Holy See v. Holy Land

Earlier this week, Israeli Prime Minister Netanyahu held his first meeting with Pope Francis, the leader of the worldwide Catholic Church. The discussions focused on the Israeli-Palestinian peace process, the civil war in Syria, Israeli worries about the Iranian nuclear program, the welfare of Christians in Israel, as well as the Pope’s expected visit to the Holy Land in 2014.

Later this month, Israel and the Holy See will conduct another round of negotiations for an agreement that will establish the legal and economic status of the Church’s institutions in Israel. According to press releases, the last round of negotiation was successful and the parties expect an agreement soon, after 18 years of negotiations. Although this agreement could be highly beneficial for Israel, I argue that Jerusalem needs to think of its legal ramifications and involve the Israeli parliament in the process.

Throughout history, one cannot think of two religions that had a more agonized and complicated relationship than Judaism and Catholic Christianity. Relations between the religions have been always characterized by sharp fluctuations due to geo-political and theological changes.

According to the orthodox perception of the Roman Catholic Church, the Jews were stray atheists, who refused to recognize Jesus as the messiah. Moreover, the perception was that the Jews were sinners and they were to blame for the crucifixion and death of Jesus. Jews were considered a cultural group, which does not enjoy the right of self-determination or the right to an independent state. However, in the past seventy years, there has been a change and the Roman Catholic Church stopped resisting the creation of the State of Israel.

In 1993, Israel established diplomatic relations with the Holy See, the Episcopal jurisdiction of the Roman Catholic Church. The Fundamental Agreement between the Holy See and the State of Israel, which established the diplomatic relationship, declared that the parties should normalize their relations and negotiate a comprehensive agreement, containing solutions for disputed issues concerning property, economic and fiscal matters relating to the Catholic Church generally, or to specific Catholic Communities or institutions.

The negotiations between the Holy See and Israel have been taking place since 1995. According to reports in the media, we can understand that the Holy See refuses to pay certain taxes and even in the past demanded granting tax exemptions for its institutions in Israel, such as churches, monasteries, cemeteries, schools, hospitals, small businesses and residential real estate. Despite the secretive nature of the talks, it seems that the main issues are which taxes and what is the degree of exemptions the institutions of the Catholic Church should enjoy. The parties need to decide whether the exemptions would be identical to the exemptions given to other religious institution in Israel and if the business operation of some of the Church’s institutions would be taxed.

When Catholic Christianity is the official religion of the country or if the Roman Catholic Church constitutes an important factor in the development of the nation, the Church’s institution are given unique benefits: for instance, in Spain, the Church is receiving direct funding in the yearly budget and Spanish citizens can dedicate some of their income tax to the Roman Catholic Church. In Peru, the Church enjoys exclusive exemptions and the state funds Catholic priests.

On the other hand, the Catholic Church does not get special treatment in the United Kingdom and in the United States. Generally, in those countries charitable organizations are eligible for set of relieves and exemptions from taxation, but unrelated business activities are not exempted.

In recent years, the question whether to tax the properties of the Holy See is being raised in the United States and even in Italy, which has had a special relationship with the Catholic Church since January 313, when the Roman emperors adopted Christianity. In a surprising move in January 2013, the Italian government made a historic change in the 2013 tax code and decided the Roman Catholic Church will no longer be exempt from property taxes.

Israel has granted tax relieves and exemptions when it wished to bolster its relations with multilateral organizations, such as the U.N. or IMF, or when it wanted to strengthen its scientific research. Similar political and economical considerations could be relevant when pondering whether to give tax exemptions to the Holy See.

A fiscal agreement with the Holy See could be extremely beneficial for Jerusalem; a comprehensive agreement which protects the rights of the Catholic Church and the Christian pilgrims in Israel could enlist the support of the Christian world of 2.1 billion people, and specifically the support of the Catholic world of 1.66 billion people. This support could assist Israel in advancing its ideas and positions in the international community.

Moreover, a fiscal agreement that protects the Catholic Church’s property and holy places could prove to the Holy See that under Israeli sovereignty the Church’s interests are protected. This may incentivize the Holy See to object the ideas of turning Jerusalem into a city controlled by the United Nations.

