It’s time to decolonise the Palestinian economic system
Bank of Palestine Head Office, Ramallah
Ahmed Alqarout writes in Middle East Eye on 8 July 2025:
Israel’s recent move to cancel the waiver enabling cooperation between Israeli and Palestinian banks is not merely a bureaucratic measure. It is a calculated manoeuvre that strikes at the economic foundation of the Palestinian Authority (PA) and the occupied territories as a whole.
This policy shift must be seen as part of a broader campaign to erode what remains of Palestinian institutional autonomy. It is also a punitive response to international censure, including UK-led sanctions on ministers inciting settler violence.
Since October 2023, Israel had already banned cash inflows to banks in Gaza, most of which have suspended their services. The cancellation of the indemnity framework further deepens this financial blockade.
Only two Israeli banks, Hapoalim and Discount, maintain correspondent banking ties with Palestinian banks. The waiver enables these Israeli banks to indemnify foreign banks that process payments on behalf of Palestinian institutions; its removal effectively severs the Palestinian banking system from global financial networks.
The centrality of Israeli financial institutions in the architecture of Palestinian economic life is not incidental. Under the 1994 Paris Protocol, a sub-agreement of the Oslo Accords, the Palestinian economy is tethered to the Israeli shekel, with Israel acting as both gatekeeper and bottleneck for trade, tax revenues and monetary transactions.