A draft statement by G7 finance ministers seen by Reuters on Saturday showed that they would call on Israel to maintain correspondent banking services between Israeli and Palestinian banks to allow vital transactions, trade and services to continue.
The statement, which will be issued at the conclusion of the meeting of G7 finance ministers and central bank governors in Stresa, northern Italy, also calls on Israel to “release the withheld clearing funds to the Palestinian Authority, in light of its urgent financial needs.”
The statement repeats a warning issued by US Treasury Secretary Janet Yellen last Thursday when she said that not renewing messaging services that will expire soon will close a vital artery for the Palestinian territories amid the devastating conflict in the Gaza Strip.
Yellen added that the United States and its partners “need to do everything in their power to increase humanitarian assistance to Palestinians in Gaza, to contain violence in the West Bank, and to seek to stabilize the West Bank’s economy.”
“We call on Israel to take the necessary measures to ensure the continuity of correspondent banking services between Israeli and Palestinian banks, so that financial transactions, trade, and vital services continue,” the draft statement said.
The group’s finance ministers also called in the draft statement to cancel or ease other measures “that negatively affected trade, in order to avoid further aggravation of the worsening economic situation in the West Bank.”
Israeli Finance Minister Bezalel Smotrich had threatened not to renew an exemption that expires on July 1, allowing Israeli banks to deal with payments in shekels for services and salaries linked to the Palestinian Authority.
The Palestinian economy uses the Israeli currency, the shekel, and relies on Israeli banks to process transactions.
Last February, Yellen wrote a letter to Israeli Prime Minister Benjamin Netanyahu urging him to increase trade engagement with the West Bank, considering that doing so is important for the economic well-being of both Israelis and Palestinians.
UN officials said last month that separating Palestinian banks from Israel would essentially cut them off from the global banking system and cripple the Palestinian economy.