From an economic point of view, Israel has a big interest in expanding Christian tourism. According to a survey conducted by the Israeli Ministry of Tourism, around 60% of the 3.5 million people who visited Israel in 2010 were Christians. Understandably, the potential is enormous; around one third of the world’s population is Christian. For them, Israel is the holy land and it is the most attractive destination for religious tourism.

Financially, it is the most dominant group in the world, while its members largely come from developed countries. The Israeli Institute for Economic Planning estimated in 2008 that a large increase of Christian tourism could tremendously boost Israel’s gross domestic product (GDP), decrease unemployment rate, strengthen local industries, and of course add billions of dollars to the Israeli treasury.

In spite of the importance of maintaining diplomatic relations and despite the many advantages a significant agreement could bring to Israel and the Holy See, it is crucial that a future agreement will be compatible with Israeli law. The activities of the Holy See and its institutions in Israel are obviously in the realm of “public purposes” definition in the Israeli taxation laws. Hence, the institutions of the Holy See are entitled to certain tax exemptions, like any other religious institutions.

At the same time, when public authorities allocate indirect funding, such as giving relieves and exemptions from taxation, they ought to do it according to guidelines that reflect equality. Those guidelines need to take into consideration the notion that equality entails the treatment of likes alike and un-likes differently in accordance with their unlikeness.

Granting exclusive tax exemptions to religious institutions affiliated with the Catholic Church could severely undermine the principle of equality, which has long been recognized by Israeli Supreme Court as one of the basic tenets of Israeli law.

Perhaps a different treatment could be given to the Catholic Christianity because of ‘relevant difference’, which could stem, for instance, from the unique relationship between Judaism and Catholic Christianity throughout history or from the many benefits mentioned above that Israel could achieve from an agreement of that sort.

A final agreement is likely to be challenged in Israeli High Court of Justice. There is a possibility that the court will not intervene since it will deem the agreement as a matter of Israel’s foreign policy, decided by the executive branch. Furthermore, there is a chance the court will not want to make a decision which could have a major influence on the Israeli economy or on Christian sacred places.

On the other hand, judicial restraint was not the answer when basic rights such as equality were undermined in other cases. The court was willing to examine the reasonableness of the governmental decision-making process and even analyze whether favoring a specific religion on a specific matter actually inflicts any damage to other religions.

In addition, giving exclusive tax benefits to the institutions of the Holy See undermines the freedom of religion of other religions in Israel. When reducing government funding to a religious community, it has less money to spend for example on building houses of worship. This is an obvious case of undermining the community’s freedom of religion. The same logic applies to not giving tax exemptions to one religion, which literally means it has less money.

The ‘preference’ of religion in the State of Israel was granted only to Judaism, since the country was defined as a Jewish state, which promotes a distinctive Jewish character. Therefore, giving such a ‘preference’ to the Catholic Christianity could hurt the religious feelings of other religions in the country. Israelis of different religions could even feel that the country is being disrespectful towards their most precious beliefs.

One has to bear in mind that Israel has many sacred places for all the branches of Christianity and for the Muslim world. Moreover, the spiritual and administrative centre of the Bahai Faith is located in Israel. It is unclear whether the High Court of Justice, if required, will agree to examine and decide what is the level that religious feelings has been hurt or consider the possible future outcomes of the agreement on Israel’s relations with the Muslim world or with different religions.

Since a comprehensive fiscal agreement with the Holy See would bear great importance, I argue that the Israeli parliament (Knesset) needs to approve it. According to Israeli law, the executive branch and not the legislature is in charge of negotiating and signing treaties or other international agreements. The conception is that ratification of treaties is part of the realm of foreign relations, and therefore the authority resides with the Government. However, the current practice is that the Government brings significant agreements, such as agreements with the Palestinians or peace agreements, for approval in the Knesset prior to their ratification, but this is a ‘constitutional custom’ and not a binding law.

About the Author
Ohad Shpak is a Contributing Analyst for Wikistrat, the world's first crowdsourced consultancy. Ohad was part of the political team of the Israeli Embassy in Washington, D.C. and worked for the Israeli Ministry of Justice and the Middle East Media Research Institute. A StandWithUs fellow, he holds a law degree from Hebrew University and now lives in Jerusalem. Follow him on Twitter at @OhadShpak
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