Israeli Government Agency is Linked to Effort to Settle Christian Quarter
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Israeli Government Agency is Linked to Effort to Settle Christian Quarter

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The government, various settlement agencies and wealthy Jewish donors overseas have been implicated in clandestine efforts to expand the Jewish presence in Jerusalem’s Old City into traditionally non-Jewish quarters.

If disclosures here over the weekend are correct, the Construction and Housing Ministry at least partially funded acquisition of the lease on a building in the Christian Quarter, owned by the Greek Orthodox Church, into which 150 Orthodox Jews moved on April 11.

The fiercely contested move, now before the High Court of Justice, triggered interreligious strife in Jerusalem and sharp criticism of Israel.

According to Knesset member Yossi Sarid of the left-wing Citizens Rights Movement, the lease was paid for by the ministry with money funneled through the Himnutah Co., an affiliate of the Jewish National Fund of Israel, and then through SBS, a company registered in Panama.

The money was paid to Mardiros Matossian, an Armenian businessman identified as the lessor. But the church maintains he had no legal right to lease the premises.

Matossian is reported to have fled to Canada with $3.5 million, after intifada activists issued a death warrant against him.

The Construction and Housing Ministry is alleged to have provided some $1.1 million on April 9 and another $700,000 on April 11.

Shlomo Ariav, chairman of Himnutah, confirmed in an interview that some $1.8 million passed through his company for the purposes of the transaction.


He stressed, however, that neither Himnutah nor JNF used a penny for any purpose. “We have merely acted as a trustee on behalf of the government,” Ariav said.

The firm has had a contract with the government since 1969 to act as a trustee in the purchase of real estate throughout the country.

It served as a courier for the government at the time of the Camp David accords in 1978, when then Prime Minister Menachem Begin promised his regime would not transfer funds to buy land in the territories Israel captured in 1967.

When Israel annexed East Jerusalem that year, the Old City became part of Israel proper, but its traditional division into separate quarters of the various religious faiths was supposed to remain intact.

Now, according to the latest maps of the Old City, about 19 buildings in the Moslem Quarter are inhabited by Jews, including a flat purchased in 1987 by Ariel Sharon, the hard-line former minister of Likud.

Jews are also said to be seeking to buy property in the Armenian Quarter.

The Greek Orthodox building, known as St. John’s Hospice, was the first in the Christian Quarter to be populated by Jews. The settlers include 20 families and 60 unmarried yeshiva students.

Sarid charged that the Construction and Housing Ministry forwarded the money for the lease without approval from the Treasury.

A spokeswoman for the ministry would say only that it acted within the law.

Sarid’s calculations did not account for sums of $5 million and $3.5 million said to have been paid to Matossian.

Those figures were mentioned in the court battle between the settlers and the Greek Orthodox Patriarchate, which is trying to evict them.


Dan Avi-Yitzhak, a lawyer for the Panamanian SBS Co., said Sarid’s figures were “nonsense” and insisted most of the money for the lease came from three or four Jewish donors.

According to the daily newspaper Ha’aretz, most of it came from Erwin Moskowitz, a medical doctor from Miami whom the newspaper described as a multimillionaire. He allegedly gave $2.75 million to acquire property in the Old City.

According to the same report, another $2.25 million was raised at a Jerusalem Day dinner in New York last spring, attended by then Mayor Edward Koch and Sharon, who was then Israel’s minister of industry and trade.

On Friday, meanwhile, the High Court of Justice upheld the Panamanian company’s appeal that it leased the building legally and the Jews who occupy it are their guests. But it did not reverse a lower court’s ruling in favor of the Greek Orthodox Church.

The High Court is scheduled to take up the matter again on Thursday. It ruled that the settlers can stay in the building until then, provided that no new guests or tenants are allowed inside.

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