Barkan, located in the occupied West Bank, is an Israeli residential settlement and industrial zone that houses around 120 factories that export around 80 percent of their goods abroad. In the background is the Palestinian village of Qarawat Bani Hassan. © 2004 David Silverman
Almost immediately after Israel’s military occupation of the West Bank in June 1967, the Israeli government began establishing settlements in the occupied Palestinian territories. From the outset, private businesses have been involved in Israel’s settlement policies, benefiting from and contributing to them. This report details the ways in which Israeli and international businesses have helped to build, finance, service, and market settlement communities. In many cases, businesses are “settlers” themselves, drawn to settlements in part by low rents, favorable tax rates, government subsidies, and access to cheap Palestinian labor.
In fact, the physical footprint of Israeli business activity in the West Bank is larger than that of residential settlements. In addition to commercial centers inside of settlements, there are approximately 20 Israeli-administered industrial zones in the West Bank covering about 1,365 hectares, and Israeli settlers oversee the cultivation of 9,300 hectares of agricultural land. In comparison, the built-up area of residential settlements covers 6,000 hectares (although their municipal borders encompass a much larger area).
Israeli settlements in the West Bank violate the laws of occupation. The Fourth Geneva Convention prohibits an occupying power from transferring its citizens into the territory it occupies and from transferring or displacing the population of an occupied territory within or outside the territory. The Rome Statute, the founding treaty of the International Criminal Court, establishes the court’s jurisdiction over war crimes including the crimes of transfer of parts of the civilian population of an occupying power into an occupied territory, and the forcible transfer of the population of an occupied territory. The ICC has jurisdiction over crimes committed in or from the territory of the State of Palestine, now an ICC member, beginning in June 13, 2014, the date designated by Palestine in a declaration accompanying its accession.
Israel’s confiscation of land, water, and other natural resources for the benefit of settlements and residents of Israel also violate the Hague Regulations of 1907, which prohibit an occupying power from expropriating the resources of occupied territory for its own benefit. In addition, Israel’s settlement project violates international human rights law, in particular, Israel’s discriminatory policies against Palestinians that govern virtually every aspect of life in the area of the West Bank under Israel’s exclusive control, known as Area C, and that forcibly displace Palestinians while encouraging the growth of Jewish settlements.
As documented in this report, it is Human Rights Watch’s view that by virtue of doing business in or with settlements or settlement businesses, companies contribute to one or more of these violations of international humanitarian law and human rights abuses. Settlement businesses depend on and benefit from Israel’s unlawful confiscation of Palestinian land and other resources, and facilitate the functioning and growth of settlements. Settlement-related activities also directly benefit from Israel’s discriminatory policies in planning and zoning, the allocation of land, natural resources, financial incentives, and access to utilities and infrastructure. These policies result in the forced displacement of Palestinians and place Palestinians at an enormous disadvantage in comparison with settlers. Israel’s discriminatory restrictions on Palestinians have harmed the Palestinian economy and left many Palestinians dependent on jobs in settlements—a dependency that settlement proponents then cite to justify settlement businesses.
Following international standards articulated in the United Nations Guiding Principles on Business and Human Rights, businesses are expected to undertake human rights due diligence to identify and mitigate contributions to human rights violations of not only their own activities but also activities to which they are directly linked by their business relationships. They are also expected to take effective steps to avoid or mitigate potential human rights harms—and to consider ending business activity where severe negative human rights consequences cannot be avoided or mitigated.
Based on the findings of this report, it is Human Rights Watch’s view that any adequate due diligence would show that business activities taking place in or in contract with Israeli settlements or settlement businesses contribute to rights abuses, and that businesses cannot mitigate or avoid contributing to these abuses so long as they engage in such activities. In Human Rights Watch’s view, the context of human rights abuse to which settlement business activity contributes is so pervasive and severe that businesses should cease carrying out activities inside or for the benefit of settlements, such as building housing units or infrastructure, or providing waste removal and landfill services. They should also stop financing, administering, trading with or otherwise supporting settlements or settlement-related activities and infrastructure.
Human Rights Watch is not calling for a consumer boycott of settlement companies, but rather for businesses to comply with their own human rights responsibilities by ceasing settlement-related activities. Moreover, consumers should have the information they need, such as where products are from, to make informed decisions.
This report uses illustrative case studies to highlight four key areas where, in Human Rights Watch’s view, settlement companies contribute to and benefit from violations of international humanitarian and human rights law: discrimination; land confiscations and restrictions; supporting settlement infrastructure; and labor abuses. These case studies are not necessarily the worst examples of settlement businesses, but demonstrate how businesses operating in settlements are inextricably tied to one or more of these abuses.
