Israel adopted a law on Monday that critics say targets Israeli rights groups critical of the right-wing government's policies and which supporters see as a blow against foreign interference in their country's affairs.
Called a "transparency bill" by its sponsor, far-right Justice Minister Ayelet Shaked, it will require NGOs to give details of overseas donations if more than half their funding comes from foreign governments or bodies such as the European Union.
The United States and European Union have raised their concerns publicly and privately about the legislation, which passed its third and final reading in a sometimes stormy parliament session by a vote of 57-48.
Opponents of the law say it is discriminatory because it is mainly groups that oppose the policies of Israel's administration towards Palestinians which receive money from foreign governments and the EU.
"The NGO law … is indicative, more than anything, of the budding fascism creeping into Israeli society," opposition leader Isaac Herzog of the center-left Zionist Union party told reporters hours before the vote.
Private funds from overseas, such as money donated to Israeli organizations that support Jewish settlements on occupied land Palestinians seek for a state, were not addressed in the bill.
"It is a law whose only aim is to silence and mark those who dare to voice criticism of the government or against settlements," Israel's Peace Now group said in a statement.
The final version of the bill was watered down to remove a clause that would have required lobbyists for NGOS affected by the new rules to wear special name tags during visits to the legislature.
Netanyahu, in defending the bill as "democratic and necessary", has seemed to allude to foreign monetary support for Israeli groups backing Palestinian statehood.
Addressing members of his conservative Likud party earlier this year, Netanyahu drew parallels with Spain's Basque country where various separatist groups used peaceful or violent means to further their cause. "Try to imagine Israel funding Basque independence organizations," he said.
More than 30,000 NGOs are registered in Israel, about half of them active. Around 70 of those groups deal with the Israeli-Palestinian conflict and receive funds either from the EU as a whole, or individual member governments, including Denmark, Sweden and Belgium, as well as non-member Norway.
"I expect countries [to] … try to influence Israel in a diplomatic path and not by funding millions of dollars or euros to NGOs that usually try to promote their views," Shaked told Reuters on Monday.
