The Israeli Ministry of Finance spokesman said – today, Thursday – that Minister Bezalel Smotrich will sign, under pressure from US Treasury Secretary Janet Yellen, an extension of cooperation between Israeli and Palestinian banks for another month after the approval of the Council of Ministers.
The American Secretary and 7 of her counterparts in major countries had urged Israel to cooperate with the penny banksFoldAn intention to avoid a negative impact on the faltering Palestinian economy, which in turn will worsen the security situation in the West Bank, which is governed by the Palestinian Authority.
The required cooperation would allow Israeli banks to accept payments in shekels from the Palestinian Authority, which is important for continued financial transactions in the West Bank and Gaza.
Smotrich had previously threatened to stop this cooperation by canceling the guarantees provided by the Israeli government to Israeli banks dealing with Palestinian banks, which raised fears of the impact of this on the stability of the Palestinian economy.
A few days ago, the US Secretary of the Treasury and seven of her counterparts from America’s allies sent a letter to Israeli Prime Minister Benjamin Netanyahu warning him that his far-right finance minister may be on the verge of causing the collapse of the Palestinian economy.
According to Axios, which viewed the letter, the ministers expressed their countries’ concern that the collapse of the banking system in the West Bank would have serious repercussions, including the fall of the Palestinian Authority and a security crisis threatening Israel.
The ministers fear that Smotrich will not allow the extension of the financial correspondence agreement between Israeli banks and the West Bank, which expires at the end of this month, as without this correspondence the Palestinian banking system could collapse.
In addition to Yellen, her counterparts from Japan, Canada, the European Union, the United Kingdom, the Netherlands, Australia and France signed the letter on October 25.
The letter stressed that the continuation of relations between Israeli and Palestinian banks is necessary “so that vital financial transactions, trade, and essential services can continue.”
The letter also called for the release of pending tax revenues and submitting them to the Palestinian Authority in full, as well as the reissuance of permits to Palestinian workers wherever security conditions permit.
Smotrich – one of the most extreme politicians in the Israeli government – presented a number of demands to Palestinian banks to prevent illicit financing “pertaining to financing the families of Palestinian martyrs and prisoners.”
The administration of US President Joe Biden informed Israel last week that it had decided that Palestinian banks had met the conditions set by Smotrich.
Last Friday, the finance ministers and heads of central banks in the G7 countries ended their meetings in Washington.