorded Palestine non-member observer state status in 2012, allowing it to become a party to international conventions, but this does not change the legal status of the occupation.
In almost all cases, settlements entail an additional international humanitarian law violation: Israel’s confiscation of Palestinian land and other resources in violation of the Hague Regulations of 1907. Article 55 of the Hague Regulations makes public resources in occupied territory, including land, subject to the rules of usufruct. A generally accepted legal interpretation of these rules is that “the occupying power can only dispose of the resources of the occupied territory to the extent necessary for the current administration of the territory and to meet the essential needs of the [occupied] population.” According to the Israeli legal scholar Eyal Benvenisti, “there is little doubt today that this condition is binding on all uses of immovable public property.”
Private property is subject to more stringent protection under international humanitarian law. The Hague Regulations state that “Private property cannot be confiscated” and the Fourth Geneva Convention prohibits the destruction of private property unless “absolutely necessary” for military purposes.
International human rights law has long established the basic principles of non-discrimination and equality. Discrimination is where laws, policies or practices treat persons in similar situations differently due to, among other criteria, race, ethnic background or religion, without adequate justification. States are obliged not to take any step that “has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of human rights and fundamental freedoms” based on race, color, descent, or national or ethnic origin. The prohibition against racial discrimination is considered one of the most basic in international human rights law–the International Covenant on Civil and Political Rights states specifically that even in times of public emergencies, measures taken by states to derogate from other rights obligations must not “involve discrimination solely on the grounds of race … or religion.”
While Israel maintains that its human rights obligations do not extend to the occupied territories, the United Nations Human Rights Committee, the body charged with interpreting and enforcing the ICCPR, has repeatedly found that “the provisions of the Covenant apply to the benefit of the population of the occupied territories.” The International Court of Justice endorsed this view in its Advisory Opinion regarding Israel’s separation barrier: the ICCPR “is applicable in respect of acts done by a State in the exercise of its jurisdiction outside its own territory.”
With regard to the treatment of employees, the United Nations Guiding Principles on Business and Human Rights specify that corporations have a responsibility to respect domestic law, in addition to, at a minimum, rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. These fundamental principles include a prohibition on discrimination, defined as the disparate and worse treatment of members of a group based on prohibited grounds such as ethnicity or national origin. Companies are expected to undertake effective due diligence measures to help ensure that they do not engage in discrimination themselves. Due diligence should also endeavor to ensure that other entities including a company’s suppliers and partners do not engage in discrimination that is directly linked to the company’s business operations, products or services by their business relationships.
Israel’s “two-track” legal system in the West Bank, which applies a combination of Jordanian law and Israeli military orders to Palestinians and Israeli law to Israelis, violates the human rights prohibition on discrimination. Notwithstanding the international humanitarian law prohibition on Israel extending its domestic laws and enforcement authority to the occupied territories as though it were the sovereign there, international human rights law nonetheless requires Israel to avoid discrimination between Israeli settlers and Palestinian residents of the West Bank—or, in the words of the Committee on the Elimination of Racial Discrimination, “to ensure that all civilians under its effective control enjoy all humanrightswithout discrimination based on ethnicity, citizenship, or national origin.”As the Committee noted, Israel denies that its human rights obligations extend to occupied territory,but went on to say that that position is inconsistent with the extended nature of the occupation.
Both international humanitarian and human rights law strictly restrict a state’s right to forcibly transfer or displace people from one area to another. The Fourth Geneva Convention permits a state to evacuate civilians only for their own security or for “imperative military reasons,” and in that case the state must provide the displaced people with accommodation “to the greatest practicable extent” and allow their return to their homes as soon as possible. The prohibition of forcible transfer extends beyond cases where a military force directly and physically relocates a population under its control, to cases where the military force renders life so difficult for the population that they are essentially forced to leave. The ICTY Appeals Chamber has held that “forcible transfer” is “not to be limited to [cases of the use of] physical force” but that “factors other than force itself may render an act involuntary, such as taking advantage of coercive circumstances.”
The International Covenant on Economic, Social, and Cultural Rights (ICESCR), which Israel ratified in 1991, requires the Israeli authorities to respect the right to adequate housing. The Committeeresponsible for interpreting the ICESCRhas made clear that the right to adequate housing includes protection from involuntary removal from one’s home by the state (known as “forced eviction” under human rights law) unless the state can show it is a reasonable and proportionate step that complies with other human rights principles.
Furthermore, in human rights jurisprudence on the right to property or possessions, regional courts, including the European and Inter-American Courts of Human Rights, have concluded that states should recognize as property, individual, family and group traditional use and occupation of buildings and lands, even where such property rights have not been formally recognized in property registries but where the occupier has been treated as having property rights for a long period of time. All property rights can be interfered with only when there is clear domestic law, the interference is for a legitimate aim, the interference is the least restrictive possible, and adequate compensation is paid. Permanent seizure or destruction of property can be justified only where no other methods are possible and compensation is paid.
Business and Third-Party State Obligations
Although governments have primary responsibility for promoting and ensuring respect for human rights, businesses also have a responsibility to avoid causing or contributing to human rights abuses. Companies have a responsibility to identify and mitigate potential human rights problems linked to their operations, and to ensure that victims of such abuses have access to an appropriate remedy. Human Rights Watch opposes business operations that cause, facilitate, exacerbate or contribute to serious human rights abuses or international humanitarian law violations, unless those business operations are able to either eliminate that connection or ensure that the abuses or violations at issue are substantially mitigated or remedied.
This principle is reflected in the United Nations “Protect, Respect, and Remedy” Framework and the UN Guiding Principles on Business and Human Rights, which are widely accepted by companies and governments.Under the Guiding Principles, companies have a responsibility to “avoid causing or contributing to adverse human rights impacts through their own activities,” as well as to “seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships,even if they have not contributed to those impacts.” Companies are expected to undertake adequate due diligence to identify the potential adverse human rights impact arising from their activities and that of their suppliers, and to help ensure that victims have access to adequate remedies for any abuses that occur in spite of these efforts. Companies should refrain from doing business where serious adverse human rights impacts are unavoidable.
Moreover, settlement businesses profiting from land and resources that Israel unlawfully appropriated from Palestinians may violate an international law prohibition–which also exists in many domestic legal systems–against an individual or company knowingly benefitting from the fruits of illegal activity. This principle is enshrined in Article 6 of the United Nations Convention Against Transnational Organized Crime, which prohibits “the acquisition, possession or use of property, knowing, at the time of receipt, that such property is the proceeds of crime.” In his report on businesses profiting from Israeli settlements, the UN Special Rapporteur on the Situation of Human Rights in Palestinian Territories Occupied Since 1967 also analyzed such businesses’ responsibilities under international criminal law and found that businesses that play a causal role to Israel’s transfer of its citizens to settlements “in certain instances may be enough to make them accomplices of that crime.”
Third-party states also have obligations under international humanitarian law. Article 1 of the Fourth Geneva Convention provides that: “The High Contracting Parties undertake to respect and to ensure respect for the present Convention in all circumstances.” At a minimum, this creates an obligation for states not to act contrary to the Convention, and thus prohibits states from recognizing Israel’s sovereignty over the territory it occupies.
The International Court of Justice, in an advisory opinion regarding the legality of the separation barrier that Israel constructed in the West Bank, found that Israel’s settlement regime violates obligations under international humanitarian law “which are essentially of an erga omnes character,” meaning they apply to all states, and all states have a legal interest in their protection. On this basis, as well as states’ duty to ensure respect for the provisions of the Fourth Geneva Convention, the court concludes: “[A]ll states therefore are under an obligation not to recognize the illegal situation resulting from the construction of the wall in Occupied Palestinian Territory, including in and around East Jerusalem. They are also under an obligation, not to render aid or assistance in maintaining the situation created by such construction.” Although the focus of the case was the separation barrier that Israel constructed around settlements rather than the settlements themselves, the court affirmed that the illegality of settlements under international law and so the applicability of the same obligation not to recognize the unlawful situation resulting from Israel’s settlements, or to aid or assist Israel’s violations.
III. How Businesses Contribute to and Benefit from Discrimination
Businesses contribute to and benefit from the two-tiered system of laws, rules, and services that Israel operates in the parts of the West Bank that are under its exclusive control, which provides preferential services, development, and benefits for Jewish settlers while imposing harsh conditions on Palestinians. Settlement companies contribute to Israel’s discriminatory policies by facilitating the presence of settlements, but they also directly benefit from discriminatory economic policies that, on the one hand, encourage settlement business by, for example, providing subsidies and low tax rates, while on the other hand stifle Palestinian businesses and the Palestinian economy by imposing discriminatory restrictions on them.
The 1995 Oslo interim agreement gave Israel exclusive control over what the agreement called Area C, which covers 60 percent of the West Bank, while it ceded some control to the newly established Palestinian Authority in Areas A and B. Area C, which is the only contiguous area of the three areas in the West Bank, contains all Israeli settlements and substantial amounts of the West Bank’s water sources, grazing and agricultural land, and the land reserves required for developing cities, towns, and infrastructure. Areas A and B are made up of 227 cantons that include most Palestinian towns and cities. The interim agreement was intended as a temporary stage in preparation for Palestinian statehood within five years, but it still remains in effect, and Israel maintains full administrative and military control over Area C.
A 2010 Human Rights Watch report, Separate and Unequal, documented Israel’s discriminatory laws and practices that favor settlers at the expense of Palestinians in Area C. It highlighted four major areas of discrimination—construction, zoning, and demolitions; freedom of movement; water; and land confiscation—the only discernable purposes of which appear to be promoting life in the settlements while in many instances stifling growth in Palestinian communities and even forcibly displacing Palestinian residents.
The discriminatory nature of Israel’s settlement regime is not an incidental shortcoming but rather one of the occupation’s central features. In fact, according to the International Committee of the Red Cross’s 1958 commentary on the Geneva Convention, the convention’s drafters chose to prohibit an occupying power from transferring its citizens into occupied territory because of its close link with discrimination and economic harm against the local population: “Certain Powers,” it notes, “transferred portions of their own population to occupied territory for political or racial reasons or in order, as they claimed, to colonize these territories. Such transfers worsened the economic situation of the native population and endangered their separate existence as a race.”
Encouraging Settlement Business: Government Financial Incentives
Successive Israeli government have actively encouraged the migration of Israeli and international businesses to settlements by offering a variety of financial incentives that they do not provide to Palestinian businesses in areas of the West Bank under its control. A significant channel of government support is its categorization of most Jewish settlements and almost all settlement industrial zones as National Priority Areas (NPAs), a classification also reserved for areas within Israel facing economic hardship or located near a border. The government also provides support by investing in public infrastructure projects to help draw businesses to the area.
NPAs are eligible for a series of financial benefits, which, according to the Ministry of Construction, have four aims: “(1) to alleviate housing shortages affecting many residents of Israel; (2) to encourage positive migration to these communities; (3) to encourage development in these communities; and (4) to improve the economic resilience of these communities.” From 1998 until 2002, Israel categorized all settlements as NPAs. The government drew a new map of NPAs in 2002 that included 104 settlements, but Adalah, an Israeli civil rights group, challenged it on grounds of discrimination, since only four of the 553 communities designated as NPAs were Arab (all inside of Israel). In 2006, the Supreme Court found that the map discriminated against Arab communities in Israel and ordered the government to come up with a new map within one year. Seven years after the court ordered it to do so, the government approved a revised map of NPAs, accepted by the court, which includes 90 settlements. Almost all settlement industrial zones are NPAs, as are 23 settlements in the Jordan Valley and the Dead Sea region, where most settlement agriculture is located.
