Primary architect of Israel's birth may face extinction

It was one of the pillars on which the state of Israel was founded, encouraging successive waves of immigration, raising funds and acting as a powerful advocate for international Zionism.

Now, however, the Jewish Agency -- founded in 1929 by the World Zionist Organization -- is facing the greatest crisis of its existence, amid proposals that it should no longer be involved in its traditional business of encouraging immigration, but function only as an educational body.

The agency, which raises most of its donations in dollars, is facing an acute financial crisis. The drop in the value of the US dollar has led it to consider closing down its operation organizing aliyah -- the return of Jews to Israel -- regarded as one of Zionism's overriding historic priorities. At present almost half the agency's US$320 million budget goes on encouraging aliyah. The agency has also been struck by a drop in funds from its pool of donors -- largely from the US -- who are concerned that it is over-politicized.

The background of the Jewish Agency for Palestine, which after World War II became known as the Jewish Agency for Israel, is synonymous with the controversial history of the foundation of Israel itself.

Recognized as the official representative of world Jewry after the League of Nations Mandate for Palestine, it helped organize the escape of 50,000 German Jews in the 1930s under the Transfer Agreement negotiated with the Nazis. Later, as the plight of European Jews worsened -- and faced with tightening immigration restrictions to Palestine under British Mandate rule -- the agency continued to rescue European Jews by organizing illegal immigration.

After the war it became a key organization in the fight for a Jewish state, with its leadership arrested for resistance to British Mandate rule. Following independence, the agency's head, David Ben-Gurion, became the country's first prime minister.

Since then the agency has acted as the focus of successive mass immigrations, including the 1951 evacuation of 110,000 Iraqi Jews and the airlift of Ethiopia's Jews in 1991.

The disclosure of problems and divisions within the agency, emerged last week in a leak to Haaretz newspaper, which revealed in a report that the agency was planning to close one of its most historically important branches, the Immigration and Absorption Department, as part of a radical restructuring.

The newspaper said that efforts to find alternative sources of funding have not succeeded.

"The new plan can either give it a new identity or signal the end of the road. In any case, we have no choice," a Jewish Agency official said, commenting on plans for swingeing budget cuts.