This came after a spokesman for Israeli Finance Minister Bezalel Smotrich said on Thursday that the minister would sign an exemption to extend cooperation between… Banks Israeli and Palestinian for another month after the approval of the Council of Ministers.
US Secretary of State Anthony said Blinken and Treasury Secretary Janet He relents In a joint statement, “The very short duration of this extension creates another crisis looming on the horizon by November 30, exacerbating the uncertainty for international banks and Israeli companies operating in West BankAnd most importantly for ordinary Palestinians.”
The two ministers urged Israel to extend banking relations for at least a year to avoid an economic crisis in the occupied West Bank, and warned that its security was at stake.
Banking relations between Israel and Palestine.. What does it mean?
Under agreements that Norway partly brokered in the 1990s, Israel raises money for the Palestinian Authority, which exercises limited self-rule in parts of the West Bank. But since the outbreak of war in Gaza on October 7, Israel has prevented financial transfers.
The exemption allows Israeli banks to make payments In shekels For services and salaries associated with the Palestinian Authority, without finding itself exposed to accusations of money laundering and financing extremism.
Without the exemption, the connection between… Palestinian banks And the Israeli financial system.
Currently, two Israeli banks operate them:Discount“and”Hapoalim“The relations of Palestinian banks with the banking system in Israel, which consists of sending and receiving cash transfers, especially those related to trade payments.
This agreement serves as protection from lawsuits filed against the Palestinian Authority and its banks in the United States on charges of “transferring funds to terrorist groups.” Three years ago, the Israeli government issued a decision to protect the two banks from any charges, a decision that is renewed annually, with the signature of the Minister of Finance.
Without this protection, the Palestinian Authority will be stripped of immunity, and Israeli banks will also be exposed to lawsuits both inside Israel and in American courts.
What does severing banking relationships mean?
Cutting banking ties between Israeli and Palestinian banks means that Palestinian banks will not be able to use the Israeli banking system to conduct financial transfers and commercial transactions. This includes:
- Stopping correspondent banking services: Palestinian banks are unable to send and receive money through Israeli banks.
- Disable Payments International: Inability to carry out international financial transfers that pass through the Israeli banking system.
- Stopping financial transfers: Stopping the transfer of funds related to taxes and clearance revenues collected by Israel to the Palestinian Authority.
- Trade affected: Imports and exports that rely on the banking system to complete financial transactions are disrupted.
- Economic and humanitarian impacts
- Stopping vital imports: such as electricity, water, fuel, and food.
- Exports stop: affecting the Palestinian economy and livelihoods.
- Increasing humanitarian crisis: due to lack of funding and necessary services.
It is mentioned that World Bank He had previously warned that the Palestinian territories were already approaching “economic free fall” after Gaza’s gross domestic product fell by 86 percent in the first quarter of 2024 on an annual basis.