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G7 finance ministers on Saturday urged Israel not to disrupt “vital financial transactions” in the occupied Palestinian territories, following indications that Israel may cut off Palestinian banks.
“We call on Israel to take the necessary measures to ensure that correspondent banking between Israeli and Palestinian banks is maintained and that vital financial transactions and essential trade and services can continue,” the final statement after the talks in Italy said.
G7 ministers, gathering in Stresa for a two-day finance summit, called on Israel “to pay the withheld customs revenues to the Palestinian Authority in light of its urgent financial needs.”
They also called on Israel to “remove or relax other measures that are adversely affecting commercial activity in the West Bank, in order to avoid a further deterioration of the economic situation in the West Bank.”
U.S. Treasury Secretary Janet Yellen on Thursday expressed concern about Israel’s “threats” to cut off transactions between Palestinian banks and Israeli correspondent banks.
Israel’s Finance Minister Bezalel Smotrich said on Wednesday that the country will not renew a key agreement between financial institutions that expires within weeks.
Yellen warned that this would risk a “humanitarian crisis” and said she had conveyed her concerns to Israel.
“These banking channels are essential to process transactions that enable approximately $8 billion in annual imports from Israel, including electricity, water, fuel and food,” she said.
It also promotes “exports worth about $2 billion a year” that support Palestinian livelihoods.
Smotrich also threatened to stop tax remittances to the Palestinian Authority and end Norway’s role in facilitating remittances.
Under peace deals brokered by Norway in the 1990s, Israel collects funds for the Palestinian Authority, which has limited autonomy in parts of the West Bank.
However, Israel has blocked the transfer since shortly after the October 7 attack by Hamas, which effectively controls the Gaza Strip.
Smotrich’s threat came after Norway followed Ireland and Spain in recognising a Palestinian state earlier this week.
The Israeli cabinet approved a plan this year to transfer tax money earmarked for the Palestinian Authority to Norway for Gaza Strip officials.
Some Israeli officials, particularly far-right ministers like Smotrich, have called for an end to the transfers, citing fears the money could be used by Hamas, with which Israel is fighting in Gaza over the Oct. 7 attack.
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