Israel Launches Pilot Program to Compensate Victims of Racketeering

Starting September 24, Israel will begin accepting applications from business owners and farmers seeking compensation for property damage caused by racketeers. This initiative, a pilot project approved by the government in June and spearheaded by Finance Minister Bezalel Smotrich, aims to assist those who have suffered losses due to extortion without having adequate insurance.

Applications will be processed by the Property Tax department of the Tax Authority, similar to claims filed by victims of hostile actions. The government will reimburse direct property damage resulting from extortion, with the goal of supporting businesses that refuse to pay protection money and ensuring their continued operation after incidents like arson or property destruction.

A key condition for submitting a claim is filing a police report that clearly details the extent of the damage and explicitly states it was caused by refusal to pay for "protection." The rules for reviewing applications and issuing compensation were finalized by the Finance Ministry after a three-month public review period.

This pilot program implicitly acknowledges a failure in the state's efforts to combat racketeering. A State Comptroller's report from April 2026 highlighted that racketeering inflicts hundreds of millions of shekels in damage on the Israeli economy. Comptroller Matanyahu Engelman noted that contractors are forced to pay vast sums for "protection," face threats and violence, and have their property stolen, yet fear reporting these crimes to the police.

The Comptroller's report also pointed out that racketeering is widespread across all regions of Israel. In 2025, 87% of construction contractors surveyed in the Tel Aviv district reported facing pressure from racketeers, with annual "protection" payments ranging from 250,000 to 1 million shekels. Despite these pressures, 75% of those surveyed feared reporting extortion to the police. In 2025, police opened 221 cases related to suspected racketeering, arresting and questioning 528 suspects.