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Israel cutting off Palestinian banks from global system 'would be violation of int'l law': UN experts

April 25, 2024 at 1:20 pm

People walk by an ATM machine, which is out of service, since ongoing Israeli attacks hinder banking operations and lead to cash liquidity crisis, in Rafah, Gaza on April 2, 2024 [Abed Rahim Khatib/Anadolu via Getty Images]

UN experts in a statement, on Thursday, warned that unilaterally cutting off Palestinian banks from the global banking system would be “a violation of the fundamental principles of international law”, Anadolu Agency reports.

The experts’ remarks came after an Israeli Minister threatened to revoke a protection waiver issued annually to two banks in Israel that maintain connections to Palestinian financial institutions.

“Cutting off Palestinian banks from the global banking system unilaterally also violates the principle of sovereign equality of states, the principle of non-intervention into the domestic affairs of states, the principle of cooperation in good faith,” they said.

They stressed that the impossibility of bank transfers “will affect all people of Palestine indiscriminately, exacerbate the ongoing humanitarian catastrophe and affect all fundamental human rights, including the right to food, right to water and sanitation, right to health, freedom from torture and the right to life.”

According to the statement, the waiver, which expired on 1 April, protects Israeli banks from lawsuits involving the Palestinian Authority for “transferring funds to terror groups”, and without this protection, Israeli banks will be exposed to legal action and can be expected to break ties with Palestinian banks.

The Palestinian economy runs on the Israeli shekel, and its financial dealings with the rest of the world must go through the Israeli banking system, the experts noted, and warned that isolating the Palestinian Authority from the financial world will cripple the Palestinian economy, recalling that the protection waivers were guaranteed under the Oslo and Paris Accords.

“Because a significant proportion of taxes in the Palestinian Authority’s budget are collected by Israel, the Palestinian Authority is vulnerable to unilateral suspensions by Israel of transfers of clearance revenue, qualifying as unilateral coercive measures contrary to international law,” they said.

The experts also called for interim measures to prevent “irreparable harm and potential breaches of international law”.

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