Ambassador Tom Nides
Ambassador Tom NidesGideon Markowicz/TPS

US Ambassador to Israel Tom Nides sent a letter to Prime Minister Benjamin Netanyahu last week urging him not to move forward with the so-called “Nonprofits Law”, that would limit the ability of Israeli nongovernmental organizations to raise money from foreign governments, two Israeli and US officials told Axios’ Barak Ravid on Wednesday.

The bill, initiated by MK Ariel Kallner from Netanyahu’s Likud Party, stated that NGOs that receive money from foreign governments won’t be recognized as nonprofit organizations and will have to pay 65% tax.

The legislation was scheduled to be voted on last Sunday in the Ministerial Committee for Legislation, but Netanyahu shelved it after the US and several European governments vocally opposed the bill.

The Israeli and US officials told Axios that Nides and other US diplomats privately worked for weeks to urge the Israeli government to back off from the bill.

Many other Western countries, including Germany, the UK, France and the Netherlands, also privately and publicly lobbied the Israeli government against the bill, European diplomats told Axios.

Nides' letter to Netanyahu, which has not been previously disclosed, laid out the concerns the Biden administration has about the proposed bill, a US official told Axios.

"We didn’t threaten the Israelis or anything like that, but our message was that this bill is going to get Israel into an international crisis for something that isn’t worth it," a US official said.

The Prime Minister's Office confirmed Netanyahu received the letter.

Earlier this week, Galei Tzahal (IDF Radio) reported that members of the Biden administration had presented Netanyahu with an ultimatum and made clear to him that if he is interested in a meeting with President Biden and assistance in advancing normalization with Saudi Arabia, he would need to shelve the legislation.

Netanyahu, who has been working hard to score a meeting with the US President and is aware of the vitality of American assistance in normalizing ties with the Saudis, had no choice but to capitulate to the American demands.