How Businesses Contribute to and Benefit from Discrimination
Israel operates a two-tiered system in the West Bank that provides preferential treatment to Jewish Israeli settlers while imposing harsh conditions on Palestinians. Israeli courts apply Israeli civil law to settlers, affording them legal protections, rights and benefits not enjoyed by their Palestinian neighbors who are subject to Israeli military law, even though under international humanitarian law, military law governs the occupied territories regardless of citizenship. Israel’s privileged treatment of settlers extends to virtually every aspect of life in the West Bank. On the one hand, Israel provides settlers, and in many cases settlement businesses, with land, water infrastructure, resources, and financial incentives to encourage the growth of settlements. On the other hand, Israel confiscates Palestinian land, forcibly displaces Palestinians, restricts their freedom of movement, precludes them from building in all but 1 percent of the area of the West Bank under Israeli administrative control, and strictly limits their access to water and electricity.
In 2010, Human Rights Watch published a report, Separate and Unequal, documenting Israel’s systematic discrimination against Palestinians in favor of settlers. The report found that the impact of these policies on Palestinians at times amounts to forcible transfer of the population living under occupation, since many Palestinians who are unable to build a home or earn a living are effectively forced to move to areas under Palestinian Authority control or to emigrate entirely out of the West Bank. This new report builds on Human Rights Watch’s previous findings and considers the ways in which settlement businesses are deeply bound up with Israel’s discriminatory policies.
By virtue of facilitating the settlement regime, settlement businesses, in Human Rights Watch’s view, contribute to the discriminatory system that Israel operates for the benefit of settlements. These businesses also directly benefit from these policies in myriad ways. The report describes two such ways. One is the financial and regulatory incentives that the Israeli government provides to settlement businesses, but not to local Palestinian businesses, in order to encourage the economic development of settlements. The other is the discriminatory way that the Civil Administration, the unit in the Israeli military responsible for civilian affairs in the West Bank, issues permits for the construction and operation of settlement companies, often on land confiscated or expropriated from Palestinians in violation of international humanitarian law, while severely restricting such permits for Palestinian businesses. It is therefore Human Rights Watch’s view that businesses operating in or with settlements are inextricably linked to, and benefit from, Israel’s privileged and discriminatory treatment of settlements at the expense of Palestinians.
As an illustrative example, the report contrasts the operating conditions of a quarry in the West Bank owned and operated by a European company, to the operating conditions of Palestinian-owned quarries in the West Bank town of Beit Fajar. Whereas Israel issued a permit to the European company to operate the quarry on an area of land that Israel declared belongs to the state, Israel has refused to issue permits for nearly all of the 40 or so Beit Fajar quarries, or for almost any other Palestinian-owned quarry in the area of the West Bank under Israel’s administrative control. The World Bank estimates that Israel’s virtual ban on issuing Palestinians permits for quarries costs the Palestinian economy at least US$241 million per year. Yet Israel licenses eleven settlement quarries in the West Bank despite this exploitation of resources in occupied territory violating international humanitarian law.
Article 55 of the Hague Regulations of 1907 makes occupied property subject to the laws of usufruct. The generally accepted interpretation of these rules permits an occupying power to appropriate the resources of the occupied territory only for the benefit of the protected population or if justified by military necessity. Yet the settlement quarries pay fees to settlement municipalities and the Civil Administration, which cannot be said to benefit the Palestinian people, and sell 94 percent of the materials they produce to Israel or Israeli settlements, in violation of these laws.
How Businesses Contribute to and Benefit from Land Confiscation and Restrictions
This report also describes how settlement businesses depend on, contribute to, and benefit from Israel’s unlawful confiscation of and restrictions on Palestinian land for the benefit of settlements. Some settlement businesses operate in residential settlements, or provide services to them, while others operate in “industrial zones” specially built for settlement businesses.
Such businesses depend on Israel’s unlawful confiscation of Palestinian land to build the settlements in the first place. Based on the findings of the report, it is Human Rights Watch’s view that by facilitating settlements’ residential development, these businesses also contribute to the further confiscation of Palestinian land, restrictions on Palestinian access to their lands, and their forced displacement from these lands. The report highlights the case of Ariel, a settlement Israel first established in 1978. The 4,615 dunams (462 hectares) of land on which Ariel was initially built was seized by military order ostensibly for security purposes. In the decades since, Israel has built three security fences around the settlement, each time encompassing hundreds more dunams of privately owned Palestinian agricultural land.
