The Biden administration warned on Thursday that Israel’s decision to extend a waiver, allowing Israeli and Palestinian banks to transact business for only one more month, has created a “looming crisis” that might threaten regional security.
U.S. Secretary of State Antony Blinken and Secretary of the Treasury Janet Yellen stated that the banking agreement should be extended for at least a year on a renewable “depoliticized” basis.
“The very short-term duration of this extension creates another looming crisis by Nov. 30, exacerbating uncertainty for international banks, Israeli companies operating in the West Bank and most importantly for ordinary Palestinians, who bear the greatest brunt of such uncertainty,” the secretaries stated.
“Cutting off these banking ties would create significant economic turmoil in the West Bank, threatening the security of Israel and the broader region,” they added. (The Biden administration and some countries refer to Judea and Samaria as the “West Bank.”)
The two U.S. officials noted that the G7 group of large, liberal democracies and “many of our closest partners” share the duo’s concerns.
Israeli Finance Minister Bezalel Smotrich signed the one-month waiver earlier on Thursday, pushing any decision about renewal until after the U.S. presidential election on Nov. 5.
The waiver indemnifies Israeli banks from charges of money laundering and funding extremism. Without it, Palestinian banks in Judea and Samaria would lose access to the Israeli banking system, threatening the collapse of the economy in areas under the control of the Palestinian Authority.
Smotrich, the leader of the Religious Zionism Party, said in May that cutting off those funds might also end the Palestinian Authority.
“The Palestinians are working against Israel with political terrorism and promoting unilateral measures around the world,” Smotrich said. “I cannot continue to transfer funds to them. If this causes the P.A. to collapse, let it collapse.”