Palestinian Central Bank Warns of Serious Risks to Banking Ties with Israel
Translated & summarized from Arab48 by baba
Palestinian Monetary Authority Governor Yihye Sahnar warned of serious risks to the Palestinian economy due to temporary banking relations with Israeli banks. He met with EU Representative Andreas Weidner in Ramallah to discuss the issue, urging the EU to pressure Israel for a permanent solution. The Bank of Israel has agreed to extend ties until 2026, but this is not seen as a lasting fix. Banking relations have been renewed quarterly since October 2023.
The story in 5 lines · by baba
- Palestinian Governor warns of serious risks to economy from temporary banking ties with Israel.
- Banking relations with Israeli banks are now renewed quarterly, down from annual renewals.
- The Bank of Israel has pledged to extend banking ties until the end of 2026.
- Two Israeli banks, Discount and Hapoalim, manage Palestinian banking transactions.
- Palestinian Monetary Authority urges EU to pressure Israel for a permanent solution.
The Governor of the Palestinian Monetary Authority, Yihye Sahnar, warned on Tuesday that the Palestinian economy faces "serious risks" due to its banking relations with Israeli banks being contingent on temporary decisions. Sahnar met with Andreas Weidner, the European Union Representative to Palestine, in Ramallah to discuss the issue.
Sahnar stated that the Palestinian economy "still faces serious risks as a result of banking relations being linked to temporary decisions" with Israeli banks. He noted that the Bank of Israel has pledged to extend the banking relationship until the end of 2026, but emphasized that this extension "does not constitute a permanent solution for the financial and banking relations between the two sides."
Under the Paris Economic Protocol of 1994, the Palestinian Monetary Authority oversees the banking sector. Sahnar urged the European Union to play an active role in resolving this issue and to pressure for the continuation of banking relations with Israeli banks, highlighting their importance for trade, supply chains, and essential services for citizens.
He called on the EU and the international community to use their influence with Israel and the relevant banks, especially given these banks' extensive international financial connections. Sahnar also affirmed the Palestinian banking sector's commitment to international standards in combating money laundering and terrorist financing.
Weidner acknowledged the importance of continued dialogue and coordination with the Palestinian Monetary Authority and expressed commitment to ongoing cooperation. Currently, two Israeli banks, Discount and Hapoalim, manage Palestinian banks' transactions with the Israeli banking system, primarily for trade payments. Three years ago, the Israeli government issued a decision, renewed annually, to protect these two banks from lawsuits in the U.S. related to alleged fund transfers to "terrorist groups." Without this protection, they would be vulnerable to legal action. Since October 2023, the renewal of the correspondent banking agreement has been on a three-month basis instead of annually.