Israeli Prime Minister Netanyahu and Foreign Minister Lieberman.

Israeli P.M. Netanyahu, after a standoff with Foreign Minister Lieberman over the controversial NGO funding bill, is now moving to revive the legislation. Lieberman, as chairman of Likud coalition partner Yisrael Beitenu, has long been determined to pass the legislation, which Netanyahu distanced himself from last month.

Arutz 7 speculates that Lieberman’s intransigence has finally gotten the better of Netanyahu. In a sign of coalition reconciliation, the new bill is being sponsored by a member of Likud and a member of Yisrael Beitenu. The Israeli left has reacted strongly against the bill, as have the NGOs that the bill targets (especially those that provided data for the UN fact-finding mission to Gaza that produced the Goldstone Report).

According to Arutz 7, there will be three government categories for NGOs:

1. NGOs “that reject Israel’s right to exist, incite racism, support violence against Israel, support trying Israeli soldiers or officials in international courts, call for boycotts of Israel, or issue calls for IDF personnel to disobey orders” will be ineligible to receive funds from foreign donors. Arutz 7 asserts that Adalah (The Legal Center for Arab Minority Rights in Israel) and Yesh Gvul, an association of Israeli refuseniks, fall under this rubric.

2. “Political organizations that do not fall in the prohibited category” will be allowed to receive foreign funds, but these donations will incur a 45% tax rate. Arutz 7 singles out Peace Now, B’Tselem and Physicians for Human Rights as organizations that would fall into this category.

3. “Non-political organizations that receive [Israeli] state funding will be tax exempt and may receive unlimited donations from foreign governments.” Arutz 7 asserts that this includes “purely welfare and educational organizations.”

The Israeli government will establish the criteria for “political” and “non-political” designations. According to Haaretz, the bill’s sponsors have not yet settled on what criteria will define “a political organization.”

For “political organizations that do not fall in the prohibited category,” i.e., Peace Now, it is possible that they can appeal against the 45% tax rate by going before the Knesset Finance Committee to argue for a waiver. They will have a tough time if they do so with this government, however. The Knesset Finance Committee is chaired by United Torah Judaism KM Moshe Gafni. United Torah Judaism is a pro-settlement, ultra-Orthodox coalition.

According to the pro-Israel watchdog NGO Monitor, significant amounts of foreign funding for these groups comes from EU governments and charities like Oxfam. Haaretz is less specific on the matter, but notes that between 1/4 and 1/2 of certain leftist groups’ funding comes from overseas donors.

Paul Mutter is a graduate student at the Arthur L. Carter Journalism Institute at NYU and a contributor to Foreign Policy In Focus.