Paving the Way

The Role of Israeli Banks in Road Construction in the Occupied Palestinian Territory

Road infrastructure projects, like all Israeli construction projects in the occupied Palestinian territory, rely on the financial support of the Israeli Banks. In this update, Who Profits examines a few case studies of infrastructure projects financed by Israeli banks in the occupied West Bank and East Jerusalem.

Road infrastructure projects, like all Israeli construction projects in the occupied Palestinian territory (oPt), rely heavily on the financial support of the Israeli Banks. As shown by Who Profits' 2017 report on the Israeli banking sector, "Financing Land Grab: The Direct Involvement of the Israeli Banks in the Israeli Settlement Enterprise," all Israeli banks except Dexia Israel provide special loans to construction and infrastructure projects in illegal settlements in the occupied West Bank and East Jerusalem.

The banks extend credit to companies that execute infrastructure projects in the oPt, holding as collateral the company's rights in contracts and its rights to receive funds and other payments from various Israeli authorities, such as the Ministry of Construction and Housing, settlement regional councils and state-owned corporations. These special loans for housing and infrastructure projects in settlements are provided by Israeli banks under special terms known as "accompaniment agreements" (heskemey livui), which ensure that the bank provides companies with all of the required financial services from the early stages of a project to its completion.

Road infrastructure plays a pivotal role in the continuation and expansion of Israel's illegal settlement enterprise. By providing the necessary capital to build and maintain this infrastructure, the Israeli banks directly contribute to the settlement enterprise. Moreover, the terms of their support make them active stakeholders in the occupation economy.

In this update, Who Profits presents examples of infrastructure projects financed by Israeli banks in and around settlements in the West Bank and in East Jerusalem. The projects examined below, some of which were included in earlier reports and others presented for the first time, represent only a small sample of the infrastructure work carried out with the support of the banks in the oPt. All sources for the information presented are on file with Who Profits.

Road Construction in Occupied East Jerusalem

Immediately following the occupation of the Palestinian territory in 1967, Israel unilaterally annexed the territory of East Jerusalem. Since then, it has confiscated 38.3% of the land in East Jerusalem for the construction of Jewish settlements. Successive governments have been expanding settlement neighborhoods, linking them to one another in order to establish territorial continuity and to break up and prevent the development of Palestinian neighborhoods in occupied East Jerusalem.

Highways, tunnels and railroads facilitate the creation of accessible, well-connected settler spaces while ensuring the fragmentation and de-development of Palestinian spaces. Roads and other forms of transit infrastructure serve not only the continually growing settler population in East Jerusalem itself, but also the much larger settlement blocs that surround the city, such at the Etzion Bloc and Maale Adumim (the Jerusalem light rail is a case in point).

Highway 50, one of the largest infrastructure projects undertaken by the Jerusalem Municipality in recent years, connects settlements in northern and southern East Jerusalem with one another and with the western part of the city. The road starts at the Givat Ze'ev Junction, beyond the Green Line, where it connects to Highway 45 (connected in turn in the northwest to Route 443). It cuts through the Palestinian neighborhood of Beit Safafa, dividing it in two, and continues through a tunnel under the Palestinian neighborhood of Shuafat.

The Israeli company Shapir Civil and Marine Engineering was contracted by the Moriah Jerusalem Development Company to build Section 2 of Highway 50 South (Begin Highway). The estimated cost of the project was 100 million NIS. According to Moriah, the section of the road paved by Shapir will enable the flow of traffic from Atarot in the north (Route 443) to Gilo in the south without any traffic lights. Highway 50 officially opened in September 2017. This infrastructure project is accompanied by First International Bank of Israel (FIBI), which holds as collateral all the rights of the company to receive funds under the contract with Moriah.

FIBI is also accompanying a project of the Israeli company Shoham Engineering and Development to conduct paving and development works near Wadi al-Joz in occupied East Jerusalem. The bank holds as collateral all the company's rights under a contract signed with the Moriah Jerusalem Development Company in August 2017, including the right to receive funds in accordance with the contract.

Mizrahi Tefahot Bank is accompanying an infrastructure project executed by the Israeli company Kotler Adika in the Ramat Shlomo settlement neighborhood in East Jerusalem. The project includes infrastructure work on Road 21, a new road in northern East Jerusalem that opened in February 2017. Road 21, estimated at 80 million NIS, serves the settlement neighborhoods of Pisgat Zeev, Neve Yaakov and Ramat Shlomo in occupied East Jerusalem. Mizrahi Tefahot Bank extends credit for the project, holding a specific collateral on all the company's rights in the contract signed with the Moriah Jerusalem Development Company for public infrastructure works in the area.

Leumi Bank extended credit to the Israeli company Bardarian Brothers to conduct road and infrastructure works in the Neve Ya'akov's settlement neighborhood, in accordance with a contract that the company signed with the Israeli Ministry of Construction and Housing in May 2013. The company provided as collateral to the bank all of its rights in connection with the contract.

Road Construction in the Occupied West Bank

In October 2017, the Israeli government pledged nearly 230 million USD for developing road infrastructure in settlements in the West Bank, to go into effect in 2018. Such government investment in settlement infrastructure is nothing new. Since 1967, Israel has built at least 800 km of bypass roads in the occupied West Bank. This elaborate network of roads enables settlers to travel rapidly between settlements and to cities within the Green Line, creating territorial contiguity and further incentivizing settlement expansion. Palestinian communities, on the other hand, are barred from using many of these roads, either wholly or partially, through roadblocks and checkpoints and the route of the Annexation Wall.

The Israeli banks finance the construction of settler road infrastructure on occupied land, an activity that clearly violates international law, including Article 49 of the Fourth Geneva Convention and Article 55 of the Hague Regulations. As the accompaniment agreements clearly state the location of a given project, there is no doubt that the financing banks do so knowingly.

Hapoalim Bank accompanies two infrastructure projects of Israeli company Einav Ahets. The first, estimated at 40,000 NIS, involves water infrastructure works for the Israeli national water company Mekorot on the Nabi Elyas bypass road (Highway 55) in accordance with tender 4/14 of Netivei Israel. The second project consists of patching and road resurfacing works in Area C of the occupied West Bank in accordance with tender 35/17 of Netivei Israel. For both projects, the company provided as collateral to the bank all rights and revenues due to it from the contracting authority.

Hapoalim Bank also extended credit to the Israeli company Amnon Rahamim Infrastructures for infrastructure and development works in the settlements of Mehola and Beka'ot in the occupied Jordan Valley, holding as collateral all rights and funds in connection with the contract between the company and the Jordan Valley Regional Council.

The bank also accompanied the Israeli development and infrastructure company Bardarian Brothers in a project of infrastructure and road works in Hill C of the settlement of Beitar Illit in the occupied West Bank, on the basis of a contract with the Israeli company Adi Hadar. The bank holds as collateral all rights and funds owed to the company for the project.

Bardarian Brothers also received credit from Leumi Bank to conduct road paving, development and infrastructure works in the settlement of Givat Ze'ev in 2013. Leumi bank held as collateral all the company's rights in relation to the contract with the Givat Ze'ev Regional Council and the company Local Government Economic Services, which hired Bardarian Brothers to execute this project.