Smotrich's office said in a statement, "Finance Minister Yehiel Rotenberg has instructed Accountant General Yehiel Rotenberg to cancel the guarantee (immunity) provided to correspondent banks in their dealings with banks in the Palestinian Authority territories." The statement added that this move came "against the backdrop of the Palestinian Authority's delegitimization campaign against Israel worldwide."
According to the private Hebrew Channel 12, Smotrich's decision "means the economic collapse of the Palestinian banking system."
Earlier on Tuesday, the Hebrew newspaper Israel Hayom reported that Smotrich threatened to "bring down the Palestinian Authority's economy if Britain imposes sanctions on any Israeli minister."
Last November, the Israeli Security Cabinet approved extending the guarantee granted to Israeli banks that deal with Palestinian banks for an additional year, until the end of November 2025. Israeli banks require an annual guarantee from the government that they will not be subject to legal prosecution if they deal with Palestinian banks, and Smotrich's directive effectively halts Palestinian-Israeli banking transactions.
Two Israeli banks, Bank Discount and Bank Hapoalim, handle financial transactions between Palestinian and Israeli banks, as well as between Palestinian and international banks. Both banks enjoy government immunity from criminal lawsuits in Israel and compensation for civil lawsuits filed against them. Compensation is granted by the Israeli Ministry of Finance's Accounting General.
Israel is taking numerous measures to further undermine the Palestinian Authority's economy, including withholding Palestinian clearance revenues. These revenues are taxes and customs duties imposed on goods imported into the Palestinian territories, whether from Israel or through border crossings controlled by Tel Aviv. The funds are collected by Tel Aviv on behalf of the Palestinian Authority.
The foreign ministers of Britain, Australia, Canada, New Zealand, and Norway announced in a joint statement later Tuesday the imposition of sanctions and other measures against Smotrich and Israeli National Security Minister Itamar Ben-Gvir. They attributed the move to their incitement of Israeli settlers to violence against Palestinian civilians in the occupied West Bank.
According to The Times, the sanctions include banning the two Israeli ministers from entering the United Kingdom, freezing any assets they hold, and prohibiting financial institutions from establishing relations with them.
The United Nations affirms that settlements in the occupied territories are "illegal" and undermine the possibility of resolving the conflict according to the principle of a two-state solution (Palestinian and Israeli). For decades, it has called on Israel to halt them, to no avail.
In addition to encouraging settlement activity and inciting settlers, Ben-Gvir and Smotrich have repeatedly called for reoccupying the Gaza Strip, expelling Palestinians from the Strip, establishing settlements on their land, and preventing the entry of humanitarian aid.
Since October 7, 2023, Israel—with American support—has been committing genocide in Gaza, including killing, starvation, destruction, and displacement, ignoring international calls and orders from the International Court of Justice to halt it.
The genocide left approximately 182,000 Palestinian martyrs and wounded, most of them children and women, and more than 11,000 missing, in addition to hundreds of thousands of displaced persons and a famine that claimed the lives of many, including children.