The report examines two illustrative case studies—a bank and real estate agency active in Ariel—to demonstrate the manner in which businesses finance, develop and profit from the illegal settlement housing market on lands seized from Palestinians. Many other banks and real estate agencies are active in settlements, and the focus on these companies is purely illustrative and not intended to single them out as particularly problematic.
The first case study looks at the role of an Israeli bank in the construction of a six-building complex in Ariel called Green Ariel. The bank is financing the project and provides mortgages to Israeli buyers there and elsewhere in Israeli settlements. The bank’s website advertises the pre-sale of apartments in several other buildings under construction in settlements. This is one example of the many banks that finance settlement construction or provide mortgages to settlers.
The operations of a US-based global real estate franchise is another case study illustrating business involvement in the settlement housing market. Like other real estate agencies, the branches located inside Israel offer properties for sale and rent in Ariel and other settlements; it also has a branch in the settlement of Ma’aleh Adumim.
By contributing to and benefitting from Israel’s unlawful confiscation of land, the financing, construction, leasing, lending, selling and renting operations of businesses like banks and real estate agencies help the illegal settlements in the West Bank to function as viable housing markets, enabling the government to transfer settlers there. In this way, in Human Rights Watch’s view, companies involved in the settler housing market contribute to two separate violations of international humanitarian law: the prohibition on an occupying power expropriating or confiscating the resources of the occupied territory for its own benefit and the prohibition on transferring its civilians to occupied territory. By benefitting from the preferential access to land and financial incentives for doing business in the settlements, these businesses also benefit from Israel’s unlawful discrimination against Palestinians.
Israel’s confiscation of land for settlements and settlement businesses violates international law, regardless of whether the land was previously privately held, “absentee land” or so-called “state land.” Businesses operating on these unlawfully confiscated lands are inextricably tied to the ongoing abuses perpetuated by such confiscations.
While Israel maintains that its human rights obligations do not extend to the occupied territories, the International Court of Justice, endorsing the position of the United Nations Human Rights Committee, has refuted Israel’s position on the grounds that a state’s obligations extend to any territory under its effective control. Israel also wrongly asserts that the Fourth Geneva Convention’s prohibition on an occupying power to “deport or transfer parts of its own civilian population into the territory it occupies” does not apply to voluntary transfers. Both the plain meaning of article 49 of the Convention—which only refers to “transfer” in this clause but expressly refers to “forcible transfers” in the context of a different prohibition in the same article—and the International Committee of the Red Cross’s commentary contradict this position.
How Businesses Support the Infrastructure of Unlawful Settlements
Businesses also play a vital role in sustaining the settlements, thereby facilitating and benefitting from Israel’s violation of the international law prohibition on an occupying power transferring its civilian population into occupied territory and contributing to Israel’s discrimination against Palestinians in the West Bank. Businesses provide services of all kinds to settlers. At the same time, they contribute to the economic development of settlements by providing employment to settlers and tax revenues to settlement municipalities.
The report highlights, as an illustrative example, a company providing waste management services in Israeli settlements in the West Bank, including Ariel and the nearby Barkan industrial zone. It operates a landfill in the Jordan Valley on land that Israel confiscated in violation of the laws of occupation and helps to sustain the presence of settlements. The company also benefits from Israel’s discriminatory approval requirements that favor Israeli companies servicing settlements but discriminate against Palestinian companies servicing Palestinians. In 2004, Israel invested in upgrading the facility in the Jordan Valley and the Civil Administration gave it a permit to operate there, even though the site currently exclusively services Israeli and settlement waste.
Meanwhile Palestinians have struggled to obtain funding and permits for landfills. All authorized landfills servicing Palestinians are funded by international donors. In one case, Israel has refused to retroactively approve a Palestinian site, and in another, it forces a Palestinian landfill site to accept waste from settlements established in violation of international law.
More generally, settlement businesses provide employment to settlers, which is a key to attracting and maintaining settlers. Around 55,440 settlers—about 42 percent of the settlement workforce—are employed in public or private sector jobs in Israel’s settlements. Settlement businesses also pay taxes to settlement municipalities, thus contributing to the sustenance of the settlements. Although the tax rates are often lower than rates inside Israel, they still make up a sizable share of the municipality’s income.
For example, the 2014 projected budget of the settlement of Barkan, which is associated with the industrial zone of the same name, anticipated that around 6 percent of its budget—350,000 shekels of a six million shekels ($87,500 of $1,500,000) budget—would come from corporate taxes, and that Barkan would take in another nearly million shekels ($250,000) in water taxes, a portion of which factories in the industrial zone would pay. In 2014, the subsidiary of a European cement company that owns a quarry in the West Bank paid €430,000 ($479,000) in taxes to the Samaria Regional Council for its operation of the Nahal Raba quarry.