For NPA settlements, government benefits include reductions in the price of land, preferential loans and grants for purchasing homes, grants for investors and for the development of infrastructure for industrial zones, indemnification for loss of income resulting from custom duties imposed by European Union countries, and reductions in income tax for individuals and companies.
In “urban” NPAs, which is the classification of most settlement NPAs, the government may subsidize up to 50 percent of development costs, up to 107,000 shekels (US$26,750) per housing unit, depending on the topography of the area. In “rural” NPAs, which include agricultural settlements in the Jordan Valley, the government may subsidize up to 70 percent of development costs, with a maximum of 150,000 shekels ($37,500) per housing unit, again depending on topography. First-time home purchasers in NPAs also benefit from subsidized mortgages and a beneficial mortgage interest rate of 4.5 percent. Many of these subsidies—such as for development and commercial infrastructure—directly benefit businesses located in settlements. In 2013, for example, the government gave development grants of 2.17 million shekels ($543,000) to a furniture company in Barkan and 937,000 shekels ($234,000) to a plastics factory there.
Furthermore, companies in NPAs that qualify for “approved enterprise” status are eligible for special benefits from the Ministry of Economy over and above what they would otherwise receive. Approved factories can benefit from two potential packages: direct grants and national tax benefits. The first track offers companies 20 percent subsidies for any investment in real property. Alternatively, the tax track offers a reduced corporate tax rate of 6 percent in some NPAs (as opposed to 12 percent tax in other areas), beginning in 2015.
Israel also encourages businesses to move to settlements by investing in public infrastructure to support them. Policy statements from the years during which Israel was first developing the settlement economy reveal that Israel intentionally provided settlement companies with financial incentives, including by designating settlements as NPAs and investing in necessary infrastructure, in order to encourage them to locate in the West Bank. In a 1982 Knesset meeting, Gideon Patt, Minister of Industry and Trade, said that his ministry had established six industrial zones in the occupied territories, in addition to small industrial buildings. “And we’re also pushing factories there,” he said. “They don’t fall from the sky. They come from encouragement.”
Two years later Minister Patt spelled out what kinds of encouragement his ministry offers. He reported that the government succeeded in bringing 300 factories to seven newly established settlement industrial zones by building necessary infrastructure and by classifying these areas as NPAs, and designating some of the factories there as “approved enterprises,” thereby making them eligible for generous financial incentives. He also said his ministry was working to establish both regional industrial centers to serve centrally located settlements and industries linked to small settlements, “considering the employment needs of those communities.”
Settlement agriculture businesses benefit from another type of economic incentive: the apparently deliberate failure of the government to collect land fees owed to it. According to the state comptroller’s report in 2013, the Civil Administration does not enforce a law requiring settlements to pay it leasing fees for 83 rural settlements on so-called “state land,” resulting in a loss of 50 million shekels ($12.5 million) each year. In the words of the comptroller: “this is a fundamental failure on the part of all the parties involvedthat has persisted for many years.” As far back as 2005, the Civil Administration acknowledged the issue and attributed it to a lack of manpower, yet, to date, the Israeli government has not allocated additional resources to collect leasing fees. In 2011, the Finance Ministry finally decided to establish a collection unit, but it appears that it has yet to implement this decision.
Stifling Palestinian Businesses and Economy: Discriminatory Restrictions
In contrast to settlements and settlement businesses, none of the Palestinian areas in Area C is eligible for National Priority Area (NPA) status despite being poorer and less developed than settlements. Nor do they receive most other basic government services that Israel provides to settlements, regardless of their NPA status. Many Palestinian communities in Area C rely on international funding to provide basic infrastructure, such as solar panels, schools, and water tanks. In fact, Israel’s policies of severely restricting Palestinian access to building permits and restricting farmers access to their land, described in more detail below, has the cumulative impact of forcing many Palestinians to leave Area C.
Some of these Israeli policies also violate international humanitarian law related to land confiscation; construction permits, zoning and demolitions; water; and freedom of movement. These and other policies not only undermine Palestinian economic development, but also give a clear economic advantage to settlement companies compared to Palestinian companies.
One of the principal methods Israel uses to restrict Palestinian development is its refusal in almost all cases to grant Palestinians permits to build on or develop land or to extract resources. The World Bank estimates that if Israel lifted administrative restrictions, such as on construction and resource extraction in Area C, it could generate $3.4 billion annually for the Palestinian economy, an increase of 35 percent in its GDP. The additional revenues would generate $800 million in government tax receipts, equal to half the Palestinian Authority’s debt. Instead, Israel refuses to issue any Palestinians a permit to harvest minerals such as potash and bromine from the Dead Sea, amounting to a nearly $1 billion loss annually. Israel also restricts Palestinian access to large areas of land it designates as settlement municipal areas, firing zones, or nature preserves, and strictly limits the amount of water it allocates to Palestinians, which the World Bank estimates costs the agricultural sector $704 million annually. A report by a group of Israeli, Palestinian, and international economists found that if an additional 100,000 dunams (10,000 hectares) of land were available for Palestinian development in the Jordan Valley, it could create between 150,000 and 200,000 jobs.
Many Israeli policies that harm Palestinian businesses and the Palestinian economy are directly related to settlements. Israel has designated 70 percent of Area C for settlement regional councils (which are off-limits to Palestinian construction) and has approved master plans for Jewish settlements covering 26 percent of Area C. Israel also builds settlement infrastructure, such as roads, checkpoints, and the separation barrier, on expropriated Palestinian land, that at times increases Palestinian transportation delays and costs.
Furthermore, Israel has developed building plans for Palestinians on only 1 percent of Area C, most of which has already been built up, and on this basis Israel in practice rejects almost all Palestinian building-permit requests without justification. According to the Civil Administration, between 2000 and 2012, Palestinians submitted 3,565 requests for building permits. Of these only 210 were granted. Israel also altered Jordanian planning laws in place in the West Bank so as to exclude Palestinians from participation in planning processes, while military orders create a separate planning track for settlers, who participate in planning their own communities.
Since most of Palestine’s undeveloped lands are in Area C, Israeli land-use restrictions thwart the Palestinian construction sector and manufacturing, which requires open land for factories, and prevent Palestinians from benefitting from tourism near the Dead Sea or historical sites because they cannot build hotels, stores or other tourist infrastructure.
Israeli policy and practice create economic hardship for many of the 300,000 Palestinians who live in Area C, because it is virtually impossible to obtain a permit even to build a simple shop. Palestinian structures built without a permit is much more likely to be demolished than unauthorized settlement construction, which is often retroactively authorized.
The livelihoods of Palestinians in Area C are particularly affected by land restrictions since many are farmers and herders. According to a 2014 study conducted by the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), 24 percent of Palestinians in Area C are farmers and 10 percent are herders, and 24 percent currently work in settlements. A number of Palestinian residents of Area C told Human Rights Watch that many of those Palestinians working in settlements are farmers or herders who have lost access to their lands. In 2011, OCHA reported that families were leaving 10 of 13 communities it visited in Area C because Israeli “policies and practices implemented there make it difficult for residents to meet basic needs or maintain their presence on the land.”
Palestinian public infrastructure projects, like roads, water and sewage lines, or other utilities that connect major towns or cities in Areas A and B, often must be built across Area C. Therefore, the Israeli military’s denial of construction permits in areas under its control also harms Palestinians in areas under nominal Palestinian Authority control, deepening Palestinian dependence on Israeli products and services. Rawabi, a partly completed $1 billion residential and commercial project northwest of Ramallah located almost entirely in Area A, is not yet habitable because the Civil Administration delayed for years approving the required permits to connect the town to water infrastructure in Area C; in February 2015, it reportedly promised to approve the water connection. The Jericho Industrial Zone in Area A has also experienced serious delays because the optimal route for a road to the zone crosses Area C, and Israeli authorities have not approved construction.
Israel has exercised its control over Palestine’s borders in ways that raise the costs for Palestinian imports and exports, discriminating against and harming the Palestinian businesses in all areas of the occupied territories that engage in importing and exporting goods. Israeli authorities frequently subject imported goods destined for West Bank Palestinians to delays, resulting in additional storage and other costs. Israel often requires Palestinian producers, but not Israelis, to offload and reload goods that pass through Israeli checkpoints on their way to a port for export, which adds to the expense and time required for transport. Israel justifies these measures on security grounds, but they are nonetheless discriminatory since they target businesspeople solely on the basis of their national origin.
Israeli restrictions on Palestinian access to international markets also maintain Palestinian dependency on the Israeli economy. Palestinian businessman Amin Daoud, for example, said he stopped importing construction materials directly from overseas in 2012, because of unpredictable, long delays at the port and the associated storage fees. Now he buys everything from Israeli importers, he said, even though this reduces his profit margin and makes his goods less competitively priced. Daoud’s situation is not unique: according to the United Nations Conference on Trade and Development (UNCTAD), 39 percent of exports from Israel to the occupied Palestinian territories are imported from third countries and resold to Palestinian consumers. UNCTAD estimates that this phenomenon, known as “indirect imports,” costs the Palestinian Authority US $115 million annually in lost customs duties, since Israel only transfers customs duties for goods whose original destination is the occupied Palestinian territory.
Case Study: Quarrying in the West Bank
The case of quarries in the West Bank is one example of the Israeli state’s discriminatory treatment of Palestinian businesses in relation to its treatment of Israeli and international businesses. Natural stone is sometimes referred to as Palestine’s “white oil” because of the potential economic value and abundant supply of this resource. According to the Palestinian Union of Stone and Marble, the industry currently provides 15,000 to 20,000 jobs and adds $250 million to Palestine’s GDP. The industry is by far Palestine’s largest exporter, making up 17 percent of all exports in 2011, and reaching 60 countries.
Israeli restrictions, however, keep Palestinian businesses from tapping into the full potential of this industry. Most of the quarryable land, some 20,000 dunams (2,000 hectares) with a potential value of up to $30 billion, is located in Area C. According to the Palestinian Union of Stone and Marble, Israel has refused to issue any new permits to Palestinian businesses for quarrying in Area C since 1994, even though the Oslo Accords explicitly provide for Israel to consider a request for such a permit “on its merits.”Because of this, as of July 2012, only nine Palestinian quarries operated “legally” in Area C with the required Israeli military permission. The manager at one of these quarries told Human Rights Watch that the Civil Administration refused to renew his permit after it expired in 2012, as well as the permits of other authorized quarries. Palestinian businesses that operate unauthorized quarries are vulnerable to the confiscation of their equipment, which Israel returns only after the payment of hefty fines, and other measures that greatly reduce the businesses’ economic productivity.
In a clear example of discriminatory treatment, Israel’s Civil Administration has, in contrast, licensed 11 Israeli-administered quarries and crushers in the West Bank, which produce 10 to 12 million tons of stone annually. The Civil Administration did not respond to a letter that Human Rights Watch sent requesting information on the justification for the difference in treatment. Furthermore, Israeli excavation of Palestinian stone for its own benefit is a violation of international humanitarian law applicable to occupation, and may amount to a war crime, as discussed in more detail below.
