Israel extended for one year a waiver allowing Israeli banks to cooperate with Palestinian banks, which were threatened with paralysis from December 1 if this authorization was not renewed.
The extension was approved Thursday during a meeting of the security cabinet, the spokesperson for Israeli Finance Minister Bezalel Smotrich (far right) told AFP.
The latter had threatened in May to cut the vital banking channel between Israel and Palestinian banks based in Ramallah, in the West Bank, in response to the recognition by three European countries of the State of Palestine.
Mr. Smotrich, a settler and supporter of the complete annexation of the West Bank, a Palestinian territory occupied by Israel since 1967, then informed Prime Minister Benjamin Netanyahu that he “did not intend to extend” the annual guarantee of the State benefiting the “correspondent banks”.
In exchange for concessions on the extension of Jewish settlement in the West Bank, Mr. Smotrich finally agreed to extend the guarantee by just a few months.
Since June 30, the guarantee has been renewed several times, for varying durations, and the last time for one month, until November 30.
Mr. Smotrich had until then cited fears about the financing of Palestinian armed groups via Palestinian banks to justify this fitful extension.
The functioning of the financial system, and therefore the daily life of Palestinians in the West Bank, is dependent on the renewal of this guarantee from the Israeli state.
This protects Israeli correspondent banks against possible prosecutions (such as for the fight against money laundering or the financing of terrorism) for the transactions they carry out with their Palestinian counterparts.
Without this guarantee, these Israeli financial institutions would not take the risk of the slightest transaction with banks registered with the Palestinian Authority.
The guarantee was traditionally renewed each year before the attack on October 7, 2023 that sparked the ongoing war between Israel and the Palestinian Islamist movement 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 “cutting off Palestinian banks from their Israeli counterparts would create a humanitarian crisis.”
The vast majority of trade in the West Bank is done in shekels, the Israeli national currency, the Palestinian Authority lacking a central bank that could mint its own currency.
With AFP
