Yellen worries that Israel would shut off Palestinian banks
STRESA: The threat made by Israel to cut off Palestinian banks from their Israeli correspondent banks, which would cut off a vital lifeline for the Palestinian economy, alarmed US Treasury Secretary Janet Yellen yesterday.
The US and its allies “need to do everything possible to increase humanitarian assistance to Palestinians in Gaza, to curtail violence in the West Bank, and to stabilise the West Bank’s economy,” Yellen stated at a news conference before of the G7 finance ministers meeting that starts today.
She promised to bring up the matter during the Group of Seven industrial democracies conference in the northern Italian lakeside resort town of Stresa.
“I anticipate that other nations will voice their concerns over how this decision would affect the West Bank’s economy. This, in my opinion, would also be highly detrimental to Israel.
According to Israel’s Finance Minister Belazel Smotrich, he is unable to extend a waiver that permits Israeli banks to accept shekel payments for labour and salary related to the Palestinian Authority and expires on July 1.
In response to Yellen’s remarks, Smotrich stated he could not sign the waiver in a post on the social media platform X because Israeli banks could face legal action for breaking laws prohibiting the sponsorship of terrorism and because Palestinians are still financing “terrorism.”
Smotrich, a member of an Israeli alliance that promotes far-right settlements in the West Bank, claimed that “terrorism is infected with the Palestinian Authority’s financial system up to its neck.” He referred to policy opponents as “hypocrites.”
The Israeli and Palestinian economies will suffer if Palestinian banks are shut off from their Israeli counterparts, according to a statement made yesterday by the Palestinian Monetary Authority.
“As banking relationships with the outside world will not be affected in all cases, the Palestinian banking system maintains correspondent banking relationships with a wide network of banks around the world that qualify it to continue providing services to citizens locally and globally,” the authority continued in a statement.
According to Yellen, maintaining the Israeli-Palestinian correspondent banking link is crucial to sustaining the fragile economies of Gaza and the West Bank and promoting security.
“Transactions involving nearly US$8 billion in annual imports from Israel, such as fuel, water, electricity, and food, as well as nearly US$2 billion in annual exports that support Palestinian livelihoods, are made possible by these banking channels,” Yellen stated.
The West Bank’s economic stability is also in jeopardy, she continued, because of Israel’s refusal to give over money that it has collected on behalf of the Palestinian Authority.
As for the Israeli government, Yellen stated, “My team and I have also engaged directly to urge action that would bolster the Palestinian economy and, I believe, Israel’s own security.”
US sanctions against Israeli residents in the West Bank have increased financial tensions between the US and Israel. – Reuters