Article 55 of the Hague Regulations of 1907 subjects the resources of occupied territory to the laws of usufruct, which limits an occupying power to using such resources for its military needs or for the benefit of the occupied people. According to the Israeli legal scholar Eyal Benvenisti, “It is generally accepted that the occupant may not use them for its own domestic purposes.” Recognizing this restriction, the occupying coalition authority in Iraq, in 2003, established the Development Fund for Iraq, which collected profits from Iraqi oil to be used for the benefit of Iraqis.
In violation of this obligation, settlement quarries transfer 94 percent of their product to the Israeli market, and, according to a National Mining and Quarrying Outline plan prepared by Israel’s Ministry of Interior, it provides around one-quarter of the total consumption of quarrying materials for the Israeli economy. Israel collects royalties, at a rate of approximately $1.20 per ton, from the Israeli quarry owners, and settlement municipalities collect taxes. In 2009, the total royalties paid for the use of the quarries by Israeli parties was 25 million shekels ($6.25 million). According to a 2015 study commissioned by the Israel Land Authority, Israel’s gravel market is heavily dependent on Israeli-owned West Bank quarries: “If not for quarry activity in the West Bank, the industry would have been mired in a crisis from a lack of supply years ago, which would have serious implications beyond the rise in prices (such as harming the ability to implement construction and/or infrastructure projects due to a lack of raw materials).” This deficiency in supply could have been made up by Palestinian production, if not for of lack of access to permits and other restrictions. Data compiled by the Palestinian Union of Stone and Marble shows that, as a result of Israeli restrictions, Palestinian-owned quarries in the West Bank produce around one-quarter the amount of gravel as Israeli-administered West Bank quarries, most of which comes from a 50-year-old quarry that will soon no longer be productive.
In addition to extracting Palestinian natural resources for Israel, settlement quarries allow Israel to externalize the environmental impact of extraction. In an interview with the New York Times, Itamar Ben David, chief environmental planner for the Society for the Protection of Nature in Israel, explained that he believes one reason for “how big a portion [of quarried materials] is supplied to Israel by the West Bank . . . is clearly that planning regulations and environmental assessment are less strong in the West Bank than in Israel. In Israel, nobody wants a quarry near his residential property.” In 2013, Israel’s comptroller found that the Civil Administration’s failure to properly regulate abandoned quarries in Area C has led to “serious ecological and environmental harm.”
A Study in Contrasts: Nahal Raba Quarry and Beit Fajar
Nahal Raba Quarry
The Nahal Raba quarry is located on the western edge of the West Bank, on the opposite side of the 1949 armistice line from the Israeli city of Rosh Ha’Ayin. The German multinational Heidelberg Cement owns the quarry through its subsidiary, Hanson. The quarry, which opened in 1983, currently covers 600 dunams (60 hectares) of land that belong to the nearby Palestinian village of Zawiyah. Israel’s Civil Administration took control of the land by declaring it state land under its aggressive interpretation of an Ottoman law whereby land, even if privately owned, reverts to the state if not cultivated or otherwise used for three consecutive years. Pursuant to this provision, since the early 1980s, Israel has declared 1.3 million dunams (130,000 hectares) to be state land. In 2004, Israel built the separation barrier in the area to encompass the quarry from the east, unlawfully diverting the route of the barrier into occupied territory from the pre-1967 armistice line. As a result, the quarry is seamlessly connected to Israeli territory, while the barrier separates the village of Zawiyah from its lands. There appears to be no other Israeli presence between Israel’s border and the separation barrier, suggesting that other interests rather than security concerns dictated the barrier’s incursion into Palestinian territory.
Nahal Rabba quarry, operated by Hanson, a subsidiary of Heidelberg Cement, is one of eleven Israeli- and Internationally-run quarries located in Area C of the West Bank and licensed by the Israeli government. These businesses sell nearly all of the quarried stone in the Israeli or settlement markets. This is in violation of international humanitarian law which requires that such natural resources should only be used for the benefit of the (Palestinian) population of the occupied territory. © 2015 Private
The quarry extracts dolomite and crushes it to produce around 4,000 tons of gravel per day; the gravel is used to produce concrete and asphalt, mostly for the Israeli market.Pioneer, an Australian conglomerate, operated the quarry from 1986 to 2000. In 2000, Hanson, at the time one of Britain’s leading construction material producers, purchased Pioneer. Heidelberg Cement, a German multinational and the world’s third largest cement producer, acquired Hanson, including its Israeli subsidiary, which operated the quarry, in 2007.
Heidelberg Cement continues to own and operate Nahal Raba Quarry, despite reports in 2009 that it was looking to sell its West Bank operations (or possibly all of Hanson Israel). Hanson also owns concrete plants in two other settlements: Modi’in Illit and Atarot.The Israeli conglomerate Mashav, the parent company of Nesher, Israel’s sole cement producer, made a bid in July 2009 to acquire Hanson Israel, but Israel’s Antitrust Authority opposed the deal on the grounds that Hanson is one of Nesher’s largest clients.
Heidelberg wrote in a letter to Human Rights Watch that, in 2014, Hanson paid around €3.25 million ($3.6 million) in royalties to the Israeli Civil Administration and an additional €430,000 ($479,000) in municipal taxes to the settlement Samaria Regional Council for its operation of the Nahal Raba quarry. In the letter, Heidelberg defended its activities as fully complying with international law since the land was not privately owned, and emphasized that the royalties it pays Israel are transferred to the Civil Administration “for the benefit of residents of Area C.” It also noted that it employs 36 Palestinian residents of the West Bank who receive the same benefits and salaries as their Israeli counterparts and that another 25 Palestinians work on the site daily through a sub-contractor.
The Israeli military commander successfully defended the Civil Administration’s licensing of quarries in the West Bank on similar grounds in a case the Israeli nongovernmental organization (NGO) Yesh Din filed with Israel’s Supreme Court in March 2009 against Israeli-administered quarries in the West Bank. The plaintiffs cited an earlier Supreme Court opinion to argue that Israeli-administered quarries in the West Bank violate international law. In the 1992 opinion, Justice Aharon Barak wrote:
The Military commander may not consider the national, economic, and social interests of his country, inasmuch as they do not impair on its security interest in the area, or on the interests of the local population, even if the army’s needs are its military needs and not national security needs in the broader sense. A territory held through belligerent seizure is not a field open for economic or other exploitation.
A Heidelberg Cement Group truck, which says “Hanson” in Hebrew, leaves the Nahal Rabba quarry. © 2015 Private
Israel’s Supreme Court, however, rejected the Yesh Din petition in 2011, although it recommended that in general the Civil Administration not approve new quarries. The court based its opinion in part on the theory that “traditional occupation laws require adjustment to the prolonged duration of the occupation,” and cited the employment of Palestinians as a benefit to the occupied population. The court also held that the Israeli military’s Civil Administration, which pledged to collect fees from the quarry operators, similarly operated for the Palestinians’ benefit.
However, the provision of jobs to protected persons does not render other violations of international humanitarian law in occupied territory lawful, including facilitating settlements by paying them taxes. Moreover, as the petitioners pointed out, the Civil Administration, in reality, enforces Israel’s unlawful policies in Area C that restrict Palestinian land use, demolish Palestinian property without military necessity, and allocate land and resources to settlers. Heidelberg’s claim in its letter that its activities are lawful because the land on which the quarry is located was not privately owned is a red herring: the laws of occupation prohibit the occupying power from using any resources in occupied territory for its own benefit regardless of whether privately owned. There is an additional problem that neither Heidelberg nor the court addresses: Israeli-administered quarries benefit from Israel’s allocation of permits to them that it denies to Palestinians.
Yesh Din requested an en banc review of its petition, a procedure by which especially important, difficult, or novel rulings are reheard by at least five justices. Seven leading Israeli international law scholars filed an amicus brief in support of Yesh Din’s petition, criticizing the court’s interpretation of articles 43 and 55 of the Hague Regulations of 1907 on the grounds that it “stands in direct contradiction with the laws of occupation in light of their wording, spirit and purpose.” The Supreme Court rejected Yesh Din’s petition for an en banc review, but held that the ruling does not constitute precedent.
Beit Fajar Quarries
Beit Fajar, a town located 10 kilometers south of Bethlehem with an estimated 13,500 residents, is one of the major centers of stone production in Palestine. About 80 percent of the workforce is employed in the stone industry, mostly in one of the town’s 150 stone workshops or the 40 quarries in the area. The majority of the cutting factories are in Area B, which is under Palestinian administrative control, but most quarries are located in Area C, and therefore require an Israeli permit to operate. According to four quarry managers and owners in the area, none currently has a permit to operate.
In a few cases, Israel’s Civil Administration had continued to renew the permit for quarries that it had authorized to operate in the 1990s. In March 2015, Human Rights Watch reviewed documents showing that Israel refused to renew the permit of one of these quarries that expired in 2012. The quarry owner’s son, Jamal T. (pseudonym), who is the marketing manager, told Human Rights Watch that Israel apparently stopped renewing even these permits in 2012. “I’ve been going to [the Civil Administration office in the Israeli settlement of] Beit El once or twice a month since 2012, but we still haven’t gotten a permit. There used to be a few authorized quarries in this area–maybe five or six. But since 2012, no one has been able to renew his license,” he said.
Human Rights Watch spoke with another quarry owner, Samer T., who said he’s been working in the quarry business since 2000 and currently owns three quarries in Area C near Beit Fajar. The Civil Administration has refused to give him a permit, although he continues to submit a request every year, he said. Naif, a third quarry owner, said he, too, has not been able to obtain a permit for his two quarries.
Palestinian-owned quarry operating without a license in Area C of the West Bank. Israel’s Civil Administration has not issued a single license to a Palestinian for a new quarry in Area C since 1994, according to the Palestinian Union of Stone and Marble. The equipment of quarries operating without a license is vulnerable to confiscation by Israeli authorities. © 2015 Private
Mousa Issa Ziada, who owns 10 dunams of quarries, told Human Rights Watch that he has been operating a quarry on his land from 1973, but the Civil Administration has refused to renew his license since 1998. The Civil Administration told him the reason for the refusal was the proximity of the land to a settlement. “I told them, give me a permit, and I’ll build a fence around my land,” he told Human Rights Watch. “But they still said no.” In most cases, however, the Civil Administration does not give a reason for rejecting a permit. Often it never formally rejects a request and keeps it pending indefinitely.
Israeli authorities often confiscate the equipment of Palestinian businesses that operate quarries without a permit. In such cases the Civil Administration forces the businesses to pay stiff fines for the return of the equipment. Samer said Israeli authorities last confiscated his equipment in November 2014. At that time he said he paid the Civil Administration 17,000 shekels ($4,250) in fines to get the equipment back, in addition to $2,000 in lawyers’ fees. He said he now sleeps six nights a week in his office to watch over his equipment. “If there weren’t an Area C or an Israeli [occupation], I would be home every night” with my family, he said.
