Monday, May 20

Yellen urges Israel to restore economic ties with the West Bank

Treasury Secretary Janet L. Yellen said Tuesday that she personally urged Israeli Prime Minister Benjamin Netanyahu to increase trade engagement with the West Bank, arguing that doing so would be important for the economic well-being of both Israelis and Palestinians.

Ms. Yellen’s request was outlined in a letter she sent to Mr. Netanyahu on Sunday. It represented his most explicit public expression of concern about the economic consequences of the war between Israel and Hamas. In the letter, 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 for Palestinians and reduce barriers to trade within the West Bank .

“These actions are vital to the economic well-being of both Palestinians and Israelis,” 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 Netanyahu she was concerned that Israel’s actions were “seriously harming the West Bank economy, reducing revenue and at the same time having a negative impact on Israel.”

The letter came as the cabinet of the Palestinian Authority, which administers part of the Israeli-occupied West Bank, submitted its resignation on Monday in hopes of overhauling itself and potentially taking over administration of Gaza after the war ends. Negotiations between Israel and Hamas are also resuming this week in Qatar, as that 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 the deal of Israel for a temporary cessation of activities. fire.

Senior Biden administration officials have been trying to broker a resolution to the conflict in Gaza, which local health authorities say has killed about 29,000 Palestinians. Yellen has focused primarily on monitoring the economic implications of the war and managing the sanctions that the Treasury Department has imposed on Hamas and those involved in its financial network.

While the Biden administration is concerned about the ongoing humanitarian crisis in Gaza, it is increasingly concerned that economic unrest in the West Bank could fuel violence and further deteriorate the country’s living standards. The war has already taken a toll on Israel’s economy, which shrank by nearly 20% in the fourth quarter of last year.

Yellen’s letter outlines the steps the United States has taken to dismantle Hamas’ financial networks and how Israel benefits from an economically stable West Bank. You also said that the suspension of permits for West Bank workers has led to significant unemployment while harming the Israeli economy.

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

After Hamas’ brutal attack on Israel on October 7, the Israeli government withheld tax revenue it collects on behalf of the Palestinians. Traditionally, that money was redistributed to the Palestinian Authority, which used it to fund its operating budget. Israel has previously frozen and then released tax revenues during times of conflict with the Palestinians.

White House national security communications adviser John Kirby said last month that President Biden had discussed with Netanyahu the need to ensure tax revenues were available to pay the salaries of Palestinian security forces in the West Bank .

Ms. Yellen said Tuesday she was encouraged that revenue is starting to arrive in the West Bank. That money began flowing following an agreement between Israeli and Palestinian officials earlier this month to use Norway as a temporary intermediary to transfer tax funds that Israel had frozen.

“The United States has urged the Israeli government to release customs clearance revenues to the Palestinian Authority to fund basic services and support the economy in the West Bank,” Yellen said. “I welcome the news that an agreement has been reached and that funds have started to flow. This must continue.”

The Treasury Secretary said the war in Gaza has not yet had a significant impact on the global economy. He also addressed another conflict, Russia’s war in Ukraine, which has roiled food and energy markets over the past two years, and called on Western allies to provide more aid to Ukraine.

Yellen expressed support for the idea of ​​using Russia’s $300 billion in assets frozen by the central bank to support Ukraine and suggested that seizing such funds could be a viable option.

“I also believe it is necessary and urgent for our coalition to find a way to unlock the value of these stranded assets to support Ukraine’s continued resilience and long-term reconstruction,” Yellen said. “While we should act together and thoughtfully, I believe there are strong international law, economic and moral reasons to move forward.”

Economic leaders of the Group of 7 are discussing several options on how to legally use Russian money to benefit Ukraine. Yellen said that directly seizing assets would be the “simplest possibility,” but that this would require legislation in the United States and Europe to make such an act permissible.