United States Government’s Response to Israel’s Cabinet Decision on Extending the Indemnification for Correspondent Banking between Israel and the West Bank

The United States has been clear that economic stability in the West Bank is essential for Israeli and Palestinian security, and that the ability to conduct transactions in shekels smoothly and efficiently is a key pillar underpinning this economic stability. Today, the Government of Israel approved a 30-day extension of its indemnification of Israeli banks, allowing them to continue correspondent banking relationships with Palestinian counterparties. Unfortunately, the very short-term duration of this extension creates another looming crisis by November 30, exacerbating uncertainty for international banks, Israeli companies operating in the West Bank, and most importantly for ordinary Palestinians who bear the greatest brunt of such uncertainty.

Cutting off these banking ties would create significant economic turmoil in the West Bank, threatening the security of Israel and broader region. Our deep concern is shared by the G7 and many of our closest partners. To date, the U.S. Government's sustained engagement with both the public and private sector in Israel and the West Bank gives us confidence that Palestinian banks are adequately managing terrorist financing risks. The U.S. Government calls for the Government of Israel to swiftly extend the indemnification for these essential banking relationships for at least one year. We also call for future renewals to be transparent, predictable, and de-politicized.