The Belgian French bank group Dexia finances Jewish colonies in the Westbank, says the research of the Belgian solidarity movement ´Intal’. This opened a broad public debate in Belgium . Dexia confirms its involvement, but claims that their investment today is only 1%. But is this social responsible business?

Hidden in the green hills and under the warm morning sun lies the Jewish settlement Ariel with her white high-rises and red rooftops of semi-detached houses. Thirty years ago this modern commuter town of Tel Aviv, was knocked up 15 kilometers after the green line in the Westbank and today houses some twenty thousand settlers. Behind the iron entry gate with a guard, who carefully checks every visitors – Palestinians are not allowed to enter – arises a pastoral world with quiet long stretched asphalt roads, lushly flowerbeds, supermarkets, schools, housing blocks – neatly square with playgrounds for the children and parking spots for the parents -  a swimming pool and a university. The business center Tel Aviv is only 15 minutes driving away and the prices of real estate are reasonable. Whoever seeks his work closer to home can check out the modern industrial zone of Ariel with its 110 factories. A new industry park, Ariel West, is being built on 200 acres and will provide work for another 3000 employees.

At first sight a perfect location for young Israeli yuppies and families with children, it obviously is also an interesting investment spot. The development and maintenance of this and the 160 other Jewish settlements in the Westbank is largely financed by the state - which according to a research in the Israeli newspaper HaÁretz in addition to the usual budget spent a cool 2.5 million Shekels for extra costs each year – and by loans of Israeli banks specialized in Israeli local authorities. Dexia Public Finance Israel – formerly Israeli Municipality Treasure Bank and since 2001 the Israeli daughter company of the Dexia bankgroup ,which holds 65.31% of the shares – is such a bank and with a market share of 34% of the public sector financing of 12.5 billion shekels, is today the largest bank in the sector. Dexia Israel is also the housebank of the Israeli National lottery ‘Mifal Ha Pais’, which sponsors community projects in Israel and Jewish settlements in the Westbank via special bank accounts with Dexia.

There is only a problem. The international community considers Ariel and other Jewish settlements situated in the Palestinian territories illegal. Israel occupies these territories since the six day war in 1967 and according to the fourth Geneva Convention is not allowed as an occupying force to transfer its own citizens to these areas. Moreover the settlements are partly built on confiscated land which belonged to Palestinians or which was illegally expropriated and therefore violates the property rights of Palestinians.

This is disputed by Israel. For centuries Jews have lived in the Westbank. Why shouldn’t they be allowed today? And the new Prime Minister Netanyahu said the other day: ´If Israelis are not allowed to build in the Westbank, this should also be forbidden to Palestinians,(…) because this is disputed territory.’

But according to the database of the Ministry of Defense – retrieved by HaÁretz - 75% of the buildings of the 160 settlements - including the University of Ariel – are partly built without the necessary Israeli permits or on Palestinian land, which makes them even according to Israeli law illegal. Meanwhile the Israeli government had to promise the United States that pending further peace negotiations no settlements will be build. But provisions supporting the natural population growth are allowed. And with an annual growth of 5% the settlement expansion continues rapidly.

 ‘For some time we suspected that Dexia was financing Israeli settlements, but we didn´t have hard proof,’ says Mario Franssen, activist of the Belgian solidarity movement Intal. ‘At the end of October 2008 we suddenly got the ball rolling. The Israeli peace organization ‘Coalition of Women for Peace ‘ with whom we’re working closely together ,found the minutes of meeting of a Knesset (Israeli parliament)hearing. During this hearing the CEO of Dexia Israel, David Kapah, and answered questions of MP’s regarding Dexia´s involvement in Jewish settlements. Kapah confirmed that since 2005 long term loans ( 10 – 15 years) and other financial services have been granted to at least seven Jewish settlements in the Westbank; namely Ariel, Alfei Menashe, Beit Aryeh, Beit-El, Elkana, Har Hebron, Kedumim and Givat Zeev. When asked if Dexia’s finance policy is influenced by the geographical position of the communities – in other words if communities in Israel receive a preferred treatment to communities outside the greenline -  Kapah answered that this made no difference to Dexia.’

‘We don’t ask for a boycott of Israel but simply a suspension of settlement activities which conflict international law,’ Franssen explains. A month later Pierre Mariani, delegate board member of the Dexia group, confirmed the facts in writing but did not offer any solution.
Meanwhile there have been questions in Belgian parliament and the campaign has been signed by 54 organizations, among them 6 Belgian municipalities, labor unions, National Health insurance organization. The province of Namur and another 25 municipalities voted on a motion; a rather important development because the Municipal holding, the Belgian federal state, the three Belgian districts and Group Arco (ACW) – a cooperative holding of the Catholic workers union – own together 39,4% of the shares of Dexia.

Marda is a quiet village. Its history goes back to the time of the Crusaders. According to connoisseurs it produces the best olive oil of the Westbank. But the construction of Ariel has changed the life of the 2400 villagers forever. Today Marda is a sort of prison. Closed by fences from the south and west and Ariel in the north Marda has only one entrance, via road 5, which is also closed sometimes. For its water supplies Marda is depending on her its two natural wells which in the past were sufficient to deliver water to the entire valley. But because of the enormous expansion of Ariel the water usage increased and the Jewish settlement has taken over the management of the water reserves. Marda’s water is rationed and there is not enough pressure on the water pipes. During the hot summer months part of the villagers are stuck without a drop of water. 

