A proposed Israeli law that would uphold the government's refusal to lease land to Israeli Arabs has generated broad opposition among American Jews concerned about the bill's moral implications and its impact on the Jewish state's international standing.

The bill allows the Israel Lands Authority to continue its refusal to lease land owned by the Jewish National Fund to non-Jews. It was endorsed 64-16 earlier this month in its first Knesset reading.

Founded more than a century ago, the JNF was instrumental in funneling money to help settle Jews in prestate Israel. Approximately 60 percent of Israelis today live on the 13 percent of Israeli land owned by the organization.

Under an agreement between the groups dating back to the 1960s, JNF maintains ownership of the lands, but the ILA administers them in keeping with fund's goals.

In recent days the proposed law permitting a ban on leasing JNF land to Arabs was slammed by the Union for Reform Judaism, the largest American synagogue movement, and Ameinu, the American affiliate of the World Labor Zionist Movement. Also, in an interview with JTA, the national director of the Anti-Defamation League criticized the measure, albeit in less stringent terms.

One American group, the Zionist Organization of America, has endorsed the bill. Otherwise, in the United States, JNF has found itself virtually alone in defending the measure, on the grounds that its covenant requires that land the organization owns in Israel be used only for Jewish purposes.

Critics worry that the bill comes a time when the very notion of a Jewish state is being increasingly challenged throughout the world, and Israel's treatment of Palestinians and its own Arab citizens is drawing greater scrutiny. In fact, to combat these trends, JNF has sponsored the Caravan for Democracy, an initiative on college campuses that touts Israel's democratic traditions.

Russell Robinson, JNF's chief executive officer, rejected any suggestion that the caravan's message would be undermined by a bill that essentially enshrines into law differential treatment of Jewish and Arab Israelis.

"This whole case is a great foundation for Caravan for Democracy," said Robinson, noting that the matter was prompted by a petition brought by Israeli Arab groups and was debated in an open forum that demonstrated Israel's commitment to due process. "Democracy is about the process, not about the decision."

Besides, Robinson said, Israel's democratic principles must sometimes bend to the state's foundational commitment to its Jewish character.

Elsewhere in the Jewish world, the bill was met with concern, if not outrage. Last week, Ameinu released the text of a letter opposing the measure sent to one of the three sponsoring Knesset members. The Union of Reform Judaism is working on a protest letter. And a collection of Jewish bloggers took up the issue online, collecting signatures for a petition expressing "profound disapproval and sorrow" over the bill.

"This bill is not only unfair to one-fifth of Israel's population; it also reinforces the growing perception around the world that Israel is an 'apartheid' state," the Ameinu letter stated. "We are friends of Israel who do our best to counter that false perception and to build support for the Jewish state in the public arena. By voting for this bill, you have made our job much more difficult."

The ADL's national director, Abraham Foxman, noted that among Muslims, selling land to Jews is a crime sometimes punished by death. Nonetheless, he concluded that the bill is "contrary to the spirit of the Israeli Declaration of Independence, which talks about a state of equal citizens, which hasn't changed."

The bill, titled the "Jewish National Fund Law," is an attempt to circumvent Attorney General Menachem Mazuz's 2005 determination that the state cannot discriminate against Arabs by restricting land leases to Jews. Mazuz's ruling came in response to a High Court petition challenging the ILA's refusal to permit the sale of a home to an Arab family.

JNF says that land swaps have been used to accommodate Arab Israelis who wished to purchase lands owned by the organization. Under this arrangement, if JNF-owned land is sold to an Israeli Arab, the fund is compensated with an equivalent parcel of land elsewhere in the country.

Critics charge that the practice is a procedural nightmare that caused many real estate deals to collapse.

"It's a very burdensome bureaucratic move to actually change the title," said Neta Ziv, director of the Human Rights Clinic at Tel Aviv University.

Ziv was the attorney in the landmark Ka'adan case in which an Arab family appealed to the High Court after being prevented from purchasing land in a new community intended exclusively for Jews.

"Land swapping is not something that you do overnight," Ziv told JTA. "Many times Arab buyers back off the deal because it got complicated, so they kind of gave it up. It doesn't really work."

If the Mazuz decision stands, JNF officials have said the organization will likely proceed with plans to end its arrangement with the Israel Lands Authority. Both JNF and its critics agree that such a split might be the best course, so that JNF can maintain its policy but Israel will no longer have to play a role in implementing it.

Some critics, however, challenge the appropriateness of JNF continuing its Jewish-only policy nearly 60 years after the state's creation.

"A government is obligated to act towards all of its citizens in a way that's just and in a way that extends equality to all of its citizens," said Rabbi Eric Yoffie, president of the Union for Reform Judaism. "For the Jewish community to do what it had to do to establish Jewish sovereignty in the land was appropriate in every way. What's appropriate post-state is not same as prestate."