Palestinian Officials Offered to Help Lift Sanctions on Smotrich for Frozen Funds
Translated & summarized from Al-Shams by baba
Senior Palestinian Authority officials reportedly offered to help lift European sanctions on Israeli Finance Minister Bezalel Smotrich in exchange for the release of approximately 11 billion shekels in frozen Palestinian funds. The offer, which included signing a letter against the sanctions, was reportedly made four months ago and rejected by Smotrich. The PA is facing a severe financial crisis, exacerbated by Smotrich's economic measures, including fund deductions and threats to banking relations. Israeli security agencies have warned of potential PA collapse due to the financial strain.
The story in 5 lines · by baba
- Palestinian officials offered to help lift sanctions on Israeli minister Smotrich for frozen funds.
- The Palestinian Authority is facing a severe financial crisis, with 11 billion shekels frozen by Israel.
- Smotrich's economic pressure includes halting fund transfers and impacting banking relations.
- Israeli security agencies warn of potential Palestinian Authority collapse due to financial strain.
- The alleged offer was made four months ago and reportedly rejected by Smotrich.
Two senior Palestinian Authority officials reportedly offered to help lift European sanctions against Israeli Finance Minister Bezalel Smotrich in exchange for the release of billions of shekels in Palestinian clearing funds held by Israel. The offer, made about four months ago through intermediaries connected to Smotrich, included the officials' willingness to sign a letter opposing sanctions imposed on him by European countries and others, such as Britain and France, and to call for their cancellation. The report states that Smotrich rejected the offer, and the communications via intermediaries ended without resolution.
The officials involved in the outreach were identified as Mahmoud al-Habbash, advisor to Palestinian President Mahmoud Abbas, and Hussein al-Sheikh, the deputy president. They reportedly communicated with an individual close to Smotrich through al-Habbash's assistant, Hamza Daana. In return for their assistance, the officials requested the release of some or all of the frozen funds to alleviate the PA's severe financial crisis and enable it to pay employee salaries.
Israel is currently holding approximately 11 billion shekels in funds related to the West Bank and Gaza. Smotrich's economic pressure tactics also include preventing the return of Palestinian laborers to the Israeli job market at previous levels and taking steps that threaten banking relations between Israeli and Palestinian banks. He is reportedly hindering arrangements for the protection and compensation of Israeli banks dealing with Palestinian financial institutions, potentially leading to further restrictions on banking ties and increased pressure on the Palestinian economy.
Since the start of the war, Smotrich has been deducting about 275 million shekels monthly from Palestinian funds, money that was previously transferred to Gaza before the conflict. Furthermore, since May 2025, he has completely halted fund transfers to the PA, using the frozen money to cover claims from Israeli families affected by Palestinian attacks and to settle the PA's debts to the Israel Electric Corporation.
Sources close to Smotrich indicated that these economic measures are accompanied by warnings from the Shin Bet and the IDF about the potential collapse of the Palestinian Authority and the cessation of security coordination. Israeli security officials are increasingly concerned that the ongoing financial crisis and the PA's declining ability to pay salaries and provide services could lead to a deterioration of conditions in the West Bank. However, individuals close to Smotrich reportedly dismiss these concerns, believing the economic hardship will compel the PA to focus on its survival rather than engaging in confrontations. The Palestinian Authority has not commented on the alleged offer.