Israel Launches Novel Fund to Aid Victims of Extortion

Israel's Ministry of Finance and Tax Authority are launching an unprecedented pilot program to financially assist businesses and farmers who are victims of extortion and protection rackets. The initiative, set to run for two months, will allow property owners who refused to pay protection money to claim direct financial compensation from the Property Tax Fund, similar to how victims of hostile acts are compensated. To be eligible for the grant, claimants must present official confirmation of a police report.

The government's move addresses a market failure where commercial insurance companies routinely refuse to cover damages from arson and extortion, leaving victims without financial recourse. The state is now stepping in as a last resort insurer for business owners, aiming to prevent capitulation to crime organizations. This program, however, shifts the cost of enforcement failures onto the public.

The pilot program, spearheaded by Minister Bezalel Smotrich, will begin Thursday with an initial budget of 35 million shekels to assess its effectiveness. This action follows a State Comptroller report indicating that approximately 87% of contractors pay protection money, alongside severe criticism within the Finance Ministry regarding the police's ineffectiveness despite increased budgets.

Extortion has become a major threat to Israel's economy and personal security, with hundreds of business owners, contractors, and infrastructure companies reportedly paying large sums monthly to crime syndicates to avoid property damage or harm. The problem is particularly acute in peripheral areas, the south, and the north, especially in Arab communities where crime groups have exploited governance gaps to establish sophisticated collection mechanisms. Despite legislative efforts to increase penalties, most extortion incidents go unreported due to fear of retaliation.