U.S. Deputy Treasury Secretary Pushes Israel on Banking Ties with Palestinians

U.S. Deputy Treasury Secretary Wally Adeyemo urged Israel to extend its banking ties with Palestinian banks to prevent an economic crisis in the West Bank. Adeyemo warned that severing these ties could harm Israel's security. Talks included officials from the Bank of Israel and Jordan's King Abdullah.

In a move aimed at averting an economic crisis in the West Bank, U.S. Deputy Treasury Secretary Wally Adeyemo urged Israel to extend its banking relationships with Palestinian banks for at least one more year. He warned that ending these ties would threaten Israel's own security, a message delivered during a meeting with Bank of Israel Governor Amir Yaron and Jordan's King Abdullah on the sidelines of the United Nations General Assembly in New York.

Adeyemo expressed the U.S. government's apprehensions about Israeli government's threats to cut off Palestinian banks, emphasizing the need for a minimum one-year extension to prevent destabilization in the region. The banking correspondence authorization, crucial for export and import transactions valued at almost $10 billion, is set to expire on Oct. 31, posing significant financial risks, according to Treasury officials.

Highlighting the potential regional instability, Adeyemo warned that any Israeli decision to sever these ties would drive more Palestinian financial transactions underground, adversely impacting regional security. The issue has also been raised by Treasury Secretary Janet Yellen and discussed in Group of Seven finance ministers' meetings. The World Bank has noted that the Palestinian territories are already teetering on economic collapse, with Gaza's GDP dropping significantly and the Palestinian Authority facing a substantial financing gap.

(With inputs from agencies.)