U.S. Treasury Secretary Janet Yellen, along with seven finance ministers from Western countries, issued a warning to Israeli Prime Minister Benjamin Netanyahu that Finance Minister Smotrich’s policies could lead to the collapse of the Palestinian economic system. The ministers’ letter, sent on October 25, noted that restricting financial relations between Israeli and Palestinian banks jeopardizes stability in the West Bank and Israel’s security, particularly given the already tense conditions in the region.
Details of the Warning and International Concerns
The letter points to the impending expiration of the current mandate allowing Israeli banks to operate with their Palestinian counterparts, set to end on October 31. The ministers expressed deep concern that failure to renew this mandate could result in the collapse of the Palestinian banking system, potentially creating a governance vacuum that threatens the security and stability of the West Bank and exacerbates the economic crisis, which in turn impacts the Israeli economy.
Yellen and her counterparts from Japan, Canada, the European Union, the UK, the Netherlands, Australia, and France reaffirmed their commitment to Israel’s security, but stressed that “cutting financial ties between Israeli and Palestinian banks could create unregulated financial channels that would put the lives of Palestinian and Israeli civilians at greater risk.”
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