Israel poised to cut ties with Palestinian banks
Palestine may be cut off from the global banking system in the coming week as Tel Aviv moves to cut financial ties, further isolating the territories from the international community.
The decision by Israel’s finance minister, Bezalel Smotrich, to isolate Palestinian banks came on March 28th, according to Haaretz.
Tied to the Israeli Shekel, the Palestinian economy is reliant on Israel’s, with all of its international transactions moving through the Israel Discount Bank and Bank Hapoalim.
Both institutions are issued a waiver of protection annually, signed by the finance minister, to protect them against law suits involving the Palestinian Authority (PA) and “transferring funds to terror groups.”
Smotrich is now refusing to renew the arrangement, which has been in place for years. Without this legal protection, Israeli banks will be exposed to lawsuits and are expected to cut ties with Palestinian institutions.
The finance minister had previously threatened to paralyze the Palestinian Authority’s economy in response to US sanctions against four extremist Israeli settlers accused of acts of violence against Palestinians, which Israeli banks obeyed despite Smotrich’s calls not to comply.
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Without legal protection, Israeli firms that conduct business with the PA will no longer be able to deposit Palestinian cheques or receive payments from Palestinian banks.
Palestinian workers, who are only permitted to receive payment via bank deposit according to a 2022 Israel-PA agreement, will be unable to legally collect wages.
Since the outbreak of the Israel-Gaza war on October 7th, 2023, some 200,000 Palestinian workers that used to commute from the West Bank into Israel have been deprived of their livelihoods, according to Reuters.
Palestinian import and export operations, which move through Israeli ports, and tax funds that Israel collects would also be paralysed.
Haaretz / Reuters