Khofash assesses the damage. ‘On every dounam of land there are 20 trees, which each produce 10 to15 liter of oil a year. This oil was exported in the past to Israel, the Gulf States and Saudi Arabia. A Palestinian farmer receives for a liter of oil around 20 Shekels. Therefore the damage per dounam is therefore minimal 4000 Shekels. If you take all the confiscated land it mounts up to 18 million Shekels per year. Imagine how much the capitalized loss is for all the years of Ariel’s existence. With the opening of the European market and the increase of olive oil consumption in the world this is especially bitter for Marda’s farmers. Three quarter of the villagers are now unemployed.’

Also the neighboring village, Bruqin, about five kilometers further and east of Ariel, suffers from its expansion. But Bruqin deals with more urgent problems than the loss of  the 800 dounams of land. The industrial zone of Ariel dumps regularly its industrial waste water on Bruqins soil, says Abdallah Samara, mayor of Bruqin. ‘That water is highly polluted and damaged our crop. But it is also dangerous for the health of our people. Last year we had 12 new cases of cancer and tens of patients with skin diseases.‘

According to Yousef Habash - Public Relations Officer of Health Work Committees in Ramallah, which examined the health situation of Palestinian villages around the area of settlements and close to the separation barrier – the health of these Palestinians has deteriorated in recent years. This is partly caused by the economic crisis. Because of the erection of the barrier and Israel’s closure policy around 150.000 Palestians who used to work in Israel lost their jobs. Tens of thousands of farmers are separated from their land and unemployed. There is not enough work in the Palestinian territories. Moreover there is the stress of the occupation. Sometimes villages are totally closed in and the inhabitants can’t reach their work, schools or family. The effects of the settlements on the health of Palestinians on the other hand are evident in the villages around the big settlements, such as Ariel.

´We have seen an alarming increase of the number of cancer patients not only in Bruqin and Marda, but also other communities.’ Habash says.

Soil tests also show pollution, which effects the olive trees , the olives and the drinking water.

Dexia’s office in Israel doesn’t give any information and directs us to Ulrike Pommée, press officer of the mother company in Dexia´s head office in Brussels. Pommee doesn´t answer our phone calls and responds with a standard writing- the same text has been sent the last four months to accountholders, the Belgian municipal holding, shareholders and anybody else in Belgium who requested information–  which contains a confirmation that Dexia indeed finances Jewish settlements in the Palestinian territories and that the amount of loans at the time of the takeover of the Israeli daughter was 5% but has now been decreased to 1%.

But 1% in absolute numbers no doubt is still a considerable amount. The question remains if you could call that sustainable responsible business activity? What about the Corporate Social Responsibility? If I compare it to other situations, for instance the crime of dumping polluted waste in Somalia’s coastal waters: isn’t dumping a little bit of waste still illegal?  

Cees van Dam, professor at King's College London and the Dutch University of Utrecht is specialized in Corporate Social Responsibility (CSR) and answers carefully. ‘Corporate Social Responsibility means that a company does much more than just abides the law. A business shouldn’t only focus on its economic results but also act with respect towards human rights and take care of the effects of its activities on humans and the environment.’

CSR is not a legal standard. Its social standards have been put in the OESD (Organisation for Economic Co-operation and Development) guidelines. Belgium is a member state of OESO, Israel endorses it and business embraces and applies the guidelines. Companies have to apply due diligence and carefully check if they didn’t violate the rights of others. If that’s the case they should immediately stop the activity.

Van Dam: ‘In Dexia’s case the bank group should have determined and checked the risks of infringing human rights when financing Israeli settlements which according to international law are illegal. Maybe also other laws and environmental rights have been violated and the Dexia group runs a serious risk of being directly involved in violations of law and rights. Moreover banks have the legal obligation to supervise side effects of financing.’

Dexia’s conduct is not an example of social responsible business, Van Dam concludes. That the investment was only a small percentage doesn’t change this. A social responsible business acts responsible in all its facets.

‘For Israelis settlements are attractive because they pay less taxes, Palestinians give cheap labor ,real estate is cheaper and there is hardly any law and order.  In short a sort of judicial no-man’s-land was created. We have seen situations of expropriating Palestinian land, illegal building activities, dump of waste and pollution and employment of Palestinian workers for salaries and on conditions which violate the law all over the settlements in theWestbank’

The land looks neglected .The weed is knee high. For years Khofash grew his olives here, but Ariel built a fence around it. ´Once a year they allow me to enter the fence with a special permit. It is bad enough that I have to endure the humiliations of the soldiers - they let me stand for hours in the hot sun and forced me to take of my shirt – but the worst is that I have no time to collect the olives. I’m not allowed to enter with a tractor and had to carry the bags on my back. I argued with them and at the end they allowed me to bring a donkey. But that doesn’t really help. How many bags can a donkey carry? Two, three?’

Dexia’s shareholders’ meeting is scheduled for May 13. While the shareholders might weigh the pros and cons of the continuation of the daughter’s activities under the present circumstances, Khofash and the other Palestinians see the solution as yet more concrete. They are waiting anxiously to cultivate their land again.