Financial Crime World

Israeli Minister’s Far-Right Views Spark Concern Over Economic Crisis in Palestine

TEL AVIV - The far-right views of Israel’s Minister of Finance Bezalel Smotrich have sparked concerns over a potential economic crisis in the Palestinian territories, as his government’s policies are expected to lead to widespread financial instability.

The Israeli Government’s Decisions

  • Canceled a critical waiver allowing Palestinian banks to access their funds in Israel
  • Waiver was set to expire on July 1, allowing Palestinian banks to clear transactions and access foreign currency

Consequences of Non-Renewal

  • Palestinian economy expected to collapse, leading to widespread poverty, unemployment, and instability in the region
  • World Bank warns of disruptions in trade and payment settlements, increased transaction costs, and a general decline in economic confidence
  • Potential for serious consequences for regional stability and bilateral ties with Israel

International Reaction

Urging Action

  • US, European Union, and Arab states have urged Israel to renew the waiver
  • Senior US official: “We urge the Israeli government to take immediate action to prevent an economic crisis in the Palestinian territories. The waiver is critical to maintaining stability and security in the region.”
  • International leaders warning that a non-renewal could have serious consequences for regional stability and bilateral ties with Israel

Contingency Measures

  • US, EU, and Arab states considering injecting foreign currency into the Bank of Palestine
  • Exploring alternative long-term structural reforms
  • US government considering providing comfort letters or no-action letters to Israeli banks, assuring them that they will not face enforcement action for facilitating transactions with Palestinian banks

Deadlines and Consequences

  • Deadline for waiver’s expiration approaches (July 1)
  • Failure to renew the waiver could have devastating consequences for regional stability and bilateral ties with Israel
  • International leaders urging Israel to reconsider its stance and take immediate action to prevent an economic crisis in the Palestinian territories