US and allies call on Netanyahu to renew banking agreement with Palestine

US Treasury Secretary Janet Yellen and seven international counterparts have urged Israeli Prime Minister Benjamin Netanyahu to renew a key banking agreement with Palestinian banks, warning of risks to the economy of the occupied West Bank if Israeli banks are barred from transactions with them.

Signed by officials from Japan, Canada, the EU, the UK, the Netherlands, Australia and France, as well as the US, the letter warns that without renewal of this agreement which is set to expire on Thursday, there could be weakened oversight of financial transactions, disruption of vital donor funds and destabilisation of the Palestinian Authority (PA).

“Actions taken by some members of your government to deny the West Bank access to financial resources endangers Israel’s security and threatens to further destabilise the entire region in an already perilous moment,” said the signatories of the letter seen by Axios.

The letter to Netanyahu comes as Western nations continue their boycott of Israeli Finance Minister Bezalel Smotrich since his appointment in December 2022.

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US officials have also urged the release of all withheld tax revenues for the PA and the reinstatement of permits for Palestinian workers to find jobs in the occupation state where security conditions allow, reported the Times of Israel. Over the past year, the West Bank economy has worsened as tens of thousands of Palestinian labourers have been barred from Israel since the beginning of the occupation state’s genocidal war against the Palestinians in Gaza in October last year.

The Western treasury chiefs urged Israel to extend the banking agreement for at least another year. Although Smotrich currently holds the authority to decide, Netanyahu could bypass him through a cabinet decision, expected to be discussed on Sunday evening. Smotrich’s office told US officials that he would consider another extension if the PA took measures against so-called “terror” financing, which, according to the US, the PA has already fulfilled. With concerns that Smotrich might refuse the extension, US officials have reportedly considered sanctions against him, but may delay action until after next month’s presidential election.

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