How Corruption Led to the Oslo Agreement

This article is indebted to the research of Attorney Howard Grief.

As is fairly well known, the Israel-PLO Declaration of Principles of September 13, 1993, known as the Oslo Agreement, has produced a litany of personal tragedies and national disasters. Suffice to mention the following:

  • the murder of some 1,600 Jewish women, men, and children by PLO-Palestinian Arab terrorists;

  • the wounding and maiming of some 6,000 more Jews by these terrorists;

  • the expulsion of 10,000 Jews from their homes via the so-called unilateral disengagement plan;

  • the transformation of Gaza into an Iranian-Hamas base for bombing Sderot and Ashkelon;

  • the smuggling of arms from Gaza to Judea and Samaria;

  • the loss of Israel’s deterrent power (which contributed to Hezbollah’s incursion in the north).

What is not known is the hidden cause of these disasters.

Consider the corrupt financial relationship that existed between the Labor and Shas parties between 1989 and 1996. This relationship, though exposed by the State Comptroller, was never legally addressed by the Ministry of Justice or resolved despite overwhelming evidence of wholesale corruption between these two parties. The result of this illegal relationship was to facilitate a changeover of political power from Likud to Labor in 1992 and then its consolidation until 1996.

On January 11, 1993, a special Report of the State Comptroller was published which detailed a cozy relationship between Shas and Labor based on illegal payments made in violation of the criminal laws and the Party Financing Law. The Report stated that a deal was made between the two parties on October 6, 1989 under which Shas agreed to back Labor in the Histadrut elections of that year in return for monthly consecutive payments of 110,000 NIS (about $55,000 in U.S. funds at the time) which were spread out over a three-year period lasting significantly until the end of 1992, six months after the June 23 national elections.

These political payments by Labor to Shas continued despite a Supreme Court decision in February 1991 which barred any kind of payoffs or financial benefits between parties. By receiving illegal and secret payments, Shas in effect became a religious affiliate of the Labor Party. It was therefore not surprising that Shas agreed to join the Labor-Meretz Coalition Government in 1992 which helped to initiate the (illegal) Oslo peace process and at the same time brought Shas further financial rewards and political honors.

This was done despite Shas’ false promise to its religious voters, most of whom are nationalists, never to join a proposed Labor Government. (This betrayal of the voters was facilitated by the fact that members of the Knesset are not individually elected by and accountable to the voters in regional elections. The same institutional flaw enabled 23 Likud MKs to vote for the “unilateral disengagement” law of October 2004 despite their having campaigned against disengagement in the January 2003 election.)

Returning to Shas: its commitment to Labor, born out of an illegal and corrupt deal, enabled Yitzhak Rabin to set up a Government with a Jewish majority, hence without the need to co-opt the Arab parties. Rabin wanted to give a sense of legitimacy to his Government, since his anti-religious and anti-nationalistic bloc of parties, together with the Arab parties, had not won a majority of the popular vote. Rabin needed Shas to join the Labor-Meretz coalition to obtain a Knesset majority. However, the legitimacy of the Government was more apparent than real. Had Shas voters been consulted democratically, most would have voted against their party’s entry into the Rabin Government.

The enormity of the Labor-Shas corruption, as revealed in the State Comptroller’s Report, was stunning. It amounted to outright bribery, public fraud, illegal enticement and solicitation that were on a scale unprecedented in Israeli political history. It is no exaggeration to say that Labor actually bought the 1992 elections, as the State Comptroller was reported to have remarked in an interview after publication of the Report.

A great outcry greeted the release of the Comptroller’s Report, but the pain and upset lasted only a day or so and caused no political crisis or demands for a new election. No legal steps were ever taken to prosecute those responsible in the Labor Party for bribing and illegally enticing Shas to join Labor in forming a government. The ones who concluded the illegal agreement on behalf of Labor were reported to be Michael Harish, then secretary-general of the party, and David Liba’i, who became the Minister of Justice in the new Government. The only sanction was the fine imposed by the Comptroller on the Shas Party for accepting the illegal funds from Labor.

What should have happened but did not was an investigation and prosecution by the Attorney-General of the perpetrators of the bribery and fraud. He, however, chose to do nothing for reasons never explained. Everything was swept under the rug, buried and soon forgotten, as if the bribery and fraud never happened. The Labor Party was allowed to enjoy the fruits of its ill-begotten power which was then used to foist on an unsuspecting nation an illegal (Oslo) peace process with a terrorist organization resulting in the Israel-PLO agreements.

Israel continues to suffer the bloody consequences of this illegal and corrupt state of affairs, readily traceable not only to the flaws of Israeli politicians, but also to the flaws of a political system that entrenches such politicians in power.

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