U.S. Treasury Secretary Janet Yellen expressed deep concern over Israel’s threat to sever Palestinian banks from their Israeli correspondent banks, a move that could have devastating consequences for the Palestinian economy. Yellen emphasized the need for increased humanitarian assistance to Palestinians in Gaza, efforts to reduce violence in the West Bank, and the stabilization of the region’s economy.
Speaking ahead of a G7 finance ministers meeting in Stresa, Italy, Yellen vowed to address the issue with her counterparts. She warned that cutting off banking relationships between Israel and Palestine would not only harm the Palestinian economy but also have negative repercussions for Israel.
Israel’s Finance Minister Belazel Smotrich cited concerns about Palestinian funding of “terrorism” as the reason behind the decision not to renew a waiver allowing Israeli banks to process shekel payments for the Palestinian Authority. Yellen stressed the importance of maintaining banking channels to facilitate essential transactions, including imports of goods like electricity, water, fuel, and food, as well as exports crucial for Palestinian livelihoods.
The escalating financial tensions between Israel and the U.S., exacerbated by U.S. sanctions on Israeli settlers in the West Bank, have further complicated the situation. Yellen and her team have been engaging directly with the Israeli government to find solutions that would benefit both the Palestinian economy and Israel’s security. The outcome of these discussions will have far-reaching implications for the stability of the region.