Naif said the authorities confiscated his equipment four times, most recently in 2012. Faced with a 110,000 shekels ($27,500) fine, he said he was forced to sell half his remaining equipment in order to raise the money he needed to retrieve the confiscated equipment.Jamal said his family owns four unauthorized quarries in addition to the one that Israel had authorized until 2012. In 2013, Israeli authorities again confiscated their equipment from one of their unauthorized quarries, and since then they only operate on Saturdays. This is a common practice among Palestinian quarry owners, he and others said, since the personnel charged with confiscating equipment do not work on the Jewish Sabbath.Mousa told Human Rights Watch that in 2010, he began to operate only on Thursdays, Fridays, and Saturdays because he was afraid the authorities would confiscate his equipment. The reduced hours didn’t save him:
In 2011, on a Thursday afternoon, they came and took all my equipment. They stored it in [the settlement of] Kfar Etzion. I had to pay 51,000 shekels for 51 days in fines and storage fees. I kept working, but they came back again around a year later. They didn’t take my equipment but they forced me to leave and shut me down.
Israel’s refusal to grant permits to Palestinian businesses operating quarries and its practice of confiscating equipment from quarry businesses operating without a permit contributes to the discrimination against and impoverishment of Palestinians, and stands in contrast to Israel’s treatment of Israeli-administered quarries. Samer said he moves some of his equipment back and forth between Areas B and C to avoid confiscation. “The gas, the wear on the equipment, the time, these are all costs,” he said. “I would be able to produce more efficiently if I didn’t have to hide. I would be able to hire, at a minimum, 30 to 40 more people,” he said. Naif said that he used to employ six people, but since Israel last confiscated his equipment, he works alone. There is also the lost productivity of quarries that operate only on weekends. “We go to trade shows abroad, and they want our material, but we can’t produce enough” because of the limited time the quarries operate, Jamal said.
Human Rights Watch spoke to one Beit Fajar resident, Ibrahim, who says that a lack of employment opportunities have forced him to work in a nearby Israeli settlement. “If I would find work in Beit Fajar, I would leave the settlements in the morning,” he told Human Rights Watch.
Development of Israeli Policies on the Palestinian Economy
The discriminatory economic policies described should be seen in the context of a broader Israeli policy that for decades appeared to aim to make the Palestinian economy dependent on Israel’s as a means of retaining control over the occupied territories. In the years following 1967, the dominant Israeli economic policy with respect to the West Bank was to integrate the Palestinian economy into its own. It imposed its currency on the Palestinian territories in 1967 and since then has, for the most part, worked to increase shared infrastructure, the export of Israeli goods to Palestine, and the import of Palestinian labor to Israel. While the higher wages that Palestinians earned from working in Israel helped to improve Palestinians’ standard of living, the evidence indicates that Israel’s “integration” policy is part and parcel of its discriminatory policies that restrict potential Palestinian competition and foster Palestinian dependence on the Israeli economy – including, crucially, employment in Israel or its settlements.
The main proponent of the integration approach was Moshe Dayan, who stated in 1968 while serving as defense minister:
[W]e can create economic integration—link the electric grid, the water system, set up a joint transportation system … It’s possible to organize this economically within one framework. Moreover, we can allow Arabs from Hebron to work in Beer Sheva because in Hebron there is unemployment and in Beer Sheva there is a need for workers … We should connect the two entities, if we, on our part and for ourselves, do not want to sever connections with these areas.
This integration does not connote equality. Instead, the Palestinian economy has been described as a captive market for Israeli goods, which the Israeli government reinforces through restrictions on potential local competition. In a Knesset meeting from 1987, then-Minister of Industry and Trade Ariel Sharon explained, in response to a question about the steps his ministry was taking to avoid the threat presented to the Israeli economy by potential Palestinian economic development, that his policy is to approve requests by Palestinian businessmen in the West Bank only when they align with Israeli economic interests:
Requests to build factories from the [Palestinian] residents of Judea, Samaria [Israel’s official name for the West Bank outside East Jerusalem] and the Gaza Strip are strictly examined, as Israeli requests are examined, to comprehensively take into account Israeli industries, the needs of the Israeli market, and the potential for export.
Sharon added that the threat of Palestinian competition “mandates the establishment of [Israeli settlement] industry in Judea, Samaria, and the Gaza Strip.”
A committee investigating Israeli economic policy in the Gaza Strip appointed by Defense Minister Moshe Arens in 1991 and chaired by the economist Ezra Sadan concluded that Israeli policy limited economic growth in Gaza to wages earned from Israeli businesses:
Regarding wage-earners, priority was given to increasing their income by employing them in the [Israeli] economy within the ‘Green Line.’ Only rarely did the policy opt for developing an infrastructure and encouraging the creation of factories and employment within the [Gaza Strip] itself (e.g. the creation of the Erez industrial zone). No priority was given to promoting local [Palestinian] entrepreneurship or the business sector in the Gaza Strip. Moreover, the authorities discouraged such initiatives whenever they threatened to compete with existing Israeli firms in the Israeli market.
These integration-oriented policies changed significantly after 1994. During negotiations that culminated in the Protocol on Economic Relations (“Paris Protocols”) in 1994, Israel used Palestinian dependence on employment in Israel to gain economic concessions from the Palestinian Authority. At the same time, Israel began to pursue a policy of separating the occupied territories from Israel, restricting the number of Palestinian workers permitted to work in Israel and the settlements. A new report by the Bank of Israel, however, finds that Israel has been again reversing this trend, and that between 2010 and 2014 the number of West Bank Palestinians working in Israel and the settlements has doubled to around 92,000.
Palestine remains economically dependent on Israel for employment as well as goods, and its export potential continues to languish. In 2011, Palestine imported almost six times the amount it exported; 86 percent of Palestinian exports (around $600 million) went to Israel and 70 percent of its imports (around $3 billion) came from Israel. A recent World Bank report documented that “the [Palestinian] manufacturing sector, one of the key drivers of export-led growth, has largely stagnated between 1994 and the present and its share of Gross Domestic Product (GDP) has declined substantially.”
IV. How Businesses Contribute to and Benefit from Land Confiscations in the West Bank
Settlements necessarily violate two separate laws of occupation: the prohibition on an occupying power’s transfer of its civilians into the territory it occupies and the prohibition on its confiscation of land and other natural resources in occupied territory for its own benefit. Based on the findings in the report, Human Rights Watch concludes that settlement businesses facilitate the growth of settlements, as discussed in the next section, but also depend on and contribute to Israel’s unlawful confiscation of Palestinian land on a massive scale. In Human Rights Watch’s view, all businesses located in settlements and settlement industrial zones depend on, contribute to, and benefit from Israel’s confiscation of Palestinian land, which violates international humanitarian law regardless of whether the land is privately owned or so-called “state land.”
This section examines businesses involved in the settlement housing market, such as developers, banks, and real estate agents, because they play a central role in making the land habitable for settlers, thereby, in Human Rights Watch’s view, sustaining and expanding the physical footprint of settlements. Many banks and real estate agencies are active in settlements, but, using the settlement of Ariel as a case study, it highlights the case of an Israeli bank financing the construction of six buildings on the outskirts of the settlement, and RE/MAX, a real estate franchise that markets homes in Ariel. Both businesses are also active in other settlements. The focus on these companies is not intended to single them out as particularly problematic, but rather to illustrate how companies involved in the settlement housing market contribute to abuses and violations of the laws of occupation.
The section also examines how Ariel’s development is inseparable from Israel’s land confiscation policies, including its ongoing confiscation of private Palestinian land. An annex to this report looks at related restrictions on Palestinian farmers’ access to their land surrounding Ariel and the cost to their livelihoods.
Ariel sits at the tip of a cluster of settlements extending 12 miles east of the 1949 armistice line (also called the “Green Line”), in the heart of the West Bank. Established in 1978, Ariel is one of the largest Israeli settlements in the West Bank. Its constructed area is five kilometers long but only 700 meters wide, strategically built to wind its way along a mountain ridge surrounded by Palestinian towns and villages on all sides. Its municipal area, at 13,346 dunams (1,335 hectares), is around four times larger than the built-up area.To its south, Ariel blunts the spread of the Palestinian town of Salfit, the largest Palestinian town in the vicinity which serves as a commercial and administrative center for the neighboring Palestinian villages. Ariel sits at the center of four of these villages: Haris to its west, Qira and Marda to its north, and Iskaka to its east.
Ariel and its related infrastructure divide some of these villages from Salfit and from each other. One person told Human Rights Watch that because of Ariel and related closures, he must travel 20 kilometers to get from Marda, where he lives, to a neighboring village located only one kilometer away. Another person from Marda said that the military recently re-opened the road from the village to Salfit after a ten-year closure that turned a journey of less than six kilometers into a 27-kilometer one.
The separation barrier, constructed by Israel in 2004, surrounds Ariel and other nearby settlements and separates Palestinians from 9,000 more dunams of their land. As a result, Israel effectively denies dozens of farmers the ability to cultivate lands practically engulfed by Ariel’s winding borders. According to Peace Now, 31 percent of the land encompassed by the separation barrier surrounding Ariel is private Palestinian land.
Ariel cultivates the image of an Israeli city like any other: it is a “blossoming city” located “in the center of Israel,” according to the municipal website. Ariel’s official history emphasizes that it was established “with the approval and support of the Israeli government” in 1978, when “40 families, led by Ron Nachman, took up residence on top of a rocky and barren hill that would become the City of Ariel.” Currently Ariel is home to nearly 20,000 permanent residents and an additional 10,000 students who attend its university. However, it is located outside Israel’s internationally recognized borders, and its development is inseparable from a history of continuous dispossession of Palestinians from their land and restrictions on their freedom of movement. Private companies continue to play a large part in implementing the government’s plan and benefit from Ariel’s history of land confiscation.
Case Study: Financing Settlement Construction
A row of new construction runs along the southern perimeter of Ariel, filling in the last gap of open space abutting the road that rings the city. The construction was nearly completed on six buildings at the time when Human Rights Watch visited in September 2015. The buildings house 96 apartments in all, which the developer describes as a well located and environmentally conscious complex called Green Ariel (Ariel HaYeruka).
According to an online brochure, an Israeli bank is financing Green Ariel through an “accompaniment agreement” with an Israeli developer. Such agreements, which govern most construction projects in Israel, provide the loan for the construction and protect buyers during the construction phase. The accompanying bank gives homebuyers a guarantee and deposits their payments in a dedicated bank account, while it monitors the financial status and development of the project. In some cases, the accompanying bank also holds the real estate property as collateral until the developer sells all the housing units in the project. Neither the bank nor the developer responded to separate letters from Human Rights Watch sharing our preliminary findings and requesting further information.
Yet the construction site, like all of Ariel, sits on land that Israel confiscated in violation of international humanitarian law. Its likely inhabitants are Israeli civilians whose transfer into occupied territory has been enabled by the Israeli state, in violation of the Fourth Geneva Convention.
Nitham Shtayye, a Salfit farmer, showed Human Rights Watch documentation he said he had compiled of 173 plots of land belonging to Palestinians from Salfit around Ariel based on his interviews with the landowners; Israel completely confiscated some of the plots, he said, while it restricted access to the remaining plots. According to Nitham’s map, the land for Green Ariel abuts land that belonged to a farmer from Salfit named Abdul-Ghani Afaneh, who passed away. Nitham’s map does not extend to the built-up area of Ariel, but he told Human Rights Watch that Afaneh’s land extended to the area of Green Ariel.
According to Abdul-Ghani’s brother, Ibrahim Afaneh, and Abdul-Ghani’s son, Dirar Afaneh, Israel confiscated around 70 dunams of Abdul-Ghani’s land in the late 1970s. “We used these lands to plant vegetables,” Ibrahim Afaneh said. “We planted wheat, chickpeas, tomatoes, cucumbers. It provided income for the owners and others in the village. If someone had land that he wasn’t cultivating, he would lease it to others who would cultivate it, benefitting both people.” Dirar Afaneh still has 15 dunams of land, which provide nearly half his income, but Israel reduced his access to only two of these dunams when it constructed the separation barrier around Ariel in 2004. Ibrahim Afaneh’s son works in a settlement factory in Barkan.
