Israel extends for one year dealing with Palestinian banks
Israel has extended for one year a guarantee that allows Israeli banks to deal with Palestinian banks, which are threatened with paralysis starting on December 1 if it’s not renewed.
The spokesman for Israeli Finance Minister Bezalel Smotrich, the far-right leader of the opposition, told AFP that the approval was given on Thursday during a meeting of the security cabinet.
Smotrich threatened in May to paralyze the vital banking channel between Israel and Palestinian banks based in Ramallah in the occupied West Bank, in response to three European countries recognizing the state of Palestine.
Smotrich, a settler who supports full annexation of the West Bank, which Israel has occupied since 1967, then told Prime Minister Benjamin Netanyahu that he doesn’t intend to extend the annual guarantee that Israeli banks need to do business with Palestinian banks.
In exchange for concessions to expand Jewish settlement in the West Bank, Smotrich agreed to extend the guarantee for a few months.
Since June 30, the guarantee has been renewed several times for varying periods, most recently for one month, until November 30.
Until then, Smotrich had been citing suspicions of financing Palestinian armed factions through Palestinian banks.
The financial system, and thus the daily lives of Palestinians in the West Bank, depend on the renewal of these guarantees granted by the Israeli state.
This protects Israeli correspondent banks from potential legal action (such as anti-money laundering or counter-terrorism financing) for transactions they conduct with Palestinian banks.
Without this guarantee, these Israeli financial institutions would not risk making even the slightest transaction with banks registered with the Palestinian Authority.
The guarantee was traditionally renewed every year before Hamas’s unprecedented attack on October 7, 2023, which sparked the ongoing war in the Gaza Strip.
In July, the G7 urged Israel to take the necessary steps to allow the Palestinian financial system to function after US Treasury Secretary Janet Yellen warned that severing Palestinian banks from their Israeli counterparts would lead to a humanitarian crisis.
The vast majority of trade in the West Bank is conducted in Israeli shekels, and the Palestinian Authority lacks a central bank that can mint its own currency.
