National Catholic Register

Vatican

Tax Issue Remains Stumbling Block in Vatican-Israel Relations

BY EDWARD PENTIN

Register Correspondent

January 15-21, 2006 Issue | Posted 1/16/06 at 10:00 AM

 

VATICAN CITY — Is the massive stroke suffered by Israeli Prime Minister Ariel Sharon bad news for relations between Israel and the Holy See?

Twelve years after a “Fundamental Agreement” established diplomatic relations between the two states — and granted tax exemption to Church-owned properties — Israel has still to fully comply with the treaty. Prime Minister Sharon, however, was eager to reach an agreement and was seen as one of the most committed Israeli leaders of recent times to resolving this issue.

That cooperative stance was encouraging to the Church, which is suffering from severe financial uncertainty in the Holy Land because of the unfulfilled treaty. As it stands, the Church is effectively a “tax delinquent” in Israel’s eyes, owing a massive and unspecified amount of money that the government might demand at any time.

Just last month, city officials in Jerusalem reminded the Holy See that the Church owes $65 million in unpaid property taxes.

Despite Sharon’s sympathetic position, those close to the negotiations suggest his absence will matter little to the outcome of the talks. Franciscan Father David Jaeger, regarded as the foremost expert on Church-state relations in Israel, said he remained “cautiously optimistic” about the outcome of the negotiations.

In comments to the Register Jan. 4, Rabbi David Rosen, International Director of Inter-Religious Affairs of the American Jewish Committee, was less positive about the situation, whether or not Sharon was involved. Rosen said he was doubtful that “even if Sharon were to make a full recovery, the issues will be fully resolved.”

Israel’s Ambassador to the Holy See, Oded Ben-Hur, agreed that the absence of Sharon should not affect the talks. But the diplomat was more optimistic than Rosen, saying that he was sure “good will, common sense and wisdom will be able to prevail.”

However, Ben-Hur has expressed such sentiments before, only to see the talks again reach an impasse. In an interview with the Register a year ago, the ambassador predicted that an agreement could be reached by the end of 2005. In 2004, he spoke of a possible, imminent resolution to the talks.

New Obstacle

And now there appears to be a new obstacle: differences regarding the ramifications of the agreement if implemented. To the Israelis, the Vatican is appealing for “extraterritoriality,” a means through which the Church could remain immune to future changes in Israeli taxation law. Israel fears this would pave the way for other religious organizations, including Jewish ones, to request similar exemptions and benefits.

For the Church, however, the dispute is simply a matter of righting a historical injustice. Israel had already agreed to implement the Church’s rights two years after signing the 1993 Fundamental Agreement, Church leaders say. Furthermore, its tax rights are valid under international law, and were enjoyed by the Church before the founding of the state of Israel and consequently should never have been withdrawn, according to Church representatives.

The Church is also pushing Israel to acknowledge “due process,” allowing disputes over property to be resolved through the Israeli courts. At present, Israel asserts the right to arbitrarily confiscate goods or real estate without recourse to courts.

“We are not asking for jurisdiction to be reserved to the international court of justice, simply for it to be assumed by the Israeli courts in accordance with Israeli law,” said Father Jaeger. “Is that too much to ask?”

Father Jaeger thinks resolution to the long-running saga lies more with Israeli bureaucrats than with Israeli political leaders. An agreement with Israel would effectively mean an end to the arbitrary powers of such officials to demand taxes from Church property, with no concessions in return, so they have lacked commitment to the talks.

Government officials have also been distracted by the ongoing conflict with the Palestinians.

“I do not believe that the Israeli government has, even now, fully grasped or internalized the Vatican’s expectations,” said Rabbi Rosen.

And while Israeli leaders would like the Pope to visit the Holy Land, they are unhappy about making the trip conditional on an agreement on the tax issue. After Israeli President Moshe Katsav extended an invitation to the Holy Father during his November visit to Rome, Vatican officials made it clear that the negotiations over the Fundamental Agreement must first be resolved, Agence France-Presse reported Nov. 17.

For its part, Israel is seeking greater public support from the Vatican. Ambassador Ben-Hur recently wrote a letter to Pope Benedict XVI asking him to explicitly condemn Iranian President Mahmoud Ahmadinejad’s insulting remarks last year about Israel and the Holocaust.

“We’re waiting for an unequivocal and explicit condemnation,” he said.

U.S. Role

The role of the United States is widely seen as crucial to any resolution of the negotiations. After the Vatican-Israel talks broke off in 2003, they were only restarted courtesy of pressure from the Bush administration.

Father Jaeger and others believe the appointment last month of the apostolic nuncio in Jerusalem, Archbishop Pietro Sambi, as the new papal envoy to the United States could be a major boost to resolving the protracted impasse. Archbishop Sambi, Father Jaeger said, “would be a tremendous asset” in Washington.

Ambassador Ben-Hur, however, expressed caution over the extent of U.S. influence, saying that “no one can impose an agreement from the outside because it’s bound to fail, it won’t stick, it won’t work.” An agreement, the Israeli diplomat stressed, “can only be reached between the two parties” in a spirit of “good faith and openness.”

Edward Pentin writes

from Rome.