Courtesy of JNS. Photo credit: U.N. Photo
Palestinian leader Mahmoud Abbas attends the general debate of the General Assembly’s 79th session on Sept. 24, 2024
(JNS) — The Israeli Security Cabinet voted to extend a waiver allowing Israeli banks to do business with their Palestinian Authority counterparts through November 2025, Hebrew media reported on Thursday night.
Ahead of the vote, Israel’s National Security Council reportedly briefed ministers that a failure to renew the agreement could have “significant negative consequences for state security and foreign relations.”
Earlier on Thursday, the United Kingdom, Germany and France had appealed to Israeli Finance Minister Bezalel Smotrich to extend the waiver ahead of a Nov. 30 deadline, claiming Ramallah has taken “significant steps” to combat terrorist financing in Judea and Samaria.
The E3 foreign ministers said they were “deeply concerned that Israel has yet to provide assurances it will extend the indemnifications for essential correspondent banking relationships between Israeli and Palestinian banks for a minimum period of at least 12 months.”
Smotrich extended the indemnity waiver — which shields Israeli banks with business ties to their P.A. counterparts from anti-terror laws — by only one month on Oct. 31.
The decision to extend the deal received backing from Israel’s Security Cabinet and came against the background of the U.S. presidential vote.
The E3 statement called on Smotrich to “immediately extend the indemnifications by at least one year, and for future extensions to be transparent, predictable and de-politicized.”
London, Berlin and Paris argued they were “fully satisfied” with what they described as “significant steps” taken by the P.A. and its financial institutions across Judea and Samaria to combat terror financing.
Cutting off banking ties “would create significant economic turmoil in the West Bank, jeopardizing the security of Israel and the wider region,” they claimed.
Earlier this year, Smotrich threatened to topple the P.A.’s economy in response to Ramallah’s push for unilateral statehood and support for the International Criminal Court arrest warrants against Israelis.
The P.A. is “working against Israel with political terrorism and promoting unilateral measures around the world,” he told fellow ministers. “If this causes the P.A. to collapse, let it collapse.”
U.S. Treasury Secretary Janet Yellen has vowed to use “all diplomatic efforts” to thwart Smotrich’s intentions. “I’m particularly concerned by Israel’s threats to take action that would lead to Palestinian banks being cut off from their Israeli correspondent banks,” she stated on May 23.
In September, U.S. Deputy Treasury Secretary Wally Adeyemo conveyed Washington’s concerns over Smotrich’s “threats,” telling Bank of Israel head Amir Yaron that the waiver “should be extended for at least a year.”
Per accords signed in the 1990s between Israel and P.A. leader Mahmoud Abbas’s Palestine Liberation Organization, the shekel is the primary currency in Judea and Samaria, alongside the Jordanian dinar.
One billion shekels (nearly $275 million) in yearly tax revenue that Israel collects on behalf of Ramallah goes towards the P.A.’s “pay for slay” policy, under which it pays monthly stipends to terrorists and their relatives.
