by Treasury Secretary Janet L. Yellen said Tuesday that she had personally urged Prime Minister Benjamin Netanyahu of Israel to increase trade engagement with the West Bank, arguing that doing so was important for the economic well-being of both Israelis and Palestinians.
Yellen’s request was outlined in a letter she sent to 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, he 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 Palestinians and Israelis alike,” Yellen said at a news conference in Brazil ahead of a meeting of Group of 20 finance ministers.
Yellen said she told Netanyahu that she was concerned that Israel’s actions were “severely harming the West Bank economy, reducing revenues and, at the same time, having an adverse impact on Israel.”
The letter came as the Palestinian Authority cabinet, which administers part of the Israeli-occupied West Bank, submitted its resignation on Monday in hopes of being able to reform and potentially take over the administration of Gaza after the war there ends. Negotiations between Israel and Hamas are also resuming in Qatar this week 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 Israel agreeing to a ceasefire. temporary. fire.
Senior Biden administration officials have been trying to mediate a resolution to the conflict in Gaza, which health authorities say has killed an estimated 29,000 Palestinians. Yellen has largely focused on tracking the economic implications of the war and managing the sanctions the Treasury Department has imposed on Hamas and those involved in its finance network.
While the Biden administration has been concerned about the humanitarian crisis unfolding in Gaza, it is increasingly concerned that economic unrest in the West Bank could fuel violence and further deteriorate living standards there. The war has already taken its toll on Israel’s economy, which shrank nearly 20 percent in the fourth quarter of last year.
Yellen’s letter emphasized 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 the suspension of permits for West Bank workers had caused significant unemployment and hurt Israel’s economy.
The Treasury secretary called on Israel to ensure that tax revenue reaches Palestinians in the West Bank.
Since Hamas’ brutal attack on Israel on October 7, the Israeli government has been withholding the tax revenue it collects on behalf of the Palestinians. Traditionally, that money has been distributed to the Palestinian Authority, which used it to fund its operating budget. Israel previously froze and then released those tax revenues during periods 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.
Yellen said Tuesday that she was encouraged that revenue was starting to flow into 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 settlement revenues to the Palestinian Authority to fund basic services and boost the economy in the West Bank,” Yellen said. “I welcome the news that an agreement has been reached and funds have begun to flow. “This must continue.”
The Treasury secretary said the war in Gaza had not yet had a significant impact on the global economy. He also addressed another conflict, Russia’s war in Ukraine, which has disrupted 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 central bank’s $300 billion in frozen assets to support Ukraine and suggested that seizing those 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 must act together and thoughtfully, I believe there are strong international law, economic and moral arguments to move forward.”
Economic leaders from the Group of 7 countries have been discussing various options for how they can legally use Russia’s money to benefit Ukraine. Yellen said seizing the assets directly would be the “simplest possibility,” but doing so would require legislation in the United States and Europe to allow such an act.
