PM shelved plan to strip Smotrich of control over PA banking after far-right minister threatened to resign

Prime Minister Benjamin Netanyahu shelved a plan to prevent Finance Minister Bezalel Smotrich from trying to collapse the Palestinian Authority after the far-right minister threatened to resign and collapse the government, an Israeli official tells The Times of Israel.

Netanyahu was planning to present a cabinet decision this evening that would have transferred some of Smotrich’s authorities to another minister. Smotrich is refusing to sign a waiver granting indemnity for Israeli banks to correspond with Palestinian ones.

Failure to sign a waiver by the end of the month risks collapsing the Palestinian banking system, which operates on Israeli shekels. The Trump administration has been pressuring Israel to sign the waiver, fearing that the financial crisis could lead to the PA’s collapse and major instability in the West Bank.

This isn’t the first time that this dynamic has unfolded, as Smotrich has tried to squeeze pro-settler concessions each time he signs a temporary extension to Israeli-Palestinian banking cooperation.

Netanyahu tried to solve the issue by passing a cabinet decision stripping Smotrich of his authority to adjudicate the matter, but the finance minister found out about the plan last night and threatened to resign, the Israeli official says, confirming a report in the Israel Hayom daily.

Not wanting to lose his government, Netanyahu has decided to hold off on bringing the cabinet decision to a vote, but it is unclear at this stage how the matter will be resolved.