The United States has welcomed Israel’s decision to extend a vital banking lifeline to Palestinians for another year.
The move comes after far-right Finance Minister Bezalel Smotrich threatened to sever the connection amid the Gaza war.
The US had pressed Israel to maintain the waiver, which allows Israeli banks to work with Palestinian ones, fearing that its cancellation would plunge the relatively stable West Bank into economic chaos.
In a joint statement, the State and Treasury Departments expressed their appreciation for Israel’s decision, taken at a meeting of the country’s security cabinet. “Economic stability in the West Bank is essential for Israeli and Palestinian security, and correspondent banking is a key pillar of that economic stability,” the statement said.
US Treasury Secretary Janet Yellen had warned that cutting off Palestinian banks “would create a humanitarian crisis.”
She had also voiced disappointment in October when Israel approved only a 30-day extension.
Smotrich, who lives in a West Bank settlement and advocates for the full annexation of the territory occupied by Israel since 1967, had threatened to end the waiver in retaliation for three European countries’ recognition of a Palestinian state.
