Concerns of Palestinian economic crisis grow as Israeli banks prepare to cut ties
JERUSALEM/RAMALLAH: Two Israeli banks will halt working with their Palestinian counterparts in the coming months citing risks of associating with possible terrorism financing and money laundering, Israeli officials said, fueling concerns of a Palestinian economic crisis.
Israeli officials and the head of the Palestinian central bank said that Israel Discount Bank will stop its association with Palestinian banks on September 1 and Bank Hapoalim will follow suit on October 1. Both banks work with several Palestinian lenders. The move comes against the backdrop of the Gaza war and deepening friction between Israel’s right-wing government and the PA. Israeli Finance Minister Bezalel Smotrich, who oversees the waiver mechanism enabling cooperation between Israeli and West Bank lenders, has repeatedly withheld a portion of tax revenues Israel collects on the Palestinian Authority’s behalf and publicly questioned the PA’s legitimacy, straining an already fragile financial relationship.
Yahya Shunnar, governor of the Palestinian Monetary Authority, warned of regional economic instability should the Israeli banks sever their ties with Palestinian banks.
