* Risk of "price tag" escalation as peace talks struggle
* Many arrests but few convictions
By Dan Williams
MISHOR ADUMIM, West Bank, Feb 25 (Reuters) - Last March, Israeli Prime Minister Benjamin Netanyahu launched a crackdown on crimes that elsewhere might be shrugged off as ugly but sufferable mischief - racist graffiti, slashed tyres, hacked orchards and small-scale arson.
Such vandalism takes on a whole different meaning when it is perpetrated by ultranationalist Jews against Palestinian property, risking renewed violence in the occupied West Bank and east Jerusalem, disrupting U.S.-mediated peace talks and further sapping Israel's image abroad.
Israeli officials, including Defence Minister Moshe Yaalon, have likened the incidents - dubbed "price tagging" in a reference to making the government "pay" for curbs on Jewish settlement of Palestinian land - to terrorism.
Yet despite dozens of arrests, there have been few convictions, and the vandalism continues to occur almost weekly. Churches, peace activists and even the Israeli army have also been targets.
"In every incident, we go for the maximum possible charges, but in the end we tend to run up against a void in the court system," Chief-Inspector Shmuel Gerbi, lead investigator for the police's price-tag taskforce, told Reuters in an interview.
Some security officials and independent experts say if the crackdown is failing, the problem is that the justice system handles price-tag suspects with kid gloves. Even in Netanyahu's own governing coalition, there are those who advocate leniency.
It's another indication of the tightrope Netanyahu walks on the settlements, which most world powers deem illegal as they take up territory envisaged making up a Palestinian state.
Many Israelis see the settlers as pioneers realising a Jewish birthright to biblical land, and Netanyahu wants to keep most of the enclaves under any peace deal though he has acknowledged some would have to be relinquished.
The taskforce on price tagging is not window dressing. Its 60 officers, backed by Israel's domestic intelligence service Shin Bet, recruit informants, tap phones and run undercover stings in settlements where Israeli authorities are unwelcome.
Taskforce commander Chief-Superintendent Udi Levi said they meet monthly Palestinian counterparts who seal off scenes of price-tag crimes. Israeli forensic teams arrive within hours "provided their security has been assured", he said.
In November, the taskforce swooped on two teens accused of planning to desecrate a Jerusalem church and embarrass Israel on the eve of a visit by French President Francois Hollande.
The methods recall those used against Palestinian militants, something the Shin Bet says is warranted as price taggers usually strike covertly, at dark and in small bands.
But in contrast to Israel's mass jailing of Palestinian suspects, only one price tagger has seen serious prison time so far: a man sentenced to a year for slashing Arab car tyres and daubing a death threat on the wall of an Israeli anti-settler activist's home.
Justice officials say comparing price-tag vandals with militants is inappropriate because the former don't aim to cause physical injury.
"These are not acts of murder, or attempted murder or aggravated assault," Deputy State Attorney Yehuda Shaffer told Reuters. "Palestinian terror is characterized by far greater violence - not spray-painting slogans."
That's why lighter charges, such as those imposed for damage to property, usually apply.
But price-tag incidents can easily get out of control, other officials say.
"What if they go torch a mosque one night, and it turns out there is someone sleeping inside?" said a Shin Bet official, speaking on condition of anonymity.
Police say there are only a few score culprits, many known by name. A high number of suspects - some 50 percent, according to police - are underaged, some as young as 12.
"It is very hard to get a judge to approve holding young minors for interrogation, and that makes the investigation difficult," Shaffer said.
The Shin Bet, according to one veteran officer, itself avoids using underaged suspects as informants or questioning them even briefly without their parents present.
There are indications the gloves are coming off, however.
This month, three settlers were charged with torching cars and spraying a political slogan on a wall in a Palestinian village.
The indictment was secured in part thanks to a confession one of the defendants gave while the Shin Bet interrogated him over 9 days, during which he was denied access to legal counsel - twice the period normally allowed by law - taking advantage of special measures approved by the Defence Ministry last year.
It was the first time the Shin Bet had kept an Israeli incommunicado in a price tag case. In a statement, the security agency called the three settlers' alleged vandalism a "terror attack" - implicitly putting price taggers in the same category as the armed Palestinian militants who are its usual quarry.
Uri Ariel, a cabinet minister from the far-right Jewish Home party that sits in Netanyahu's coalition, excoriated the Shin Bet for the move. Denying the settler access to lawyers, he said, recalled "dark regimes, the Middle Ages".
"The Shin Bet should be kind enough to try not to breach the civil rights of Israeli citizens," Ariel told Army Radio in a Feb. 6 interview.
The perceived failure of the crackdown is the subject of an appeal to the Supreme Court from the International Association of Jewish Lawyers and Jurists, who argue the state must not turn a blind eye to incitement that can fuel price tag attacks.
The association's president, former Justice Ministry official Irit Kohn, acknowledged the authorities' tougher tone but said price taggers were still not being treated as firmly as they deserve to be given the threat to national security.
"These are not pranksters," Kohn said. "Any of their actions could set off conflagration, so fragile are the ties between Israel and various wings of Islam and Christianity."
Kohn said her association defends Jews who suffer anti-Semitism abroad, "and it doesn't help our case much when such things happen to religious minorities in Israel". (Writing by Dan Williams; Additional reporting by Ali Sawafta in Ramallah; Editing by Jeffrey Heller and Sonya Hepinstall)