Israel's 'economic war' chokes occupied West Bank
RAMALLAH
Palestinian teenagers bounced on trampolines and jumped through hoops inside a towering tent on the outskirts of Ramallah, the financial hub of the occupied West Bank.
But the circus students weren't the only ones bending over backwards in the pavilion: the school's director faced financial hurdles to buy the tent from Europe and trampolines from Asia.
"We are suffering with international payments," said Mohamad Rabah, head of the Palestinian Circus School, describing a bureaucratic process that could delay equipment delivery by up to a month.
Banking in the Palestinian territories is challenging, with the Palestinian Authority (PA) under scrutiny for potential terror financing, hindering transactions.
Israel has occupied the West Bank since 1967, with strong economic ties allowing two Israeli lenders to serve as correspondent banks in the Palestinian territory.
But this may change if Israel's far-right Finance Minister Bezalel Smotrich carries out threats to sever a vital banking route next month.
Since Hamas's Oct. 7 attack, Israel has imposed economic curbs on the PA, withholding tax revenues it collects on its behalf.
Smotrich said this week he had redirected $35 million in PA tax revenues to families of "terrorism" victims, a move condemned by the United States.
After three European countries recognised Palestinian statehood in May, Smotrich told Prime Minister Benjamin Netanyahu he would not extend indemnity to banks that transfer the funds from the end of June.
Israel's Bank Hapoalim and Israel Discount Bank need protection, expiring on July 1, to avoid sanctions for dealing with Palestinian lenders.
The banking channel used to pay for West Bank imports - including essential goods like water, fuel and food - handles $8 billion yearly.
Palestinian businesses receive nearly $1.7 billion annually for exports, according to the Palestine Monetary Authority.
"For us, because our economy is dependent on the Israeli economy, because Israel is controlling the border, the impact will be high," said PMA governor Feras Milhem.
The Palestinian economy is largely governed by the 1994 Paris Protocol, which granted sole control over the territories' borders to Israel, including the right to collect import duties and value-added tax for the PA.
Palestinian livelihoods have also been hurt by bans on laborers crossing into Israel and by a sharp downturn in tourism in the territory, including a quiet Christmas season in Bethlehem.
The United States has urged Israel to improve conditions, warning that severing the banking route would have a dire impact on the West Bank economy.
Western governments fear Israel's economic policies could destabilise the West Bank.
"The banking system may collapse and therefore the PA may collapse as well," a European diplomatic source in Jerusalem told AFP.
"The PA is in a financial crisis and it could collapse before August."
