G7 finance ministers were set to urge Israel Saturday not to disrupt “vital financial transactions” in the occupied Palestinian territories, following indications it could cut off Palestinian banks.
“We call on Israel to take the necessary measures to ensure that correspondent banking services between Israeli and Palestinian banks remain in place, so that vital financial transactions and critical trade and services continue,” a draft statement following talks in Italy.
G7 Ministers
The G7 ministers gathered in Stresa also urged Israel “to release withheld clearance revenues to the Palestinian Authority, given its urgent fiscal needs”.
And they asked Israel “to remove or relax other measures that have negatively impacted commerce to avoid further exacerbating the economic situation in the West Bank”.
US Treasury Secretary Janet Yellen had on Thursday expressed concern at Israel’s “threats” to cut off Palestinian banks from their Israeli correspondent banks.
Israeli Finance Minister
Israeli Finance Minister Bezalel Smotrich said, he planned not to renew a vital arrangement between financial institutions, which expires within weeks.
Yellen advised of the possibility of a “humanitarian crisis” if this occurred, and said she had expressed her concerns to Israel.
“These banking channels are critical for processing transactions that enable almost $8 billion a year in imports from Israel, including electricity, water, fuel, and food,” she stated.
They also facilitate “nearly $2 billion in exports that support Palestinian livelihoods.”
Smotrich also feared to halt tax transfers to the Palestinian Authority and end Norway’s role in facilitating them.
Parts of the West Bank
Under peace treaties negotiated partially by Norway in the 1990s, Israel acquires funds from the Palestinian Authority, which maintains restricted freedom in parts of the West Bank.
However, Israel has impeded payments since shortly after the October 7 attacks by Hamas, which governs the Gaza Strip.
Smotrich’s threat came after Norway, Ireland, and Spain recognised Palestine earlier this week.
This year, the Israeli cabinet approved a plan to transfer to Norway Palestinian tax funds designated for the Palestinian Authority’s Gaza staff.
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