G7 finance ministers urge Israel to maintain financial channels with Palestinian banks

G7 finance ministers call on Israel to maintain vital financial transactions in the occupied Palestinian territories, amid concerns that it might cut off Palestinian banks

G7 finance ministers on Saturday urged Israel to ensure the continuation of “vital financial transactions” in the occupied Palestinian territories, amid concerns that Israel might cut off Palestinian banks.

“We call on Israel to take the necessary measures to ensure that correspondent banking services between Israeli and Palestinian banks remain in place, so that vital financial transactions and critical trade and services continue,” read the final statement from the two-day finance summit held in Stresa, Italy.

The ministers also pressed Israel “to release withheld clearance revenues to the Palestinian Authority, in view of its urgent fiscal needs.” Additionally, they called for the removal or relaxation of measures that negatively impact commerce to prevent worsening the economic situation in the West Bank.

US Treasury Secretary Janet Yellen expressed concern on Thursday about Israel’s threats to sever ties between Palestinian banks and their Israeli correspondent banks. Israeli Finance Minister Bezalel Smotrich announced on Wednesday his plan not to renew the arrangement, which is set to expire within weeks.

Yellen warned that cutting off these banking channels could precipitate a “humanitarian crisis.” She highlighted the critical nature of these channels for processing transactions that enable almost $8 billion a year in imports from Israel, including essential goods such as electricity, water, fuel, and food. They also facilitate nearly $2 billion a year in Palestinian exports, crucial for Palestinian livelihoods.

Smotrich has also threatened to stop transferring tax funds to the Palestinian Authority and to end Norway’s role in facilitating these transfers.

Under peace agreements brokered in the 1990s with Norwegian involvement, Israel collects money for the Palestinian Authority, which exercises limited autonomy in parts of the West Bank. However, Israel has blocked these transfers since the October 7 attacks by Hamas, which governs the Gaza Strip.

The threat from Smotrich followed Norway’s recognition of a Palestinian state, joining Ireland and Spain earlier this week. This recognition has sparked tension, with some Israeli officials, particularly far-right ministers like Smotrich, advocating for the cessation of fund transfers over concerns that they could be used by Hamas.

The G7 ministers’ call underscores the international community’s concern about the potential economic and humanitarian fallout of Israel’s proposed actions. The ministers emphasized the importance of maintaining financial stability and economic ties to support the Palestinian population during this critical time.

Source: AFP