Yellen calls on Israel to restore economic ties with the West Bank

Treasury Secretary Janet L. Yellen said Tuesday that she has personally urged Israeli Prime Minister Benjamin Netanyahu to increase commercial engagement with the West Bank, arguing that it is important to the economic well-being of Israelis and Palestinians.

Ms. Yellen’s request was made in a letter she sent to Mr. Netanyahu on Sunday. It was her most explicit public expression of concern about the economic consequences of the war between Israel and Hamas. In the letter, Ms. Yellen said, she warned of the consequences of the erosion of basic services in the West Bank and called on Israel to restore work permits to Palestinians and reduce barriers to trade in the West Bank.

“These actions are vital to the economic well-being of Palestinians and Israelis,” Ms Yellen said at a news conference in Brazil ahead of a meeting of finance ministers from the Group of 20 countries.

Ms. Yellen said she told Mr. Netanyahu that she was concerned that Israel’s actions were “seriously disrupting the economy of the West Bank, reducing revenues, while also having a negative impact on Israel.”

The letter came as the cabinet of the Palestinian Authority, which governs part of the Israeli-occupied West Bank, resigned on Monday in hopes that it could be overhauled and potentially take over the administration of Gaza after the war there ends. Talks between Israel and Hamas are also continuing in Qatar this week as the nation’s mediators, along with the United States and Egypt, work on a deal to release some hostages held by Hamas in Gaza in exchange for Israel agreeing to a temporary truce. fire.

Senior officials in the Biden administration are trying to mediate a resolution to the conflict in Gaza, which health authorities there say has killed about 29,000 Palestinians. Ms. Yellen was mostly focused on monitoring the economic implications of the war and managing the sanctions imposed by the Treasury Department on Hamas and those involved in its financial network.

While the Biden administration is concerned about the developing humanitarian crisis in Gaza, it is increasingly concerned that economic unrest in the West Bank could fuel violence and further deteriorate living standards there. The war had already taken its toll on the Israeli economy, which reduced by almost 20 percent in the fourth quarter of last year.

Ms. Yellen’s letter highlighted the steps the United States has taken to disrupt Hamas’ financial networks and how Israel benefits from an economically stable West Bank. She also said that the suspension of permits for West Bank workers has led to significant unemployment, while hurting the Israeli economy.

The Treasury Secretary called on Israel to ensure that tax revenues reach the Palestinians in the West Bank.

Since Hamas’s brutal attack on Israel on October 7, the Israeli government has withheld the tax revenue it collects on behalf of the Palestinians. Traditionally, that money was distributed back to the Palestinian Authority, which used it to finance its operating budget. Israel has previously frozen and then released that tax revenue during periods of conflict with the Palestinians.

White House National Security Communications Adviser John Kirby said last month that President Biden had discussed with Mr. Netanyahu the need to ensure that tax revenue is available to pay the salaries of Palestinian security forces in the West Bank.

Ms. Yellen said Tuesday that she was encouraged that revenue was beginning to flow to the West Coast. That money began flowing after an agreement between Israeli and Palestinian officials earlier this month use Norway as a temporary intermediary for the transfer of tax funds frozen by Israel.

“The United States has called on the Israeli government to release customs revenue to the Palestinian Authority to fund essential services and boost the economy in the West Bank,” Ms. Yellen said. “I welcome the news that an agreement has been reached and that the funds have started to flow. This must continue.”

The Minister of Finance said that the war in Gaza has not yet had a significant impact on the global economy. She also addressed another conflict, Russia’s war in Ukraine, which has disrupted food and energy markets for the past two years and called on Western allies to provide more aid to Ukraine.

Ms. Yellen expressed support for the idea of ​​using $300 billion in frozen Russian central bank assets to support Ukraine and suggested that stripping those funds could be a viable option.

“I also believe it is necessary and urgent that our coalition find a way to unlock the value of these immobilized assets in order to support Ukraine’s continued resistance and long-term rebuilding,” Ms. Yellen said. “While we should act together and in a deliberate manner, I believe there is a strong international legal, economic and moral case for progress.”

Economic leaders from the Group of 7 nations are discussing several options for how they can legally use Russian money to benefit Ukraine. Ms. Yellen said outright seizure of assets would be the “simplest option,” but that it would require legislation in the United States and Europe to allow such an act.

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