RAMALLAH, Palestinian Territories: Palestinian teenagers bounced on trampolines and jumped through hoops inside a towering tent on the outskirts of Ramallah, the financial hub of the occupied West Bank.
But the circus students weren’t the only ones bending over backwards in the pavilion: the school’s director faced financial hurdles to buy the tent from Europe and trampolines from Asia.
“We are suffering with international payments,” said Mohamad Rabah, head of the Palestinian Circus School, describing a bureaucratic process that could delay equipment delivery by up to a month.
Banking in the Palestinian territories is challenging, with the Palestinian Authority (PA) under scrutiny for potential terror financing, hindering transactions.
Israel has occupied the West Bank since 1967, with strong economic ties allowing two Israeli lenders to serve as correspondent banks in the Palestinian territory.
But this may change if Israel’s far-right Finance Minister Bezalel Smotrich carries out threats to sever a vital banking route next month.
Since Hamas’s October 7 attack triggered the Gaza war, Israel has imposed economic curbs on the PA, withholding tax revenues it collects on its behalf.
Smotrich said this week he had redirected $35 million in PA tax revenues to families of “terrorism” victims, a move condemned by the United States.
After three European countries recognized Palestinian statehood in May, Smotrich told Prime Minister Benjamin Netanyahu he would not extend indemnity to banks that transfer the funds from the end of June.
Israel’s Bank Hapoalim and Israel Discount Bank need protection, expiring on July 1, to avoid sanctions for dealing with Palestinian lenders.
Israel’s central bank and finance ministry declined to comment when contacted by AFP.
The banking channel used to pay for West Bank imports — including essential goods like water, fuel and food — handles $8 billion yearly.
Palestinian businesses receive nearly $1.7 billion annually for exports, according to the Palestine Monetary Authority.
“For us, because our economy is dependent on the Israeli economy, because Israel is controlling the border, the impact will be high,” said PMA governor Feras Milhem.
The Palestinian economy is largely governed by the 1994 Paris Protocol, which granted sole control over the territories’ borders to Israel, including the right to collect import duties and value-added tax for the PA.
Palestinian livelihoods have also been hurt by bans on laborers crossing into Israel and by a sharp downturn in tourism in the territory, including a quiet Christmas season in Bethlehem.
The United States has urged Israel to improve conditions, warning that severing the banking route would have a dire impact on the West Bank economy.
“I believe it would create a humanitarian crisis in due course if Palestinian banks are cut off from Israeli correspondence,” US Treasury Secretary Janet Yellen said last month.
Western governments fear Israel’s economic policies could destabilize the West Bank.
“The banking system may collapse and therefore the PA may collapse as well,” a European diplomatic source in Jerusalem said on condition of anonymity.
“The PA is in a financial crisis and it could collapse before August.”
Palestinian businessmen say their bottom lines have been hit since October 7.
Imad Rabah, who owns a plastics company, said his net income had fallen 50 percent in one year.
Arak producer Nakhleh Jubran said his liquor business had fallen 30 percent over the same period.
“We have a traditional war in Gaza and we have an economic war in the West Bank,” said Jubran.
Musa Shamieh, who owns a womenswear company said the Israeli policies were designed to push Palestinians to leave the West Bank.
“They want us to leave our land and they know it will be hard for us to stay if we can’t do business,” Shamieh said.
Israel’s harsh economic policies could eventually drive Palestinian policymakers to pursue sweeping changes to the monetary system.
“We need to work on a plan B when it comes to the trade relations,” said Milhem, governor of the PMA, which uses an image of the former Palestinian pound as its logo.
Yousef Daoud, professor at the West Bank’s Birzeit University, said the territory could scrap the shekel as its de facto currency in favor of a digital alternative.
“We can make our e-currency, just collect all the shekels, issue an equivalent amount of Palestinian pounds, one-to-one fixed exchange rate, and have the Palestinians deal with e-currency,” he said.
“Somehow, eventually, we’ll get rid of the shekel.”
Israel’s ‘economic war’ chokes occupied West Bank
https://arab.news/yux28
Israel’s ‘economic war’ chokes occupied West Bank
- Banking in the Palestinian territories is challenging, with the Palestinian Authority under scrutiny for potential terror financing
- Palestinian businesses receive nearly $1.7 billion annually for exports, according to the Palestine Monetary Authority
Israel’s Somaliland gambit: what’s at risk for the region?
- Somaliland’s strategic location near the Bab Al-Mandab raises fears an Israeli security presence could turn the Red Sea into a powder keg
- Critics argue the decision revives Israel’s “periphery” strategy, encouraging fragmentation of Arab and Muslim states for strategic advantage
RIYADH: It perhaps comes as no surprise to seasoned regional observers that Israel has become the first and only UN member state to formally recognize the Republic of Somaliland as an independent and sovereign nation.
On Dec. 26, Israel’s Prime Minister Benjamin Netanyahu and Foreign Minister Gideon Sa’ar signed a joint declaration of mutual recognition alongside Somaliland’s President Abdirahman Mohamed Abdullahi.
For a region that has existed in a state of diplomatic limbo since declaring independence from Somalia in 1991, this development is, as Abdullahi described it, “a historic moment.” But beneath the surface lies a calculated and high-stakes geopolitical gamble.