Without the participation and support of such private businesses that service Israel’s settlements, the Israeli government would incur much greater expenses to sustain the settlements and their residents. In this way, businesses contribute to Israel’s maintenance and expansion of unlawful settlements.
How Businesses Contribute to and Benefit from Labor Abuse
While all settlement-related business activity runs afoul of international standards on the human rights responsibilities of businesses, regardless of labor conditions, the lack of clear labor protections for Palestinians working in settlements creates a high risk of discriminatory treatment and other abuses. As noted, Israeli courts apply Israeli civil law to settlers, while Palestinians are subject to Jordanian law as it existed at the start of the occupation in 1967, except as amended by military order. In 2007, Israel’s Supreme Court ruled that, in the case of labor laws, this two-track legal system is discriminatory, and Israeli law should govern employment conditions of Palestinians in settlements, giving Palestinian employees the right to sue their employers in Israeli courts for violations of Israeli labor laws. But the government has not implemented this ruling, and claims it cannot investigate and enforce compliance with these laws.
The virtually complete lack of government oversight, as well as Palestinian workers’ dependency on Israeli-issued work permits, creates an enabling environment for settler employers to pay Palestinian workers below Israel’s minimum wage and deny them the benefits they provide to Israeli employees. Notwithstanding the international humanitarian law prohibition against applying Israeli law to occupied territory, Israel is obliged by international human rights law to ensure that all civilians under its effective control enjoy all human rights without discrimination according to ethnicity, citizenship, or national origin and therefore must bring conditions for Palestinian workers in settlements in line with those of settlers.
According to the workers’ rights group Kav LaOved, at least half of settlement companies pay Palestinian workers less than Israel’s minimum hourly wage of 23 shekels ($5.75), with most of these workers receiving eight to 16 shekels per hour ($2 to $4), no vacation, sick days, or other social benefits, and no pay slips. Human Rights Watch spoke to one worker, Hani A. (pseudonym), who is employed in a factory in Barkan that produces Hanukah candles and plastic containers. He said he works 12-hour night shifts, receives only one half-hour break, and earns 8.5 shekels ($2.12) per hour. Another person, Mujahid, who worked in Barkan until September 2014, told Human Rights Watch he earned 16 shekels ($4) per hour and worked between 12 and 15 hours a day. He recalled one week during which he worked from 3 a.m. to 8 p.m.
The report highlights the illustrative case of a textile manufacturer in Barkan that supplied linens to an upscale American home goods chain. In 2008, 43 employees, almost half of whom were women, sued the exporter, alleging they were earning hourly wages of 6 to 10 shekels ($1.50 to 2.50) and receiving no social benefits; women workers alleged they were receiving around 2 shekels less per hour than the men. The exporter settled all the cases out of court. The co-owner of the business claims that all employees currently receive minimum wage and full benefits under Israeli law. The exporter moved its facilities from the occupied territories in October 2015.
Supporters of settlement businesses have argued that they benefit Palestinians by providing them with employment opportunities and paying wages that exceed wages for comparable jobs in areas where Israel has ceded limited jurisdiction to the Palestinian Authority. They have raised concerns that, in some cases, ceasing Israeli business activity in settlements may force the layoff of Palestinian workers. Some have even described settlement businesses as models of co-existence or an alternative path to peace through economic cooperation.
The employment of Palestinians in settlement businesses does not, in any case, remedy settlement businesses’ contribution to violations of international human rights and humanitarian law. The cumulative impact of Israeli discrimination, as documented in this report and numerous others, is to entrench a system that contributes to the impoverishment of many Palestinian residents of the West Bank while directly benefitting settlement businesses, making Palestinians’ desperate need for jobs a poor basis to justify continued complicity in that discrimination.
The World Bank estimates that discriminatory Israeli restrictions in Area C of the West Bank, most of which are directly linked to Israel’s settlement and land policies, cost the Palestinian economy $3.4 billion a year. These restrictions drive up unemployment and drive down wages in areas of the West Bank. Farmers in Area C are particularly hard hit by Israel’s unlawful and discriminatory land and water policies, causing many to lose their traditional livelihoods. Many Palestinians are therefore left with little choice but to seek employment in settlements, providing a steady source of cheap labor for settlement companies.
