Smotrich’s Revenge: Biden’s Sanctions on Settlers Turned into Potential Collapse of PA Banking System

Photo Credit: Yonatan Sindel/Flash90

Finance Minister Bezalel Smotrich standing side by side with Prime Minister Benjamin Netanyahu, March 13, 2024.

Finance Minister Bezalel Smotrich has had it up to here with US sanctions against Jewish settlers in Judea and Samaria, and this week decided to release the kraken. 

Smotrich responded to the sanctions: “These decisions are a surrender of the Biden administration to the BDS campaign designed to blacken the entire State of Israel and lead to the elimination of the settlement enterprise and the establishment of a Palestinian terrorist state. The Israeli government is standing to the right of the settlement. These measures are completely unacceptable and we will fight to cancel them.”

It began with this week’s Axios’ exclusive report that the Biden administration is expected to impose new sanctions on two Jewish outposts in Judea and Samaria from which settlers went out to attack PA Arabs.

In early February, the Biden administration weaponized its “settler violence” mantra (based on fake reports by anti-Israel NGOs, according to the Israel Police) as a tool for pushing through the two-state agenda.

The President signed an executive order allowing the United States to issue financial sanctions against “those directing or participating in certain actions, including acts or threats of violence against civilians, intimidating civilians to cause them to leave their homes, destroying or seizing property, or engaging in terrorist activity in the West Bank. And the State Department also today issued four designations under this new executive authority,” NSA’s John Kirby told reporters.

A reporter then asked Kirby: “Is this a signal to those officials in the Israeli government who openly support and facilitate such violence, including Itamar Ben Gvir, who supply the weapons to these people who perpetrate?”

Kirby’s response: “I think it’s a signal to the whole world how seriously President Biden takes this violence against the settler violence against Palestinians in the West Bank.”

YOU WANT SANCTIONS? WE CAN DO SANCTIONS

In retaliation, according to Israel Hayom, Smotrich refuses to renew his signature on a document that provides protection from lawsuits to the Israeli banks doing business with the Palestinian Authority –  Discount and Po’alim.

Without government protection, the Israeli banks are expected to sever ties with the PA banks, fearing that they would become exposed to lawsuits on charges of transferring funds to entities that pay out salaries to terrorists.

And since the PA’s economy wholly depends on its relationship with Israel, this means an immediate freeze of economic activity in the Palestinian Authority.

Following the Biden administration’s announcement of sanctions against four Jewish settlers (who had not been convicted of any crime), the Office of Foreign Assets Control (OFAC) in the US Treasury Department updated its list of sanctioned individuals, and overnight Bank Leumi and Postal Bank froze their accounts.

Now, Smotrich, who prefers his revenge dish eaten cold, is turning the damage of a few thousand shekels to four Jewish settles into the possible collapse of the Palestinian Authority.

In 2018, the Israeli government created the Correspondence Government Company, to absorb the financial risks undertaken by Israeli banks doing business with PA banks. This was done after the Israeli banks threatened to sever their relations with PA institutions lest they be sued for collaborating with terrorists. The new company provides clearance services to Israeli banks, thus keeping them protected from lawsuits. But the new company is also leery about doing business with the PA, which is why the political and security cabinet each year issues a letter of protection to the Israeli banks, signed by the finance minister, absolving the of fiduciary responsibility for the PA’s terrorist shenanigans.

Now Smotrich is refusing to sign this letter of protection.

Israel Hayom’s Ariel Kahana suggested the finance minister is expecting that just as the Americans do not complain to the Israeli banks about their relationship with the Palestinian Authority, they will make it clear that they have no objection to releasing the frozen funds of the sanctioned Jewish settlers.

Otherwise, perhaps the US should start airdropping food packages on Ramallah.

The move means the immediate freezing of significant parts of the economic activity in the Palestinian Authority, whose currency is the shekel. Also, the vast majority of PA exports and imports are done through Israeli ports – no backing from Israeli banks, no trade. And of course, Smotrich’s favorite, the tax money that Israel collects will now be frozen until further notice, tell Ramallah to raise more rabbits and chop more wood for heating – it’s back to a barter economy.