Businesses like this bank promote the fiction of Ariel as an Israeli city (rather than a settlement in occupied territory) and facilitate the settlement’s seamless integration into the Israeli economy. “From my real-estate perspective, Ariel is not part of Judea and Samaria. Ariel today is an Israeli city in every way,” the developer of Green Ariel explained in an interview with Haaretz. In the same interview, he attributed his success in Ariel to getting ahead of other developers by being willing to operate, as he put it, “in an environment of uncertainty.” From a business perspective, that uncertainty expresses itself as financial risk. In Human Rights Watch’s view, at least one element of that uncertainty may reflect the consequence of building on land acquired in violation of Israel’s obligations under international law.
A farmer in the Palestinian town of Salfit, Nitham Shtayye, mapped the plots of land that the Israeli military confiscated or to which it restricts access around the settlement of Ariel.
© 2015 Private
As explained above, the expansion of settlements through the construction of housing violates international humanitarian law. Companies invested in Ariel real estate like the Israeli bank and developer involved in Green Ariel not only benefit from Israel’s violations, they also, in Human Rights Watch’s view, facilitate them. In the six years through 2013, home prices in Ariel more than doubled, placing the settlement among the top 10 Israeli towns for rising home prices over the period, according to Housing and Construction Ministry figures. “Every developer who built in Ariel earned very good money there,” the developer said in the interview with Ha’aretz:
It’s a good city for developers. The three components that determine the return – the pricing, the location and the timing – worked out in our favor. Three years ago, we bought the land in the city very cheaply, and its distance from Tel Aviv is identical to that of Hod Hasharon [a city within Israel] from Tel Aviv. A four-room home in Ariel that two years ago cost no more than 800,000 to 900,000 shekels [US $200,000 to $225,000], today costs 1.05 million [$262,500].
Israel designated Ariel as a National Priority Area A, further reducing developers’ cost due to generous subsidies for the cost of construction.
The bank is financing a number of additional large-scale construction projects in settlements, according to publicly available documents. It is financing at least 247 apartments or private houses, a commercial center and a park in the settlement of Ma’aleh Adumim, as well as 38 apartments in Pisgat Ze’ev and 273 in Har Homa. The media widely reported on the planned expansion of Givat Hamatos and Har Homa settlements, due to the sensitivity of the area for a viable two-state solution. The bank’s website offers apartments for “pre-sale” in the settlements of Har Homa, Givat HaMatos, Modi’in Illit, and Pisgat Ze’ev East, which likely indicates that it is financing their construction.It also operates 18 ATMs and 23 service stations in settlements.
Case Study: Settlement Real Estate
As in housing markets everywhere, real estate agencies play an active role marketing and selling properties in settlements. In the case of settlements, they are marketing properties located on land obtained in violation of the laws of occupation to potential buyers whom international humanitarian law prohibits from being transferred there. This report examines, as an illustrative example, the case of one such real estate company: RE/MAX, a Colorado-based international real estate brokerage franchise. RE/MAX operates in more than 95 countries and claims to have the largest real estate business volume in the world. It also has a franchise in Israel, the country’s largest real estate brokerage network, according to its website; the franchise encompasses some 100 branches. One of those branches is located in the settlement of Ma’aleh Adumim, and several other branches offer properties for sale or rent in settlements. The number of homes that RE/MAX offers for sale or rent in settlements varies; in November 2015, for example, it listed 80 properties in 18 settlements on its Israeli website. These listings included 12 properties in Ariel, at a total value of more than 13 million shekels ($3.25 million).
RE/MAX Trend, a branch of a Colorado-based real estate franchise located in the Israeli town of Rosh Ha’Ayin, sells and rents homes in the settlement of Ariel. RE/MAX also has a branch in the settlement of Ma’aleh Adumim. © 2015 Private
Ma’aleh Adumim and Ariel, like all settlements, are built on land that Israel confiscated and currently uses in violation of international humanitarian law. Like Ariel, which is discussed in detail above, the Israeli government established Ma’aleh Adumim on land that the military seized claiming it’s for military use, although the land was immediately used for civilian purposes. Israel first established the settlement as a residence for employees of Mishor Adumim, an industrial zone established in 1974. Israel took most of the land now occupied by Ma’aleh Adumim by military order in 1975 and 1979, but it extended the settlement’s municipal boundaries in the 1980s and 1990s, in each case leading to the evacuation of Bedouins living around Ma’aleh Adumim. Thousands of Bedouins living in the area, who relocated from southern Israel in the 1950s, remain at risk of expulsion, and Israel has demolished several of their homes and property.
By advertising, selling and renting homes in settlements, both the Israeli franchise of RE/MAX and RE/MAX LLC, the owner of the global franchise network, facilitate and benefit from the transfer of Israeli civilians into occupied territory and the associated human rights abuses, contravening their rights responsibilities.
Israel also effectively bars Palestinians in the West Bank from buying or renting in settlements, even in cases where Israel confiscated their land to build a settlement. A military order prohibits non-Israelis from entering settlements without a permit, thereby requiring Palestinians in the West Bank to obtain a permit to work there. Palestinians with Israeli citizenship or residency are legally allowed to live in settlements, but, according to the most recent census, only 400 live in West Bank settlements and slightly more live in settlements in East Jerusalem. Until 2008, Palestinians living in East Jerusalem, who, after Israel unilaterally annexed the territory in 1967, became residents of Jerusalem, but not citizens of Israel, needed special approval to buy property in settlements; the regulation has since been amended.
Given the character of settlements as almost exclusively Jewish and the rules that effectively bar Palestinian residents of the West Bank from living there, agents selling property there effectively contribute to discrimination against Palestinians. The World Zionist Organization’s Settlement Division, a body funded entirely by the Israeli government and under the direct control of the Prime Minister’s office, established and controls most settlements, with the stated purpose of “establishing and strengthening Jewish settlement in the country’s periphery through strengthening the hold on state lands given to it by the government.”
The RE/MAX Israel website, which is entirely in English and Hebrew, does not list any Arabic-speaking agents in Jerusalem or Ma’aleh Adumim, the area where most of its settlement properties are concentrated. Human Rights Watch spoke with one RE/MAX agent who has two properties listed in a settlement in East Jerusalem. “I don’t buy from or sell to Arabs. It’s not racism, I just prefer not to deal with [them],” he said. He said he doesn’t know whether this violates any RE/MAX policies, and added: “I just share the profits with them; we’re like partners. They can’t make me sell to anyone.”
Neither RE/MAX Israel nor RE/MAX LLC responded to a letter from Human Rights Watch sharing our preliminary findings and requesting further information. However, in a press release responding to a campaign by Code Pink, an anti-settlement advocacy group that criticized RE/MAX’s sales in occupied territory, the company’s headquarters clarified that it sold the franchise rights for Europe, which included Israel, in 1995.RE/MAX Europe then sold the rights to use the RE/MAX brand the same year to the current owner of RE/MAX Israel, Bernard Raskin. As a result, RE/MAX headquarters claimed it “has no contractual agreement with RE/MAX Israel.”
However, RE/MAX retains control over any franchisee operating under the RE/MAX brand. According to regulatory files submitted to the US Securities and Exchange Commission, RE/MAX Holdings, the publicly traded parent company of RE/MAX LLC, retains ultimate control over franchisees’ license to use its brand, trademark, promotional and operating materials, and concepts. RE/MAX Holdings has the right to reacquire a franchise and to resell or operate it if it fails to perform under the franchise agreement. Given such influence, the UN Guiding Principles would oblige RE/MAX to use it to conduct human rights due diligence throughout its supply chain, including by examining the activities of its franchises regardless of whether it has a broader contractual relationship with them.
RE/MAX LLC’s influence over and responsibility for RE/MAX Israel is also reflected in its response to Code Pink. In that letter, RE/MAX LLC said that it “understands the serious nature of the controversy surrounding real estate operations in the West Bank and has been working to find a resolution that is acceptable to all parties.” It is not clear how the resolution it proposes in the letter, placing the West Bank within the master franchise for the country of Jordan, would address the problems identified in this report, but it nevertheless demonstrates its influence over its franchisees.
Moreover, RE/MAX LLC receives financial benefits from RE/MAX Israel’s sale of properties in settlements. According to its SEC filings, RE/MAX LLC “generates revenue from continuing franchise fees, annual dues, broker fees, franchise sales and other franchise revenue and brokerage revenue.”Human Rights Watch calculated that the total value of the real estate offered for sale in settlements on their website on November 28, 2015 was around 145 million shekels ($36.25 million). Presumably, RE/MAX will not sell all of these listings, but these listings capture only one moment in time and new settlement listings are regularly added to its website. It is unclear what amount of revenue from these sales and rentals, or from broker or other fees from the RE/MAX branch located in the settlement of Ma’aleh Adumim, are realized by RE/MAX LLC, and the company did not respond to Human Rights Watch’s request for this information.
The UN Special Rapporteur on the Situation of Human Rights in Palestinian Territories Occupied Since 1967 came to a similar conclusion in a report he presented to the United Nations General Assembly in 2013 assessing the responsibilities of businesses operating in the occupied territory under international law. The report concluded that RE/MAX International (which appears to refer to RE/MAX LLC) provides “international brand name affiliation and recognition, start-up training, ongoing training, technological resources, and advertising and marketing” to the Israeli franchise; profited from such sales; and generally, “has constant interaction [with] and influence over its franchises.” As such, he found that RE/MAX International and RE/MAX Israel are “directly contributing to” violations of international humanitarian law and adverse human rights impacts, and they should therefore cease selling or renting properties in the occupied territories. If RE/MAX LLC was not previously aware of their franchise’s settlement activity, the report put it on notice, bolstering its responsibility to take action.
The history of Ariel’s establishment and expansion demonstrates how Israel’s settlement policies go hand-in-hand with its policies of confiscating Palestinian land and restricting Palestinians’ freedom of movement, including farmers’ ability to freely access their land. Since expansion would be difficult without companies that finance, construct, rent and sell the real estate, in Human Rights Watch’s view, companies involved in building new homes in settlements, or attracting new residents, contribute to or benefit from the inevitable violation of Palestinians’ rights that settlement expansion entails.
Background: The Fiction of State Land
In September 1967, three months after the start of the Israeli Occupation, Theodore Meron, who served as legal counsel to Israel’s Foreign Ministry at the time and later became president of the International Criminal Tribunal for the former Yugoslavia, submitted a legal opinion to the government stating that settlements violate the Fourth Geneva Convention, and recommended that any transfer of Israeli citizens to the occupied territories be “carried out by military and not civilian entities . . . in the framework of camps and is, on the face of it, of a temporary rather than permanent nature.”
Throughout the 1970s, the military confiscated large areas of land under its control, including private Palestinian land, citing security purposes and transferred it for the construction of Jewish settlements. A group of employees in the aircraft industry, calling themselves the Tel-Aviv Group, first sought to build a large urban settlement in the “heart of Samaria” in 1973, but the government approved it only after the Likud came to power in 1977. In 1978 and 1979, the military issued three orders seizing a total of 4,613 dunams(461 hectares), which were then used for the establishment of Ariel. Israel first defined the site of the settlement as a military base, even while the Ministry of Housing and Construction built houses for the civilian settlers there; the government declared Ariel a local municipal council in 1981.
