Finance Minister Bezalel Smotrich directed his office on Tuesday to cancel a critical policy for sustaining the Palestinian economy in retaliation for the decision by five Western countries to sanction him and fellow far-right minister Itamar Ben Gvir.

Smotrich’s office said in a statement that he had directed the Finance Ministry’s accountant-general, Yali Rotenberg, to waive the indemnity that Israeli banks have been given to correspond with Palestinian banks, “against the backdrop of the delegitimization campaign that the PA is leading against the State of Israel worldwide.”

Smotrich had earlier in the day reportedly pledged to collapse the PA in response to the sanctions, even though Ramallah was not known to have had any involvement in the joint decision by the UK, Canada, Australia, New Zealand and Norway.

The Palestinian economy relies heavily on the banks’ relationships with their Israeli counterparts to process transactions made in shekels, as the PA does not have its own currency. Some NIS 53 billion ($14........

© The Times of Israel