According to the initiative, backed by Prime Minister Benjamin Netanyahu, activities marking the "catastrophe" of Israel's establishment will not be banned, but institutions encouraging such activities will not receive government funding. The original bill included a penalty of up to three years in jail.
Following this recent development, the cabinet secretariat decided that an appeal filed by five ministers over the "Nakba law" approved last week would not be discussed by the government on Sunday during its weekly meeting.
Ministers Michael Eitan (Likud) and Isaac Herzog (Labor) voted against the bill at the ministerial committee, Minister Meshulam Nahari (Shas) abstained, and eight minister voted in favor of the bill – Justice Minister Yaakov Ne'eman, Education Minister Gideon Sa'ar, Internal Security Minister Yitzhak Aharonovich, Environmental Protection Minister Gilad Erdan, Information and Diaspora Minister Yuli Edelstein, Immigrant Absorption Minister Sofa Landver, Communications Minister Moshe Kahlon and Tourism Minister Stas Misezhnikov.
Cabinet Secretary Hauser, who received the blessing of the appealing ministers and of other ministers from both parts of the political spectrum, submitted his proposal to the review of legal experts. If his new proposal receives legal approval, the legislation process will continue.
Senior officials involved in the move said that the idea was not to harm the right of expression of Israel's Arabs in a democratic country. The new arrangement, however, will enable the government to prevent the funding of Nakba Day in various ways, whether by halting the transfer of funds to local authorities producing such events, or by preventing tax relief from Arab associations which mark the Palestinian Nakba as part of their activities.
The economic measures will be taken against institutions involved in marking the Nakba, both directly and indirectly.
Next dispute – 'Loyalty Law'
Meanwhile Sunday, the Ministerial Committee for Legislative Affairs will discuss another motion which is expected to spark a new row – an amendment to the Citizenship Law, stating that people seeking an Israeli citizenship will be forced to sign an oath of allegiance to the State.
Social Affairs Minister Isaac Herzog has already declared that he would vote against the proposed amendment.
"I will object to this bill, and if it is approved by the ministerial committee I will file an appeal with the cabinet secretariat in order to thwart the adoption of a law depriving Israel's Arabs of their legitimate rights as citizens of the State," said Herzog.
Representatives of the attorney general are expected to express their objection to the motion, as they did in regards to the "Nakba law".
The ministerial committee is expected to discuss the "Loyalty Law" on Sunday afternoon. The amendment to the law includes the following oath of allegiance: "I pledge to be loyal to the State of Israel as a Jewish, Zionist and democratic state, to its symbols and values, and serve the State, as required, be it by military service, or alternative service."
The two bills sparked a storm of emotions among Israel's Arabs and among Knesset members from the Labor Party and left-wing parties. The Higher Arab Monitoring Committee announced Saturday evening that the approval of such laws would mean "a declaration of war".
Aviad Glickman contributed to this report