Israel’s method for taking control of Palestinian land for settlement expansion shifted following a Supreme Court decision in October 1979, known as the Elon Moreh ruling, which held that the government’s practice of transferring private lands confiscated on security grounds to settlements violates international law, since an occupying power is permitted to confiscate land only for security purposes or for the benefit of the occupied population. The Israeli government responded to this ruling with a unanimous decision nonetheless to continue settlement expansion in the occupied territories.
Israel implemented a new set of rules to enable it to appropriate Palestinian lands for Jewish settlements. In the early 1980s, Israel revived an Ottoman-era law under which the government can declare land that was not considered “private” or had not been cultivated in three years as “state land.” In the decades since Israel implemented this policy, the Civil Administration designated huge tracts of the West Bank, amounting to some 1.3 million dunams (130,000 hectares), as state land and transferred around half of this land to settlements or Israeli business interests, and only a small amount to Palestinians. In 2013, the Supreme Court compelled the Civil Administration to release documents revealing that since its establishment in 1981, it allocated a mere 0.7 percent of land designated as state land to Palestinians. In contrast, it allocated 400,000 dunams (30 percent) of the land to the World Zionist Organization’s Settlement Division, which is responsible for establishing residential and agricultural settlements; 160,000 dunams (12 percent) to the government-owned Mekorot water company, Bezek communications company, and Israel Electric Corporation; and 103,000 dunams (8 percent) to mobile communications companies and local governments.
Some of the land Israel declared as belonging to the state overlapped with land it had already seized by military order in the 1970s. In Ariel, Israel appears to have made such a declaration in the mid-2000s, designating as state land an area that overlaps with land seized in the 1970s. This declaration, however, did not include a large area of land previously seized and developed; photographs from the 1970s show that Palestinian farmers cultivated at least some of this area.
Israel’s confiscation of Palestinian land for settlements violates international law regardless of whether it is privately owned. Yet Israel’s Supreme Court has refrained from ruling on the legality of Israel’s policy of building settlements on land it designates as belonging to the state on the basis that it is a political question beyond its jurisdiction, effectively allowing it to continue unhindered.
The head of the village council of Marda, Osama Khafush, told Human Rights Watch that the cumulative loss of the village’s land to Ariel has been devastating. The village, which according to villagers dates back to Roman times, is located on the northeast border of Ariel; village legend is that the name Marda, which comes from the word “rebellion” in Arabic, is a reference to the villagers’ support of Saladin’s conquest of Palestine in the twelfth century. The center of the village, which has a population of 3,000, is in Area B, and therefore under Palestinian administrative control, but all the surrounding land is in Area C, much of which Israel confiscated for the expansion of Ariel or divided from the village by the separation barrier built around Ariel in 2004. Traditionally, residents of Marda have earned a living almost exclusively from farming and herding, so the loss of land has forced villagers to find alternative employment, Khafush said. “We used to have 10,000 animals, now you can barely find 100, because there is nowhere for them to graze. So the economy collapsed and unemployment increased.”
Confiscation of Private Palestinian Land
Despite the 1979 Supreme Court decision, the Israeli government, frequently working in close collaboration with settlers, continues to transfer private Palestinian land to settlements. The Israeli NGO Peace Now, using data provided by the Civil Administration, calculates that the percentage of settlements built on private Palestinian land remained virtually unchanged after the Elon Moreh decision. Israel’s ongoing confiscation of privately held land violates additional international humanitarian and human rights laws and contributes to the impoverishment of Palestinians. The Hague Regulations categorically prohibit the confiscation of private property and the Fourth Geneva Convention prohibits the destruction of private property unless “absolutely necessary” for military purposes. Relatedly, Israel severely restricts thousands of Palestinian farmers from accessing their land located near settlements, causing the land to lose most of its productive value and costing farmers their livelihood.
Israel uses a number of methods to continue its confiscation of private Palestinian land for the expansion of settlements. Most Palestinian landowners in the area around Ariel have tax documents proving ownership, but do not have a formal deed, called a “tabou,” to the land, since under Jordanian rule these tax documents were recognized as sufficient.However, according to Israeli judicial and military practice and policy, all land not formally registered can be declared state land. The onus is then on the private landowner to prove ownership through a lengthy and expensive process that typically includes producing tax documents, gathering testimonies from neighbors and local officials, and paying for a court-approved survey of the land. Israeli courts frequently decide against the landowner.Even if ownership can be proved, the landowners must have cultivated at least 50 percent of the parcel within the prior three years or the land reverts to the state without compensation to the owners.
Yousef Mohamad Wanni, a farmer from the village of Marda, told Human Rights Watch that his father owned more than 1,000 dunams (100 hectare), but he lost almost all of it over the years to Ariel. “They took it little by little,” Wanni said.
In the beginning [in 1978 and 1979], they took 100 dunams and put caravans there. In the 1980s, they put a barbed wire fence around more land; they didn’t confiscate the land, but declared it a closed military zone. Then they started building on it. Each time they would move the fence [to encompass more land], they would say it’s for security reasons.
According to Wanni, each time Israel confiscated more land from his father, he would file a complaint at the local Israeli military court, producing all of the required evidence of ownership, yet he lost each of the cases. Only 60 dunams remain, 30 of which are behind the separation barrier built in 2004, and which he may access only twice a year, he said.
Human Rights Watch spoke to Suleiman Shamlawi, from the nearby village of Haris, who said his family owned 215 dunams (22 hectares) of land on which large parts of Barkan industrial zone, which is adjacent to Ariel, were established. According to Suleiman, there were several houses on his family’s land as well as a stone quarry that his family operated before the Israeli military confiscated the land in 1981. Israel declared the land state land on February 2, 1981, claiming it had conducted an investigation and determined the land was not privately owned. Suleiman, like most Palestinian landowners in that area, had not formally registered his title before 1967, although he has tax records that were recognized as proof of ownership by Jordanian authorities at that time. After a protracted court battle, during which Israel approved and subsidized the construction of factories on the land, Israel’s Supreme Court held that Suleiman had sufficiently proved his ownership and could register the land with the Israeli authorities. However, in 2006 a settler organization claimed that they had bought the land, and produced a sales contract from 1963 purporting to show that Suleiman’s father sold the land to a Palestinian. In 2007, the Committee for Initial Land Registration, the Israeli military body charged with registering Palestinian land, rejected the settlers’ request to register the land, finding its claim of ownership lacked credibility. Suleiman insists that the sale contract is a forgery, and points out that the contract appeared years into litigation, and the purported buyer was only 10 years old at the time of the sale.
According to Suleiman’s lawyer, following the rejection of the settlers’ request, the Israeli army issued a military order confiscating the part of Suleiman’s land already housing factories in Barkan, some 170 dunams. Shamlawi was thus permitted to register only 42dunams of undeveloped land in his name, although the settler organization continued to object to Suleiman’s claim and sought to develop the land. According to Suleiman and his lawyer, in 2009, settlers came to his house with a bulldozer, threatening to demolish it if he did not drop his case. In October 2014, after pursuing the case for more than three decades, Suleiman won a partial victory: the land registration committee cast strong suspicions on the settlers’ claims and agreed to register in Suleiman’s name 42 dunams that had not yet been developed and allocated to businesses in Barkan.
The case has cost Suleiman significant time and money. The fees for filing for registration and surveying the land alone cost him 6,300 shekels ($1,575), he said. The expense of court costs and lawyers, pressure from the military and from settlers, and low expectations that Israeli courts will do justice to their claims discourages Palestinians from filing lawsuits like his, Suleiman said, even though “a lot of the land on which Barkan was built was previously cultivated by Palestinians.”
Another way in which settlers continue to establish and expand settlements, including Ariel, on private Palestinian land is by purchasing, or claiming to purchase, the land from its owners. Even in cases in which the sale is legitimate, it does not alter the legal status of the land as occupied territory, and the relevant international humanitarian laws continue to apply. Moreover, there have been a number of cases in which settlers’ claims rely on dubious documents or sellers who are not legally entitled to sell the land in question.Palestinian landowners are forced to invest considerable time and money defending themselves against such challenges, and victory is far from guaranteed given the difficulty of proving the absence of a sale.
In March 2013, a settlement development company applied to register as the owner of at least 120 dunams (12 hectares) abutting the Ariel side of the separation barrier. The land has belonged to the Afaneh family, a large family from Salfit, for at least 100 years, according to Mamdouh Afaneh. Mamdouh and his seven siblings inherited the land after his father, Abdul Ra’uf Afaneh, died in 1963. The settler development company claims it bought the land, and produced a copy of a company check, dated February 28, 2002, in the amount of 100,000 shekels ($25,000). Mamdouh says he does not know the purported seller, a Palestinian who is not from the Afaneh family and who was previously a West Bank resident but has apparently since received Israeli citizenship. He further contends that because all eight siblings are co-owners of the property, they cannot sell it without the agreement of all of them.
The settlement company claims that it purchased the land from the original owner, although it has not produced the sales contract. The Afaneh siblings must now prove ownership of the land in court, a difficult and expensive process that includes paying for a court-approved surveyor. The family appealed to the Salfit governorate to help with the cost, which it finally agreed to do, despite being so cash strapped that, at the time of Human Rights Watch’s visit, it did not have enough money to pay for gasoline for its staff. The investment in the case is difficult to justify, Mamdouh said, since he has little confidence he can win the case. “It’s my word against the settlement company, and it is more powerful so it will win,” he told Human Rights Watch.
Finally, the Israeli government has repeatedly facilitated the establishment of settlements without permits, and therefore without an official investigation into the status of the lands, and then retroactively approved them. An investigation commissioned in 2005 by then-Prime Minister Ariel Sharon and headed by Talia Sasson, a Justice Ministry official, found that the Israeli government frequently violated its own legal distinction between state and private lands and diverted millions of shekels of state funds to the World Zionist Organization to support unauthorized settlement “outposts,” many of which were built on land that Israel itself had designated as private Palestinian property. Israel subsequently approved many of these unauthorized outposts. In a more recent case, Israel’s defense minister approved the government’s request to legalize the outpost Netiv Ha’Avot in April 2014 despite a government survey indicating that 60 percent of the outpost was built on privately owned Palestinian farmland, according to Israeli media reports. Though rare, Israel has removed unauthorized outposts, usually following court decisions ordering the government to do so.
Businesses involved in the expansion of settlements contribute to the violation of Palestinian rights in addition to the rights of landowners from whom Israel appropriated land. Palestinians are virtually cut off from vast areas of land, much of which Israel recognizes to be private Palestinian land, by a network of fences that surround settlements. For example, since Ariel’s establishment, Israel built three security fences around it, most recently the separation barrier in 2004, in each case expanding the area enclosed. As documented in an annex to this report, these restrictions have cost thousands of Palestinian farmers their livelihoods, further demonstrating, in Human Rights Watch’s view, private interests’ involvement in settlement expansion harms Palestinians.
