UK, France, Germany say Israeli steps endangering West Bank economy as Israeli-PA bank deal set to expire

The United Kingdom, France and Germany release a joint statement expressing concern that Israel has not committed to extending for a year indemnification of Israeli banks to allow them to carry on banking relationships with Palestinian banks in the West Bank.

Israel extended the indemnification for 30 days on October 31, which expires on Saturday.

“This disappointing decision prolongs uncertainty and endangers the Palestinian economy,” say the foreign ministers of the three countries. “Cutting off these banking ties, which Israel has a clear duty under the Paris Protocol to maintain, would create significant economic turmoil in the West Bank, jeopardising the security of Israel and the wider region.”

Far-right Finance Minister Bezalel Smotrich, who has long spoken in favor of collapsing the Palestinian Authority, has repeatedly threatened to  end the indemnification, claiming that money was going to fund terror.

The Palestinian economy relies heavily on the banks’ relationships with their Israeli counterparts to process transactions made in shekels, as the PA does not have its own currency. Some NIS 53 billion ($14 billion) were exchanged at Palestinian banks in 2023, according to official data.

The statement from the UK, France and Germany argues that the Palestinian Authority has taken “significant steps” to ensure money is not going to terrorist groups.

“As the deadline of 30 November approaches, we therefore renew our call for Israel to immediately extend the indemnifications by at least one year, and for future extensions to be transparent, predictable and de-politicised,” they say.