Israel is known to many as The Holy Land,. Those interested in land policy may well also call it "Leaseholds Land." Today it is the only democratic, advanced-economy country where state or quasi-state agencies own the vast majority of the land area, and where government leaseholds predominate the land system. An estimated 93 percent of the country's total land area is owned by the state or by quasi-state agencies.(1) (Here and throughout this chapter, Israel proper is referred to without the occupied areas of the West Bank and Gaza.) Quantitatively, this percentage of nationally owned land is the largest amount in any nation, outside a few remaining communist countries and city-states such as Singapore and (formerly) Hong Kong. Most formerly communist countries are in the process of privatizing the major part of their publicly owned land (Bonneville 1996; Limonov and Renard 1995; Renard and Acosta 1993; Reiner and Strong 1995). In advanced-economy countries public land usually is allocated for distinctly public purposes. Leasing out public land for private development is the exception not the rule (see for example, Gordon 1997; Kalbro and Mattsson 1995; Needham, Koenders and Kruijt 1993). This chapter analyzes the Israeli land policy system as it has evolved to its present stage. In view of the breadth of the topic, discussion in this chapter is restricted to urban land policy; the currently highly complicated and contentious issues regarding Israel's rural land policy will not be discussed. This chapter's purpose is to view Israel as a unique opportunity to study a land system where public leaseholds are the main form of tenure for the majority of the country's residents. It will be argued that Israel's overwhelmingly large public leasehold system has resulted in special policies tailored to accommodate it to the private market. This has been done incrementally rather than strategically, through a process termed gradual privatization. This persistent process has gone further than in most other cases covered in this book. The first section of the chapter presents two introductory sections to provide some background to Israel's demographic, geographic and economic context, and to outline its key urban and regional policies. The second section provides information on Israel's land policy context, to enable the reader to understand the unique circumstances for the evolution of Israel's system of leaseholds. Israel is in many ways an extreme case-what theorists sometimes call an ideal case-that holds lessons for other less extreme leasehold systems. The third section is the heart of the chapter. It presents the evolution of the public leasehold system through the prism of property rights. This evolution is viewed as an odyssey along the path of reconciliation between public ownership of land on one hand, and the desire to reduce public intervention in the development market, on the other. The chapter is concluded with the one million dollar question, "What public policy goals are achieved by Israel's public leasehold land system?" This question has many answers, depending on one's ideology and values, so it will be discussed in brief only. It deserves a separate chapter.