The head of the village council of Marda, an agricultural village which lost much of its land to Ariel, told Human Rights Watch: “We used to have 10,000 animals, now you can barely find 100, because there is nowhere for them to graze. So the economy collapsed and unemployment increased.” As a result, many of the villagers now have little choice but to work in settlements, he said.
As noted, many of the violations documented in this report under the four headings listed above are intrinsic to long-standing Israeli policies and practices in the West Bank. Companies operating in or with settlements cannot mitigate or avoid contributing to these abuses through their own operations. For this reason, Human Rights Watch recommends that, absent a radical shift in Israeli policies and practices that would allow businesses to operate in accordance with their responsibilities under international law, businesses should cease settlement-related activities, including operating in settlements or financing, administering or otherwise supporting settlements or settlement-related activities and infrastructure.
The UN Guiding Principles provide that enterprises should undertake human rights due diligence to identify and mitigate the adverse human rights impact not only of their own activities but also activities to which they are directly linked by their business relationships. In the latter case, businesses should ensure that their supply chains are not tainted by serious abuses. A business would not necessarily be expected to completely sever all its relationships with another actor that is operating in the settlements, but it would need to ensure that its relationships are not themselves contributing to or otherwise inextricably bound up with serious abuses.
Moreover, states have certain obligations given the nature of Israel’s violations in the West Bank. The Fourth Geneva Convention requires states to ensure respect for the Convention, and they therefore cannot recognize Israeli sovereignty over the occupied Palestinian territories or render aid or assistance to its unlawful activities there. In an advisory opinion, the International Court of Justice found that states also have such obligations because Israel’s settlement regime—as well as the separation barrier, the main focus of the opinion—violate international laws that are erga omnes, meaning that all states have an interest in their protection.
As a result, Human Rights Watch recommends that states review their trade with settlements to ensure they are consistent with their duty not to recognize Israeli sovereignty over the occupied Palestinian territories. For example, states should require and enforce clear origin labeling on settlement goods, exclude such goods from receiving preferential tariff treatment reserved for Israeli products, and not recognize or rely on any certification (such as organic or health and safety) of settlement goods by Israeli government authorities unlawfully exercising jurisdiction in the occupied territories.
In addition to states’ obligations under international humanitarian law, the UN Guiding Principles call on states to respect the principles and develop guidelines to implement them. A number of states are currently developing national action plans for this purpose. States should provide guidance to companies operating in conflict-affected areas, including in situations of military occupation such as the occupied Palestinian territories.
To Businesses Active in Israeli Settlements
- Cease activities carried out inside settlements, such as building housing units or infrastructure, the extraction of non-renewable resources, or providing waste removal and landfill services.
- Avoid financing, administering or otherwise supporting settlements or settlement-related activities and infrastructure, such as through contracting to purchase settlement-manufactured goods or agricultural produce, to ensure the businesses are not indirectly contributing to and benefiting from such activities.
- Conduct human rights due diligence to ensure that supply chains do not include goods produced in settlements.
- Abide by Israel’s obligations as the occupying power and dismantle settlements, including industrial zones and business operations, in the occupied West Bank, including East Jerusalem.
- Lift unlawful and discriminatory restrictions on Palestinians in occupied territory that contribute to Palestinian poverty and unemployment, including restrictions on Palestinian land and development and extraction of natural resources. End any policies on the operations of business in the occupied territories that violate international humanitarian or human rights law, including those that permit the extraction of natural resources when this does not benefit the population of the occupied territory or is not strictly required by military necessity.
- Cease providing financial incentives, including subsidies for development costs in settlements and lower tax rates, to Israeli and international businesses located in the occupied West Bank.
- Cease registering the establishment or permitting the operation of Israeli or international businesses in the occupied West Bank unless the purpose of the operations is to benefit the Palestinian people and is consistent with international humanitarian law.
To Third-Party States
- Assess trade with settlements and adopt policies to ensure such trade is consistent with states’ duty not to recognize Israeli sovereignty over the occupied Palestinian territories. This includes requiring exporters to accurately label goods produced in settlements as such, excluding such goods from preferential treatment under Free Trade Agreements with Israel, and refraining from recognizing the Israeli government’s authority to certify the conditions of production of settlement goods (such as compliance with organic or other criteria).
- Avoid offsetting the costs of Israeli government expenditures on settlements by withholding funding given to the Israeli government in an amount equivalent to its expenditures on settlements and related infrastructure in the West Bank.
- Provide guidance on implementing the UN Guiding Principles on Business and Human Rights to companies operating in conflict-affected areas, including in the context of military occupations such as the occupied Palestinian territories.
Read the full report: Occupation, Inc. | Human Rights Watch.