V. How Business Contribute to and Benefit from Supporting Settlements
The harmful impact of Israeli settlements and their residents extends beyond the land on which their houses are located. Settlements require roads, transportation systems, telecommunication services, and other goods and services. Private actors provide many of these needs, thereby contributing to the unlawful confiscation of Palestinian land and resources. These companies also facilitate the presence of settlements by making them sustainable. In Human Rights Watch’s view, businesses servicing settlements often benefit from Israel’s discriminatory policies and practices that harm Palestinians while privileging Jewish Israelis.
For example, like all settlement businesses, these companies operate in territory subject to military rule, and they require the approval of the Civil Administration to operate. Israel distributes these permits on a discriminatory basis, readily issuing permits for providing services to Israeli settlements while granting them rarely, if at all, for providing similar services to Palestinians. Businesses located in settlements also help make settlements financially viable by paying taxes to their municipalities and providing jobs to settlers, regardless of whether their activities directly service settlements.
Storks rest on mounds of garbage in a landfill in the Jordan Valley. Located in the occupied West Bank, the landfill exclusively services Israel and settlements. © 2015 Private
Case Study: Waste Management
The rapid growth of settlements gives rise to increasing amounts of settlement waste. The management of settlement waste demonstrates how companies not only help sustain settlements, but also benefit from Israeli policies that privilege settlements and contribute to additional confiscation of Palestinian land. For example, there is a landfill located in the Jordan Valley, on land registered by Israeli military authorities as absentee (Palestinian) property, according to the mayor of the adjacent Palestinian town of Il-Jiftlik. The landfill exclusively services settlements, including Ariel and Barkan, and cities inside Israel. The site was first established in the 1990s without an approved plan or proper environmental procedures, according to the Israeli human rights organization B’tselem.In 2004, the government upgraded the status of the site and invested in building a proper facility there that can process 1,000 tons of garbage a day.
The waste management company provides no services to Palestinian areas, but only to Israeli cities, towns and settlements. In Human Rights Watch’s view, the company benefits from and contributes to discriminatory Israeli planning policies and practices in the West Bank that have created a severe shortage of landfills needed to meet the needs of the Palestinians. Salfit, the Palestinian town directly south of Ariel, and the surrounding Palestinian villages are forced to dispose of their waste in unauthorized sites due to a lack of alternative options. According to the director for local affairs in the Salfit governorate, Jamal Ahmad, the Civil Administration impounded two garbage trucks as they were leaving the villages of Iskaka and Bidya, in January and February 2015, as a penalty for dumping garbage in unauthorized sites in Area C, and fined the governorate 4,000 shekels (US$1,000) in each case. Jamal told Human Rights Watch: “We asked: ‘where are we expected to throw our garbage?’ They said, ‘That’s your problem.’”
The most suitable sites for waste disposal for Palestinian communities are located in Area C, and therefore require Israeli permits to establish and operate. These permits have proven elusive. There are currently three landfills for Palestinian waste operating with a permit in Area C: one near Jenin, another near Bethlehem that the World Bank Group funded, and a third near Jericho. A plan for a fourth site near Ramallah, to be funded by the German Bank for Development (KfW), is currently frozen, apparently due to a dispute with the Civil Administration over settler use of the site.
In the case of the landfill near Bethlehem, called al-Minya, the Civil Administration refused to approve the site unless it agreed to process waste from the Israeli settlements, a demand that if granted would involve the World Bank in subsidizing waste removal for settlements established in violation of international law. After a two-month delay, Israel ultimately agreed to issue a permit for the landfill without reference to settlers’ waste, and al-Minya began operating in March 2014. However, according to the World Bank, “settlers’ waste in limited quantities is transferred to the site with military escort, despite absence of agreement with the Palestinians.”
In another case, the Civil Administration ordered the closure of al-Bireh landfill site near Ramallah and around 25 kilometers north of Jerusalem. It operated for decades without a permit, serving both al-Bireh and nearby Israeli settlements. In 2010, al-Bireh dumped 13,380 tons of waste there, while the settlements dumped 29,478 tons. The site also lacked the proper infrastructure, and Israeli authorities ordered it to close down due to its adverse environmental and health impact. Al-Bireh municipal officials contend that the Civil Administration first threatened to shut the site in 2011, after the municipality opposed the Civil Administration’s plan to extend the landfill in close proximity to homes in al-Bireh. The Civil Administration has refused to approve the proposed KfW-funded site, which was intended to replace the closed site. The settlement association for environmental quality supported the Palestinian municipality in opposing the site’s closure without an appropriate alternative, since the health and environmental consequences of haphazard, small-scale dumping in diverse locations – which would inevitably result from the dump’s closure – would be worse than the impact of continued operation of the current site. In contrast, the Jerusalem municipality approved a new landfill in a politically sensitive area in occupied East Jerusalem to serve Jerusalem and nearby Israeli areas.The facility will be constructed on 520 dunams (52 hectares) of mostly private Palestinian land and will lead to the eviction of 120 Bedouin who live there, according to media reports.
In this context, in Human Rights Watch’s view, the company operating the settlement landfill site facilitates and benefits from multiple human rights violations: it is a civilian site, not required for reasons of military necessity, established by an occupying power on confiscated Palestinian land, and its operation facilitates the presence of Israeli civilians in occupied territory by servicing settlements. Moreover, the company contributes to Israel’s disposal of its waste in occupied territory, by processing waste from areas inside Israel.
Providing Employment and Taxes
Settlement businesses provide an important source of employment and taxes essential to drawing new settlers and sustaining settlements. The distance of some settlements from economic centers in Israel, as well as the political-social divide that keeps settlers from seeking employment in Palestinian areas in the West Bank, makes local employment opportunities, such as in settlement businesses, an important factor for drawing and maintaining settlers. According to official data, in 2013, there were 126,600 employed persons living in Israeli settlements, of which 42 percent—some 53,300 people—worked in settlements. It cannot be determined exactly how many jobs are provided by private commercial activity in the settlements, as opposed to the public sector. But, particularly for the settlements located farther away from Israel proper, settlement businesses provide employment opportunities that help to sustain and expand settlements.
Creating employment opportunities in settlements has long been a key concern of government officials eager to maintain and attract settlers, and it has justified its support for settlement businesses on this basis. In a Knesset meeting in 1984, the Minister of Industry and Trade Gideon Patt explained:
The Ministry’s policy regarding the industrial development in Judea, Samaria and the Gaza Strip is intended to facilitate the economic development of Israeli settlements, by creating productive employment opportunities to meet the needs of the existing population as well as plans for expansion […] which are suited to the types of occupation, the number of residence, and their potential for growth. Industrial development is done in a controlled and balanced way, taking into account the workforce located in the settlements, with a view to maximize the number of residents who find employment near their homes. This approach is aimed to correct the current situation, in which a significant portion of the population still continue to earn their living far away from their homes.
Despite the government’s efforts, “Judea and Samaria” remains the district with the highest percentage of Israeli residents employed outside their hometown and home district, partly because many settlements function as suburbs of Israeli cities and settlers commute to jobs there. However, in part due to government policies encouraging investment in settlements, today settlement businesses employ tens of thousands of settlers.
Settlement businesses provide not only jobs but also tax revenues for settlement municipalities. Companies pay annual property taxes, called arnona, to local governments. The amount varies by their type and location. In Ariel, for example, business offices pay annual taxes of 119 shekels ($29.75) per square meter in some areas of the settlement and 160 shekels ($40) in other areas. Industrial buildings pay less—between 52 and 75 shekels ($13 and $18.75) per square meter—while banks, financial institutions and insurance companies pay between 512 and 846 shekels ($128 and $211.50) per square meter, depending on the area. In 2014, the projected budget of the settlement of Barkan, which is associated with a large industrial zone of the same name, anticipated that around 6 percent of its budget–350,000 shekels of a six million shekels ($87,500 of $1,500,000) budget–would come from business’ taxes. The settlement is expected to take in another nearly million shekels ($250,000) in taxes on water consumption, a large portion of which factories in the industrial zone would presumably pay.
VI. How Business Contribute to and Benefit from Abuse of Palestinian Labor Rights in Settlements
While, in Human Rights Watch’s view, the evidence documented in this report describes how all settlement-related business activity runs afoul of businesses’ human rights responsibilities regardless of labor conditions, settlement businesses often exploit the legal ambiguity of settlements under Israeli law to employ Palestinian workers under worse conditions than they would be able to employ Israelis. Israeli officials have frequently dismissed the Green Line as irrelevant when it comes to settlement construction, yet when it comes to labor protections, Israel maintains the Green Line as a pretext not to apply labor law provisions that would protect Palestinian workers.  This policy has the additional effect of keeping labor costs down.
According to the Israeli workers’ rights NGO Kav LaOved, at least half of settlement employers pay Palestinians less than Israel’s minimum wage and deny them the social benefits such as medical insurance and sick time that they offer to Israeli employees. One reason for the persistence of labor abuses is that government regulators conduct virtually no inspections to enforce labor laws in settlements as a result of the ambiguous legal status of Palestinian workers in settlements. A 2007 Supreme Court decision held that Israeli labor law should apply to Palestinians working in settlements, making it possible for Palestinian workers to file complaints for violations of Israeli labor law. But if they complain, they are vulnerable to retaliation due to their dependence on employers for Israeli-issued work-permits.
In Human Rights Watch’s view, settlement businesses contribute to Israel’s international law violations regardless of how they treat their employees, for the reasons detailed in this report. Yet the discriminatory environment and regulatory vacuum in which they operate tempers considerably the settlement employers’ and supporters’ claims that these businesses benefit Palestinians by providing them with jobs. Such claims also ignore how settlement businesses entrench and benefit from a discriminatory and unlawful system that harms the Palestinian economy and livelihoods, as detailed in Chapter III.
Case Study: Textile Manufacturer
Until October 2015, an Israeli company produced home textiles such as bed linens for an American retailer in a factory in Barkan Industrial Zone between the settlement of Ariel and the Israeli border. The company is not identified by name because it has since relocated from Barkan to Israel. It nevertheless remains a useful illustrative example of how factories can take advantage of an absence of legal clarity and government oversight to discriminate against Palestinian employees and export goods as though they were made in Israel.
Although its sole factory was located in a settlement industrial zone, the company promoted itself on its website as an exporter with a “home-base in Israel,” allowing it “to offer our customers duty and quota-free imports, thus significantly reducing overall costs.” Human Rights Watch obtained a set of linens from the factory in Barkan in packaging that included a “Made in Israel” designation, although the seller told Human Rights Watch that the linens were produced in the Barkan factory. For purposes of export, the company is registered under an address in a city inside Israel, rather than in Barkan.
In June 2015, the company employed around 30 Palestinians, many of whom were women, according to a co-owner. In 2008, 43 employees sued the company for hundreds of thousands of shekels after years of working for a fraction of Israel’s minimum wage.
According to the lawsuit, women workers earned 6 to 8 shekels per hour (US$2), and men earned 9 to 10 shekels ($2.50). They did not receive sick days, vacation, overtime, or pay slips, they alleged. In response to an article posted on the Business and Human Rights Resource Centre website concerning the lawsuit, the company did not deny that it paid less than minimum wage but wrote that “the worker’s payment is higher than the one in the West Bank or in the whole region.” In an interview with Human Rights Watch, the co-owner said the company paid the minimum wage required under Israeli law to a“contractor,” a Palestinian from Haris, who then pocketed a part of the wages. The company argued in court that the contractor was the plaintiffs’ employer although the contractor’s only role was as middleman between the workers and the company. The Supreme Court rejected the argument that the contractor is an employer in its 2007 ruling that applied parts of Israeli labor law to the settlements, but many settlement companies continue to employ workers through contractors, and in one recent case a lower court accepted the company’s claim that the contractor was an employer.
