WHEN the Jewish National Fund (JNF) was set up a century ago, its mission was to buy land in Palestine for settling Jews there, with the coins that diaspora Jews the world over put into the fund's distinctive blue-and-white collection boxes. Now the fund is fuelling the tension inherent in Israel's desire to be both a Jewish state and a democracy. This week a court gave the JNF three months to conclude a deal with the Israel Lands Administration (ILA) on how the fund's land is managed.

The JNF owns nearly 2.6m dunums (2,600 square km), 13% of Israel's land, and its covenant states that the land can be leased only to Jews; most land in Israel can only be leased, not sold outright. Arab Israelis who have tried to acquire homes on JNF land have been refused, sometimes after they have signed contracts and paid deposits. But most of the actual leasing of JNF land—as with almost all the land in Israel—is done by the ILA. Three years ago a group of Arab Israelis petitioned the high court, arguing that the ILA, as a government body, discriminates illegally by following the fund's Jews-only rule.

The fund argues that it is a private body doing what its contributors gave it money to do: buy land for Jews. Its critics counter that at least half of the fund's lands were not bought this way, but were seized by the state after their Palestinian owners fled the war that accompanied Israel's birth in 1948; they were then sold to the fund for a token sum. Jews still owned only 6% of the land when the British Mandate for Palestine ended.

There is controversy over the amounts, but between 1949 and 1953 the fund did obtain either 1.25m (its version) or 2m dunums this way, for a price then equal to somewhere between $4 and $18 per dunum. It says it paid “market value”. That may conceivably have been so, after the creation of the state suddenly made a lot more land easily available to Jews, but it was certainly lower than the going rates of tens to hundreds of dollars per dunum in the run-up to Israel's birth.

Realistic, righteous or racist?

The government accepted the petitioners' argument, in a way. It struck a deal in principle with the JNF: the fund will lease land to non-Jews, but each time it does so the ILA will give it an equal amount of land from somewhere else. Rina Rosenberg from the Adalah legal centre, the lead petitioner, admits that this would end the discrimination in practical terms—non-Jews would be able to acquire land anywhere—but argues that it would continue in principle, since the JNF would still own the same quantity of land.

Besides, in the proposed deal the fund would relinquish land in mainly Jewish urban areas in the centre of the country and get new land from the north and south, where mostly Arabs live. Adalah worries that this could end up making it harder for Arab Israelis to obtain land even in those areas, let alone the primarily Jewish ones.

But things may not even get that far. The ILA and the JNF have already spent two years trying to sew up the details of their deal. The ILA's lawyers gave warning that the three months the court has now granted will probably still not be enough, though an interim form of the deal will now go into effect.

Meanwhile, a bill that would make pro-Jewish discrimination in land allocation explicitly legal has passed its first reading in the Knesset, Israel's parliament, by a large majority. At a time when anti-Israel campaigners are seizing on chances to compare Israel with apartheid South Africa, this has troubled some Jews both abroad and in Israel: the liberal Haaretz newspaper titled its editorial “The racist Jewish state”.