Israel’s Channel 12 revealed a covert agreement between Israel and the United States, where the occupation state commits to supporting the Palestinian Authority economically in exchange for an American veto against any United Nations Security Council proposal calling for the establishment of a Palestinian state.
According to the report, Israel has agreed to transfer tax revenues (known as maqassa funds) to the Palestinian Authority. In a recent decision, Israel’s security cabinet approved, via a phone poll, the extension of financial ties between Israeli and Palestinian banks for another year.
This agreement follows warnings from Western powers that the collapse of the banking system could lead to the total breakdown of the Palestinian Authority. Israel’s military establishment also backed this assessment, underscoring the risks of a financial meltdown.
Behind-the-Scenes Negotiations
The decision stems from negotiations led by Israeli Minister Ron Dermer, who conducted talks with senior American officials. These discussions culminated in an agreement where the U.S. pledged to veto any Security Council resolution that might advance recognition of Palestinian statehood.
Israeli media summarized the arrangement as: continuing financial transfers to Palestinians in exchange for a U.S. commitment to block international recognition of a Palestinian state.
International Context and Pressures
In July, the G7 nations called on Israel to ensure the Palestinian financial system’s stability. U.S. Treasury Secretary Janet Yellen emphasized that severing ties between Israeli and Palestinian banks could result in a severe humanitarian crisis. This statement came amid growing international pressure to maintain the economic relationship between the two entities.
Israeli Finance Minister Bezalel Smotrich had previously threatened, in May, to disrupt the essential banking channel linking Israeli and Palestinian banks. His stance was in retaliation for the recognition of Palestine as a state by three European countries. Smotrich, a staunch advocate of annexing the West Bank, informed Prime Minister Benjamin Netanyahu of his intention not to renew the annual guarantee that enables Israeli banks to transact with their Palestinian counterparts.
Implications of the Deal
The agreement highlights the strategic interplay between economic dependency and political leverage:
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- Palestinian Authority’s Survival: The financial lifeline extended by Israel under this agreement is critical for the Palestinian Authority’s continued existence, amid its precarious political and economic position.
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- U.S. Position: By securing a commitment to veto any moves toward recognizing a Palestinian state, the U.S. reinforces its alignment with Israeli interests, further sidelining Palestinian aspirations at the international level.
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- Israeli Interests: The deal allows Israel to avoid the destabilization that would accompany the collapse of the Palestinian Authority, which could lead to chaos in the West Bank and increased international scrutiny.
A Calculated Move Amid Broader Challenges
This deal reflects a broader Israeli strategy of managing the Palestinian issue through controlled economic measures while forestalling political solutions that might lead to statehood. For the United States, it signals continued prioritization of strategic alliances over advancing a just resolution to the Palestinian-Israeli conflict.
As the Palestinian Authority grapples with internal challenges and increasing dissatisfaction among its populace, the deal underscores the complexities of a status quo that suppresses Palestinian sovereignty in favor of short-term stability.
