Treasury Secretary Janet L. Yellen warned Israel on Thursday against cutting ties between Palestinian and Israeli banks, arguing that such a move would further destabilize the West Bank economy at a time when the Palestinians are already facing a difficult economic situation are.
Ms. Yellen’s comments followed Israel’s decision on Wednesday to withhold tax revenue from the Palestinian Authority in retaliation for three European countries unilaterally agreeing to recognize a Palestinian state. Ms. Yellen and other senior business officials from the G7 nations are expected to discuss the issue and the humanitarian situation in Gaza during their summit in Stresa, Italy, which begins on Thursday.
“I am particularly concerned about Israel’s threats to take actions that would result in Palestinian banks being cut off from their Israeli correspondent banks,” Ms. Yellen said during her remarks to a news conference.
Ms. Yellen added that banking channels were critical to processing transactions involving Israel’s $8 billion a year in food, fuel and electricity imports and $2 billion in Palestinian exports. dollars enable.
The war in Gaza is one of several geopolitical crises weighing on the global economy. The economic policymakers also plan to discuss Russia’s war in Ukraine and continue deliberations on how to use more than $300 billion in frozen Russian central bank balances to provide additional aid to Ukraine. Group of Seven officials will also discuss how to tighten sanctions against Russia and how to prevent China from providing military support to the country.
Ms. Yellen said on Thursday that the plight of the Palestinians would be a topic of discussion with her counterparts and that an attempt to cut off the Palestinians from the international financial system could trigger a “humanitarian crisis.”
The Palestinian economy uses shekels, Israel’s national currency, and relies on Israeli banks to process transactions. Israel’s Finance Ministry typically signs an annual waiver that protects its banks from legal risks related to transferring funds to terrorist groups when Israeli banks facilitate transactions with Palestinians.
After granting a three-month extension to the exemption earlier this year, Israel’s hardline Finance Minister Bezalel Smotrich indicated he might not extend the exemption again when it expires in July.
United Nations officials said last month that sealing off Palestinian banks from Israel would essentially cut the country off from the global banking system and cripple the Palestinian economy.
On Wednesday, Mr. Smotrich also said he had informed Prime Minister Benjamin Netanyahu that he would no longer transfer tax revenue to the Palestinian Authority, which administers parts of the Israeli-occupied West Bank in close cooperation with Israel. Israeli and Palestinian leaders agreed to a deal earlier this year that would see Norway hold part of the proceeds in trust until Israel agreed to pass them on to the Palestinians. On Wednesday, Mr. Smotrich called on the government to immediately revoke that agreement.
The Biden administration also criticized the decision to deny Palestinians access to tax revenue.
“Israel’s withholding of revenue it collects on behalf of the Palestinian Authority also threatens economic stability in the West Bank,” Ms. Yellen said. “We and our partners must do everything possible to increase humanitarian assistance to Palestinians in Gaza, reduce violence in the West Bank and stabilize the West Bank economy.”
The finance minister declined to say what consequences Israel might face if it followed through on its threat to cut off Palestinian banks, suggesting that the United States and other G7 nations would rely on diplomatic pressure.
“I would expect other countries to express concern about the impact of such a decision on the West Bank economy,” Ms. Yellen said. “I think that would also have very negative consequences for Israel.”
In February, Ms. Yellen wrote a letter to Mr. Netanyahu urging him to increase his commercial involvement in the West Bank, claiming it was important for the economic well-being of both Israelis and Palestinians.
Source link
2024-05-23 14:35:17
www.nytimes.com
