The Jewish National Fund (JNF) told the High Court on Monday that it was willing to reverse its practice of selling land to Jews only, on the condition it is compensated for land sold to non-Jews.
The decision comes in response to a petition against the JNF over its refusal to sell its lands to Arabs. The petition was filed in 2004 by a group of Arab Israeli citizens who were forbidden from bidding for land in the north put up for sale by the JNF.
According to the attorney general's response to the High Court, the State and the JNF need three months in order to reach a land exchange agreement. Until such an agreement is reached, JNF lands will be marketed equally to Jews and non-Jews.
The JNF is of the view that it purchases its lands with donations from Jewish donors who want the land be used to settle Jews in Israel.
It therefore has a moral obligation to honor the donors' wishes.
Former IDF Chief of Staff Moshe Ayalon and Nobel Prize Laureate Yisrael Aumann have recently expressed their support for the JNF's position.
It is widely believed that the JNF has decided to repeal its policy for fear that the court would issue an unprecedented ruling in favor of the petitioners by judging its marketing practices as illegal and forcing it to sell lands to Jews and Arabs equally.
Four months ago, Attorney General Menachem Mazuz told the High Court that the JNF's practices were illegal and he would not be defending the organization. Mazuz made the same ruling in 2005.
Israel Land Authority (ILA) and JNF representatives adopted last Thursday a proposal by Mazuz that they sell land equally to all of Israel's citizens regardless of their ethnicity. Under the proposal, the ILA will compensate the JNF for lands sold to non-Jews to ensure that the overall areas of land owned by Jews remain the same.