Why critics of Israel’s new NGO “transpiracy” law are wrong

The Knesset passed a law on Monday requiring local NGOs that receive more than half of their funding from foreign governments to disclose this information

A major talking point of the law’s critics is that it has “no democratic parallel,” and that it puts Israel in the category of non-democratic regimes like Russia, and even sets it on the road to fascism. But if these claims are true, there is little hope for democracy in the U.S., which has had similar rules for decades, and imposed new ones a few years ago without a peep of international objection.

Critics of the Israeli law generally concede that the required disclosures are legitimate. They object that the application of such disclosure requirements only to groups funded by foreign governments, as opposed to those funded by foreign private individuals (who, unlike the EU, support both left- and right-wing political NGOs), are arbitrary and therefore sets Israel apart from other democracies. Both claims are specious.

First of all, treating foreign government contributions differently from private ones is entirely commonplace and rational, especially in the case of Israel.

Governments are indeed different from rich individuals. Governments have foreign policies, trade rules, and United Nations votes—and they use the groups they fund in Israel to produce documents that they then invoke when taking those actions. Private people have no similar powers. As a matter of basic democratic integrity, groups that depend largely on government funds should not be able to advertise their “NGO” status without at least some small-print clarification.

Moreover, Israel has good cause to take a different approach to the issue than other Western democracies because the outsized role of foreign—and specifically European-funded—groups is particularly egregious in Israel. Protecting the integrity of Israeli democracy requires special transparency rules.

First, Israel is unique in the sheer scale of the foreign government sponsorship of domestic political groups. For example, the European Union alone has in recent years given roughly 1.2 million Euro a year for political NGOs in the U.S,. and roughly an order of magnitude more in Israel—a vastly larger per capita amount. This is magnified by similar imbalances in funding by individual European countries. There is a unique secrecy concerning the processes by which funding is granted to Israeli non-profits by the EU and many individual governments, including refusals in response to Freedom of Information requests.

Secondly, Europe itself has unique rules about funding Israeli groups, which have no parallel elsewhere. Under Article 15 of the EU’s special guidelines for funding Israeli groups, organizations dealing with the territories are only eligible for funding if they declare that their activities promote EU foreign policy, and the EU agrees. These are groups that get the bulk of their funding from the EU, but only if they promote Brussels’s interests—the very definition of a foreign agent.

Indeed, even the United States uses NGOs as proxies to meddle in internal Israeli affairs. As the U.S. Senate Permanent Subcommittee on Investigations (PSI) reported yesterday, the State Department funded an Israeli political organization that later ran a campaign dedicated to ousting Israeli Prime Minister Benjamin Netanyahu.

The distinction between getting money from a foreign government and a foreign person is basic, and reflected in U.S. law. The House of Representatives requires from those who testify before it a disclosure of monies received specifically from foreign governments—just like the Israeli law.

More egregiously, the Israeli law is so clearly aligned with the American Foreign Agents Registration Act (FARA) that both Obama Administration officials and political groups have made the false claim that unlike the Israeli measure, FARA applies “equally” to foreign governments and foreign people. This is demonstrably false as a matter of the intent, application, and text of FARA. In fact, FARA only applies, in law and practice, to donations from foreign governmental actors.

While FARA’s overall definition of “foreign principals” does include foreign people, a 1995 amendment excludes agents of foreign people or companies from the most onerous disclosure requirements of the law. So U.S. law explicitly places much tougher reporting requirements on agents of foreign governments than foreign people. Moreover, the law has always been interpreted as covering only funds from foreign individuals who are political leaders, not mere philanthropists. This makes sense to prevent foreign countries from evading FARA by funneling money through their leaders.

To verify this, I examined the list of all current registered foreign agents. In almost all cases, these were agents of foreign governments, parties, government agencies, or quasi-states. In the very few cases where a foreign principal is an individual, they are active foreign politicians or former prime ministers. Moreover, the statute does not appear to be enforced in practice against those who receive money from private people. In other words, either FARA is not understood as applying to regular foreign people, or there are simply no such people in the world who trying to influence policy in the U.S.

To be sure, Israel and the U.S. are different countries, and FARA and the NGO law are different laws. One can always find inconsequential differences. Israel’s law is broader in some ways, America’s law broader in others. And if “chilling effects” are what concerns Israel’s critics, the U.S. measure is far scarier. Failure to comply can land one in jail for five years.

What is particularly distressing is that groups like JStreet and Americans for Peace Now have falsely claimed that FARA applies“equally” to “all” sources foreign funding. These groups, who purport to be friendly critics of Israel, should at least read the statute before slamming Israel.

In sum, the new Israeli law is, contrary to the dire claims of its critics, both perfectly sensible—indeed, urgently necessary—and well aligned with similar American statutes. If the law has a differential impact on groups based on their ideology, it highlights bias not in the transparency rules, but in the nature of European efforts to quietly skew Israeli democratic discourse.

Eugene Kontorovich is a professor at Northwestern University School of Law, and the head of the International Law Department at the Kohelet Policy Forum.