While several nations, including the UK, Ethiopia, Turkiye, and the UAE, have maintained liaison offices in the capital of Hargeisa, none had been willing to cross the Rubicon of formal state recognition.
Israel’s decision to break this decades-long international consensus is a deliberate departure from the status quo.
By taking this step, Israel has positioned itself as the primary benefactor of a state that has long sought a seat at the international table. As Dya-Eddine Said Bamakhrama, the ambassador of Djibouti to Saudi Arabia, told Arab News, such a move is deeply disruptive.
“A unilateral declaration of separation is neither a purely legal nor an isolated political act. Rather, it carries profound structural consequences, foremost among them the deepening of internal divisions and rivalries among citizens of the same nation, the erosion of the social and political fabric of the state, and the opening of the door to protracted conflicts,” he said.
Critics argue that Israel has long lobbied for the further carving up of the region under various guises.
This recognition of Somaliland is seen by many in the Arab world as a continuation of a strategy aimed at weakening centralized Arab and Muslim states by encouraging peripheral secessionist movements.
In the Somali context, this path is perceived not as a humanitarian gesture, but as a method to undermine the national understandings reached within the framework of a federal Somalia.
According to Ambassador Bamakhrama, the international community has historically resisted such moves to prioritize regional stability over “separatist tendencies whose dangers and high costs history has repeatedly demonstrated.”
By ignoring this precedent, Israel is accused of using recognition as a tool to fragment regional cohesion.
In the past, Israel has often framed its support for non-state actors or separatist groups under the pretext of protecting vulnerable minorities — such as the Druze in the Levant or Maronites in Lebanon.
This “Periphery Doctrine” served a dual purpose: it created regional allies and supported Israel’s own claim of being a Jewish state by validating the idea of ethnic or religious self-determination.
However, in the case of Somaliland, the gloves are off completely. The argument here is not about protecting a religious minority, as Somaliland is a staunchly Muslim-majority territory. Instead, the rationale is nakedly geopolitical.
Israel appears to be seeking strategic depth in a region where it has historically been isolated. Netanyahu explicitly linked the move to “the spirit of the Abraham Accords,” signaling that the primary drivers are security, maritime control, and intelligence gathering rather than the internal demographics of the Horn of Africa.
The first major win for Israel in this maneuver is the expansion of its diplomatic orbit. It could be argued that the refusal of the federal government in Mogadishu to join the Abraham Accords was an artificial barrier.
The evidence for this claim, from the Israeli perspective, is that Somaliland — a territory with a population of nearly six million and its own functioning democratic institutions — was eager to join.
Abdullahi said Somaliland would join the Abraham Accords as a “step toward regional and global peace.” Yet, this peace comes with a clear quid pro quo — formal recognition.
Israel can now argue that the “Somaliland model” proves that many other Arab and Muslim entities are willing to normalize relations if their specific political or territorial interests are met.
This challenges the unified stance of the Arab League and the Organization of Islamic Cooperation, which maintain that normalization must be tied to the resolution of the Palestinian conflict.
The second major gain for Israel is the potential for a military presence in the Horn of Africa. Somaliland’s strategic position on the Gulf of Aden, near the Bab Al-Mandab Strait, makes it a prime location for monitoring maritime traffic.
This is a ticking time bomb given that just across the narrow sea lies Yemen, where the Houthi movement — whose slogan includes “Death to Israel” — controls significant territory.
Israel may claim that a military or intelligence presence in Somaliland will boost regional security by countering Houthi threats to shipping. However, regional neighbors fear it will likely inflame tensions.
Ambassador Bamakhrama warned that an Israeli military presence would “effectively turn the region into a powder keg.”
“Should Israel proceed with establishing a military base in a geopolitically sensitive location... such a move would be perceived in Tel Aviv as a strategic gain directed against the Arab states bordering the Red Sea — namely Egypt, Saudi Arabia, Somalia, Yemen, Sudan, and Djibouti,” he said.
The Red Sea is a “vital international maritime corridor,” and any shift in its geopolitical balance would have “repercussions extending far beyond the region,” he added.
The recognition is also a clear violation of international law and the principle of territorial integrity as enshrined in the UN Charter.
While proponents point to exceptions like South Sudan or Kosovo, those cases involved vastly different circumstances, including prolonged genocidal conflicts and extensive UN-led transitions.
In contrast, the African Union has been firm that Somaliland remains an integral part of Somalia.
The backlash has been swift and severe. The Arab League, the Gulf Cooperation Council, and the OIC have all decried the move. Even US President Donald Trump, despite his role in the original Abraham Accords, has not endorsed Israel’s decision.
When asked whether Washington would follow suit, Trump replied with a blunt “no,” adding, “Does anyone know what Somaliland is, really?”
This lack of support from Washington highlights the isolation of Israel’s position. The OIC and the foreign ministers of 21 countries have issued a joint statement warning of “serious repercussions” and rejecting any potential link between this recognition and reported plans to displace Palestinians from Gaza to the African region.
Israel’s recognition of Somaliland appears to be a calculated gamble to trade diplomatic norms for strategic advantage.
While Hargeisa celebrates a long-awaited milestone, the rest of the world sees a dangerous precedent that threatens to destabilize one of the world’s most volatile corridors.
As Ambassador Bamakhrama says, the establishment of such ties “would render (Israel) the first and only state to break with the international consensus” — a move that prioritizes “narrow strategic calculations” over the stability of the international system.
