Israel Launches Pilot Program to Compensate Protection Racket Victims

Starting Thursday, Israeli businesses and farmers will have a two-month window to file claims for property damage caused by extortion rackets, according to a report by Ynet. This new government pilot program, spearheaded by Finance Minister Bezalel Smotrich, was approved in late June and will be administered by the Israel Tax Authority's Property Tax division, similar to how victims of hostile acts are compensated. The initiative aims to provide financial support to businesses that have suffered damage due to refusing to pay protection money and are not insured against such losses.

The final procedure for the program was published after a public review period. The state will offer a financial safety net to cover direct property damage resulting from extortion. The stated goal is to enable businesses that resist organized crime to maintain operational continuity after an attack and to encourage them to cooperate with law enforcement in combating the phenomenon. A key requirement for compensation is filing an official police report detailing the extortion and the damage incurred.

This program represents an official acknowledgment by the state of its failure to adequately protect victims of protection rackets. The objective is to provide a safety net to prevent victims from cooperating with criminals and paying protection fees. A state comptroller report from April 2026 highlighted the severe economic impact of protection rackets, with a survey indicating that 87% of contractors in the Tel Aviv and Central regions have paid protection money.

Many business owners currently avoid reporting extortion due to fear of immediate retaliation, a concern amplified by insurance companies typically excluding damage from extortion and arson. The Finance Ministry will evaluate the program's effectiveness in aiding law enforcement and fostering a secure business environment. Senior Finance Ministry officials previously criticized the police and the National Security Ministry for failing to curb the protection racket phenomenon despite substantial budgets.

The pilot program begins with a budget of 35 million shekels and will be tested for approximately two months to assess its efficacy. "I call on business owners: do not pay protection money. The State of Israel stands behind you," Smotrich stated, adding that the program is part of a broader effort to establish settlements and agricultural farms in the Negev and Galilee regions.