Israeli Arabs Claim Bias in Postwar Aid ; Arabs in Northern Israel Say Nearby Jewish Towns Will Receive Most of $1 Billion in Compensation

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As war raged over the heads of residents of this Arab border village last month, resident Rayek Matar hoped that when the fighting stopped the country's Arab minority would be viewed as equals to Israeli Jews after absorbing the same rocket attacks.

But when the building contractor and his lawyer realized that businessmen in neighboring Jewish towns near Lebanon were eligible for about 60 percent more government compensation, they decided to file a petition with Israel's Supreme Court charging anti-Arab bias. The court will hear the case of Fassuta and three other Arab border villages next month.

"We're saying, what's the difference between here and there? The army sat in the middle of the village," says Mr. Matar, referring to the Israeli cannons stationed at the entrance to Fassuta during the war. "It's unthinkable that we pay income tax and social security, and the ones who benefit are Jews, while we aren't eligible."

Israeli politicians were quick to point out during the war that Hizbullah's rockets didn't distinguish between Jew and Arab, a statement backed up by the grim statistic that both groups suffered an almost equal number of civilian fatalities during the war.

Now that the fighting has ended, Israel's Arab citizens say the government is making a distinction in handing out recovery aid projected to reach $1 billion.

Instead of fostering a sense of shared solidarity, the war and the recovery effort is aggravating decades-old tensions between Jews and Arabs here. Though they became citizens after Israel's independence, the Arab minority has experienced decades of institutional discrimination and suffered from a minuscule government investment.

Many Israeli Jews, meanwhile, consider the Arabs' sympathies for Palestinian brethren in the West Bank, Gaza, and Lebanon as traitorous.

But Israeli Finance Minister Avraham Hirshensohn recently promised that aid for northern Israel would be distributed equitably. Taken together with new efforts to reach out to Israeli Arab towns by diaspora Jewish donors - who want to contribute about $300 million to the recovery effort - some say there's cause for optimism.

"The trend is laudable. It's about time, but we still haven't seen execution," says Mohammed Darawshe, director of development for The Abraham Fund, which promotes Jewish-Arab coexistence in Israel. "The road is still long. Even though they want egalitarian policy, there are a lot of gaps to close."

Indeed, Arabs and civil rights activists remain skeptical that the pledge will be translated into policy that would amount to a reversal of decades of ingrained bias. "Despite laws forbidding distinguishing between Jews and Arabs, the government still does," says Samuel Dakwar, the lawyer bringing the petition to the high court on behalf of the villages of Fassuta, Aramshe - where three people were killed from a Katyusha - Meilya, and Jish. …