The workers contend that the contractor pressured them to drop the lawsuit by threatening to fire them, and 12 of them ultimately dropped their cases. All of the cases that went forward settled for amounts ranging from 5,000 to 32,000 shekels ($1,250 to $8,000), less than a third of what they claimed in most cases. Three sisters, for example, who earned 6 shekels per hour sued for a total of 287,000 shekels ($71,750) in lost earnings, but settled for a total of 45,000 shekels ($11,250) collectively, according to the lawyer who represented the plaintiffs. In addition, he told Human Rights Watch that workers claim that the company began to outsource some of the work to nearby Palestinian villages. The company vigorously denied these allegations in a letter to Human Rights Watch, and stated that “Palestinian workers receive wages and social benefits according to Israeli labor law.”
Human Rights Watch wrote letters to both the factory and the American retailer that regularly sourced linens from them. During the conversations that followed, the factory agreed to close its operations in Barkan and locate to new facilities inside Israel “We are not looking for problems. It seems it really bothers people that we’re there, so we’ll leave,” the co-owner said. He also told Human Rights Watch that he moved the factory there, rather than India or Egypt, because “I was sincerely convinced it was a way towards peace.” He said that what attracted him were the modern facilities of Barkan, close to home, yet with access to Palestinian workers who are otherwise difficult to get. For access to such workers inside Israel “you have to go to the periphery, which is far from ports,” he said.
Exploiting Legal Ambiguity
While Israel’s human rights obligations extend to the territories it occupies, the Fourth Geneva Convention requires an occupier to apply existing law, except where there is a threat to its security or amendments are necessary to comply with international law. So under international law, Jordanian law, as it existed in 1967, governs the occupied West Bank, except as amended by military order. Israeli military orders applied three Israeli labor laws to Palestinian workers in settlements: the first, in 1976, requires insurance for workplace injuries; the second, in 1982, requires employers to pay the minimum wage to those working in settlements, although this did not apply to Palestinian workers in industrial zones until 2007. The military commander issued a third law in October 2013 extending Israel’s Women Workers Act to settlements, including industrial zones.
However, while Jordanian laws apply to Palestinians, except as amended by military order, Israeli courts apply Israeli law to settlers, even though the Supreme Court recognized that the military law formally applies to them. This creates a two-track legal system that offers significantly fewer labor protections to Palestinians than those offered to Israelis. In 2007, the Israeli Supreme Court held that this two-track system, as applied in settlement workplaces, is unlawful discrimination, and Israeli labor law should apply to Palestinian workers in settlements. In making this decision, the court states explicitly that it is deviating from the general rule, which it accepts in principle, that “the law is different for Israeli inhabitants of the occupied territories” than it is for Palestinians.
The government has not yet implemented this decision, creating a gap between the law on the books and the law that Israeli courts apply. The resulting legal ambiguity has led government authorities to completely halt what little enforcement they had previously conducted to ensure settlement employers at least complied with the military orders that Israel applies to Palestinians, as further discussed below.
The 2007 Supreme Court decision, however, gave Palestinian workers the ability to sue employers in Israeli courts if they fail to respect Israeli labor laws. Human Rights Watch’s research suggests that this change has led to an increased number of settlement businesses complying with Israeli labor law. However, settlement employers continue to discriminate against Palestinian employees by paying them lower wages than Israelis for the same work.
A 2014 Bank of Israel report shows that Palestinians receive less than half of the wages received by Israelis working in the same company for the same tenure of employment.In 2010, in response to the Palestinian Authority’s proposed ban on Palestinians working in settlements, the settlement Manufacturers Association calculated that it would cost 2,000 shekels ($500) more a month per worker to hire Israeli workers in place of Palestinians, and requested that the Ministry of Industry reimburse them for the difference if the ban went into effect. Wages of Palestinians in settlements are so much lower than for Israelis that in 2013, the state comptroller warned that unless the Israeli government enforced the minimum wage, settlement companies would have an unfair competitive advantage over Israeli companies in Israel. That same year, an economist from the Bank of Israel made a similar argument at a Knesset hearing on working conditions of Palestinians in Israel and the settlements.
One reason for the persistence of labor abuses in the current system is that unless Palestinian workers complain there is no possibility of enforcement. But these workers are more vulnerable to employer retaliation for complaining. To work in settlements, Palestinians need an Israeli employer to request a work permit from Israel on their behalf. According to military protocol, if an employer reports a Palestinian worker to the police for some offense, the worker is automatically suspended until the outcome of the police investigation. As described below, Human Rights Watch documented two cases in which employees alleged that their employers initiated a complaint with police about them after they made complaints about working conditions. As a result, they not only lost their jobs but also were unable to work elsewhere in settlements. A number of Palestinian workers whose settler employers did not pay them in accordance with Israeli law told Human Rights Watch that they did not sue out of fear they would lose their work permits.
Lack of Oversight
According to several government officials, regulation and oversight of workplace safety also remains virtually non-existent for Palestinian workers in settlements. In 2013, the Ministry of Economy, which is responsible for labor law enforcement, told a Knesset committee that it carries out no activities in settlements because it does not know which law to apply.The same year, Israel’s state comptroller stated in an annual report that there was a severe lack of law enforcement in settlements that has led to an environment where “each [Israeli] person can do as he pleases.” According to Kav LaOved, in 2013, the Ministry of Economy also stopped responding to minimum wage complaints, and in response to a Freedom of Information request, the ministry stated it would not do so until a new military order is issued.
The lack of oversight, however, pre-dates the legal ambiguity created by the Supreme Court decision applying Israeli labor law to Palestinians. In a July 2007 meeting, the head of the Worker Health and Safety division of the Ministry of Industry said her division “does not go” to settlements “due to a lack of resources and indecisiveness in the matter.”
Palestinian Dependence on Israeli-Issued Permits
The system currently in place assigns all the responsibility of enforcement to Palestinian workers, but they are often hesitant to sue because they depend on Israeli-issued work-permits, according to several labor lawyers who represent Palestinians employed in settlements. Even if the court rules in their favor, their future livelihood is threatened by the risk of being fired and losing their permit, they said. In the Jordan Valley, agricultural employers circulate a “blacklist” of Palestinians who have complained about conditions. For this reason, most lawsuits are filed by employees after they’ve already left or been fired from their jobs, two lawyers told Human Rights Watch.
The military commander of the West Bank designated all settlements, including industrial zones, closed military zones. Palestinians in the occupied territories require a permit issued by the Civil Administration to enter them. Israelis are exempted from this requirement.An employer may request a six-month permit for any Palestinian living legally in the West Bank who is at least 18 years old, a much laxer standard than for a work permit in Israel.
Settlement employers must sponsor work-permit requests, giving them added leverage over Palestinian workers. Unemployment for Palestinian men in the West Bank is around 18 percent, and the average daily wage for wage employees is 90 shekels ($22.50), making access to settlement jobs essential for the livelihood of many Palestinians. Palestinian workers’ reliance on their employers for permits leaves some workers afraid to demand their rights. One worker whom Human Rights Watch interviewed, Ibrahim, earned 16.5 shekels per hour ($4.13), and did not know that he was entitled to a minimum wage. When Human Rights Watch informed him of his rights, he replied that he would not want to sue: “I’m afraid they’d take my permit. They are Israelis between each other, and I’m the outsider.” Ibrahim also believed that if he sues, his name would become known to the military and intelligence, and they would deny him a permit in the future. “I would never be able to get any sort of work in a settlement,” he said. “There needs to be an outside party that forces the company to pay minimum wage. For workers, it’s too risky,” he added.
Labor rights groups have documented incidents of employers abusing the permit system to retaliate against workers who complain about work conditions or to fire them without severance pay. In a number of cases, settler-employers reported a fabricated “security incident” to Israeli police in retaliation for workers’ complaints over working conditions in the factory, triggering the immediate revocation of their permits once summoned for police questioning, according to Hanna Zohar, who heads Kav LaOved’s division for Palestinian workers. Still other Palestinian workers suspected that their employers made false “security” reports to fire them without having to pay the severance fees required under Israeli labor law, since employees who can no longer work due to a revoked permit are not considered “fired.”
A military regulation in force since May 2011 requires settler-employers to formally request that the relevant authorities withdraw a security objection before the Civil Administration can restore a worker’s revoked permit, which gives employers extraordinary leverage over the livelihood of Palestinian workers. Kav LaOved, the Israeli non-profit that works on labor rights, represented workers from a factory in the settlement of Ma’aleh Adumim, after the company tried to compel them to sign a document agreeing to release the company from any previous claims in exchange for receiving their full rights from that point forward. Several workers refused to sign. In apparent response, the company lodged a complaint with the police claiming that they damaged company property. Applicable regulations require the police to revoke the permit of a Palestinian summoned for questioning following a complaint of an Israeli citizen. In other words, following the complaint of their employer, the workers not only lost their job at the company, but also were not able to work in any other settlements. Kav LaOved successfully appealed the revocation of their permit, but the workers’ claim and counter-claim is still pending in court.
In a different case, an Israeli non-profit organization that advocates for unionization of workers, WAC-Ma’an, documented the case of a settler employer who allegedly filed a false police complaint claiming that a Palestinian union leader, Hatem Abu Ziada, had purposefully damaged military equipment. An Israeli lawyer appealed the security preclusion in the Supreme Court on behalf of Abu Ziada, and the GSS removed the preclusion without explanation four months after it had revoked the permit. Hashem Massawra, a lawyer who works with Kav LaOved, told Human Rights Watch that these cases are not uncommon. “Factory owners and managers are closely connected to the security establishment. It is difficult to prove, but there are many cases where an employer is behind the security objection,” he said.
A Flimsy Excuse for Labor Abuses
Factory owners and managers in Barkan industrial zone say the employment of thousands of Palestinians in the industrial zone embodies the hope for Israeli-Palestinian co-existence. The founder of Barkan and mayor of Ariel, Ron Nahman, said in an interview in 2000 discussing Palestinian employees in Barkan: “I have a better shared development plan with the Arabs in the area than any of the leftist administrations, and I pursue peace exactly like all the leftists.” One Barkan factory manager told an Israeli newspaper:
Here, workers start from minimum wage and salaries can get as high as 9,000 shekels [$2,250] a month – three times the average in the Palestinian Authority. Palestinians work shoulder to shoulder with Israelis, and it’s a chance to work together, to talk together, to trust each other. We produce goods of peace.
Naftali Bennett, the former Minister of Economy who has publicly disavowed the two-state solution, similarly called for building more settlement industrial zones as “economic bridges of peace between Israelis and Palestinians.” Rueven Rivlin, Israel’s current president, similarly described Barkan as “a hub of co-existence and bridges to peace.”
Yet these rosy sentiments ignore the deeply discriminatory environment in which settlement businesses operate, and Palestinian workers’ vulnerability to abuse. It also ignores the fact that settlement businesses entrench, contribute to, and benefit from Israeli policies that dispossess Palestinians from their land and resources, facilitate unlawful settlements, and restrict Palestinian construction, trade, and freedom of movement. These policies deprive Palestinians of their livelihoods and make it difficult for them to find adequate alternative employment in Palestinian businesses.