Geneva, Unilaterally cutting off Palestinian banks from the global banking system would be a violation of the fundamental principles of international law. This concern arises after an Israeli Minister threatened to revoke a protection waiver issued annually to two Israeli banks that maintain connections with Palestinian financial institutions.

According to Office of the High Commissioner for Human Rights, The waiver, issued annually by the Israeli Finance Minister, protects Israeli banks from lawsuits involving the Palestinian Authority for “transferring funds to terror groups.” If the waiver is revoked, Israeli banks may cease ties with Palestinian banks to avoid legal risks. The waiver expired on 1 April 2024, raising concerns about the impact on the Palestinian economy.

Two UN experts emphasized that unilateral actions that sever Palestinian banks from the global banking system could breach the principles of international law, including sovereign equality, non-intervention in domestic affairs, and cooperation in good faith. They noted that cutting off financial connections could exacerbate humanitarian issues in Palestine and impact fundamental human rights such as the right to food, water, health, and life.

The Palestinian economy relies on the Israeli shekel, and its financial transactions with the global economy pass through the Israeli banking system. Withdrawing banking access would likely cripple the Palestinian economy, undermining the framework established by the Oslo and Paris Accords, which have governed Israeli-Palestinian financial relations since the 1990s.

The OHCHR press release also highlighted concerns over Israel’s recent withholding of tax revenue collected on behalf of the Palestinian Authority. Since 24 January 2024, the monthly tax revenue previously allocated to the Palestinian Authority’s public sector employees in Gaza has been transferred to a Norwegian-based trust account. However, the Norwegian fund requires Israeli permission to release the funds, preventing wage payments to public sector employees in Gaza.

The UN experts called for interim measures to avoid irreparable harm and potential breaches of international law, noting that unilateral coercive measures could have significant humanitarian consequences. They have established communication channels with the Israeli Government to address these concerns and seek a resolution to the crisis.