This comes at a time when Smotrich has a deadline until the end of this month to agree to extend financial correspondence between banks in… Israel and the West Bank, without which the Palestinian banking system may collapse.
And while you feel US Many of its allies worry that Smotrich will refuse to sign the plan.
They warn that the collapse of the banking system could lead to serious consequences – including the fall of the Palestinian Authority and a security crisis in… West Bankaccording to Axios.
It is noteworthy that Smotrich is one of the most extreme politicians to ever serve in an Israeli government.
He presented a number of demands to Palestinian banks to prevent illicit financing of terrorism, according to the website.
The United States and its allies are working to address these demands (made by Yellen and Western ministers), and the Biden administration informed Israel last week that it had determined that Palestinian banks met the conditions set by Smotrich, US officials say.
However, it remains unclear whether Smotrich will give Israeli banks the necessary permission to continue working with Palestinian banks.
What if Israel does not respond?
In exclusive statements to the “Eqtisad Sky News Arabia” website, the advisor to the Arab Center for Studies and Research and head of the Arab Thought Development Forum for Research, Abu Bakr Al-Deeb, confirmed that this step (if Israel does not respond) is considered a dangerous escalation; Because of the catastrophic repercussions it may cause, it could isolate Palestinian banks from the global banking system, which will make it difficult to transfer funds and the flow of financial support.
Al-Deeb added that implementing this step will deprive the Palestinian Authority of international funds and aid, including tax money, which may accelerate its collapse and negatively affect its financial stability.
He pointed out that such a decision would enhance the activity of armed movements in the West Bank, which might bring it closer to the tense security situation in the Strip. Gaza.
He explained that eight major countries had warned Israel Of this step, it described it as illegal, as it is considered a violation of international laws that place Israel as an occupying state responsible for the West Bank and for ensuring that financial support reaches it.
He expected that the international community, led by the United Nations and the United States, would work to support the stability of the Palestinian Authority and reject this controversial decision, because of its serious repercussions on the situation in the West Bank and the Authority’s ability to manage its affairs.
He also referred to a previous warning issued by European UnionHe considered this decision very dangerous, and pointed out that international pressure may be exerted on the Israeli government to discourage it from implementing such a measure, especially since it reflects the trend of the extremist wing of Netanyahu’s government and may cause widespread destruction to the economy in general..
Message details
In the details of the joint letter, Yellen and her counterparts wrote from Japan andCanada And the European UnionUK andHolland Australia and France to Netanyahu on October 25: “We write here to underscore our concerns that the actions taken by some members of your government to deny the West Bank access to financial resources pose a risk to Israel’s security and threaten to further destabilize the entire region at an already dangerous moment.”
They reported that if the mandate was not extended, more than $13 billion in trade facilitated by relations between Israeli and Palestinian banks would cease, “which would harm the Israeli economy and exacerbate the already dire economic situation in the West Bank,” according to the text of the letter.
In such a scenario, financial flows would become less transparent and therefore more risky, donor funds needed to stabilize the Palestinian economy could be disrupted, and the West Bank and the Palestinian Authority would be destabilized.
They added: “Our request is that you take steps to reduce the risk of economic collapse in the West Bank by extending the correspondent banking relationship of banks in the West Bank for at least one year.”
Political and economic considerations
In an exclusive interview with the “Eqtisad Sky News Arabia” website, Dr. Nasr Abdel Karim, professor of financial sciences at the Arab American University, indicated that the warnings related to this decision are not new, as they have been raised since last May.
He added that this decision, although a threat, is unlikely to be implemented given political, economic and strategic considerations. He explained that if the threat was implemented, it would be surprising, especially in light of the opposition of many countries to this decision because of its major repercussions on both parties.
Abdel Karim expected that the trend regarding the Israeli Minister of Finance’s non-response, if implemented, would have a major impact on… Palestinian economy Due to its small size and lack of alternatives, in addition to the crises it was going through even before this escalation. However, he noted that the Israeli economy may also be affected, although to a lesser extent.
He explained that the right-wing Israeli government often does not take into account the economic effects of its aggressive policies on its economy, stressing that the decision will lead to major disruption in Palestinian trade with Israel, whether in import or export, as it will disrupt the settlement of transactions through the official banking system and hinder the movement of transfers and checks.
He stressed that this situation will create a major crisis for the Palestinian Authority, which will cause a state of frustration among contractors with the government and the private sector, which will be rejected by donor countries that may seek to prevent the implementation of this decision because of its extremely negative repercussions.
An extremely dangerous step
In exclusive statements to the “Eqtisad Sky News Arabia” website, the researcher in Israeli affairs, member of the Egyptian Council for Foreign Affairs, Dr. Ahmed Fouad Anwar, described this approach, if taken, as an extremely dangerous step that reveals Israel’s intentions to continue weakening the Palestinian Authority.
He explained that all observers agree that the administration of the Strip should be under the supervision of the Palestinian Authority, and not under the control of Israel, pointing out the serious negative repercussions that may result from this decision if it is implemented.
Anwar also indicated that the most prominent expected repercussions will be on Palestinian banks and on the Authority’s general income, especially in light of the faltering economic situation that the Palestinian economy is currently facing, which will greatly increase the financial pressure on the Palestinian Authority.
He stressed the need to take a firm response to this trend, pointing out that the warnings issued by international agencies reflect the international community’s awareness of the seriousness of this trend, which he believes Israel is partly insinuating to outbid domestic public opinion.