Israel extends cooperation waiver between Israeli and Palestinian banks

Israel’s finance minister has extended a waiver that allows cooperation between its banking system and Palestinian banks in the occupied West Bank, the minister’s spokesperson said on Sunday.

According to Reuters, the waiver was due to expire at the end of June. It allows Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority. Without it, the Palestinian economy would have taken another major hit.

Finance Minister Bezalel Smotrich extended the waiver during a recent cabinet meeting, explained his spokesperson. This appeared to be in response to the far-right government approving a plan to legalise five more illegal settlement outposts and impose travel and other restrictions on PA officials. Haaretz reported that Smotrich will also sign off on the release of taxes withheld from the PA, although this was not mentioned in the minister’s statement.

US Treasury Secretary Janet Yellen has said that it is important to keep the Israeli-Palestinian correspondent banking relationships open to allow battered economies in the West Bank and the Gaza Strip to function and help ensure security.

The Palestinian economy relies heavily on this relationship to process transactions made in Israeli shekels. Some 53 billion shekels ($14bn) were exchanged at Palestinian banks in 2023, official data shows.

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