US Treasury Secretary Janet Yellen said she was concerned about Israel’s threat to cut ties between Palestinian banks and Israeli correspondent banks, a move that could close a vital artery that feeds the Palestinian economy.
Yellen added today, Thursday, in prepared remarks before a meeting of finance ministers of the major industrialized countries of the Group of Seven countries in Italy, that the United States and its partners “need to do everything in their power to increase humanitarian assistance to the Palestinians in Gaza, to contain violence in the West Bank, and to seek to stabilize the economy of the West Bank.” .
Yellen and other senior G7 economic officials are expected to discuss the issue and the humanitarian situation in Gaza during their summit in Stresa, Italy, which begins Thursday.
Israeli Finance Minister Bezalel Smotrich indicated the possibility of not renewing an exemption that expires next July 1, allowing Israeli banks to deal with payments in shekels for services and salaries linked to the Palestinian Authority.
The Palestinian economy uses the Israeli currency, the shekel, and relies on Israeli banks to process transactions.
Continuation of relationships
Yellen said it was important to maintain correspondent relationships between Israeli and Palestinian banks to allow the faltering economy in the West Bank and Gaza Strip to function and contribute to ensuring security.
It indicated that it would make all possible diplomatic efforts to ensure the continuation of Israeli-Palestinian banking relations.
She continued, “These banking channels are vital for dealing with transfers that facilitate imports from Israel worth approximately $8 billion annually, including electricity, water, fuel, and food, in addition to facilitating exports worth approximately $2 billion annually, on which Palestinian livelihoods depend.”
She added that Israel’s withholding of revenues it collects on behalf of the Palestinian Authority also threatens the stability of the economy in the West Bank.
She said: “My team and I communicated directly with the Israeli government to urge it to take measures that strengthen the Palestinian economy, and I believe that this (will in turn) contribute to the security of Israel itself.”
Last February, Yellen wrote a letter to Netanyahu urging him to increase commercial engagement with the West Bank, considering that doing so was important for achieving the economic well-being of both Israelis and Palestinians, according to what the American New York Times reported.
Tensions escalated over financial matters between Israel and the United States due to sanctions imposed by Washington on settlers in the West Bank.
UN officials said last month that separating Palestinian banks from Israel would essentially cut them off from the global banking system and cripple the Palestinian economy.
