In a pointed communique issued on Saturday, finance leaders from the Group of Seven (G7) nations called on Israel to preserve its crucial banking links with Palestinian financial institutions, underscoring the need for stable financial flows and uninterrupted trade between the two economies amidst escalating regional instability. This urging came as the G7, a coalition of the world’s most advanced economies, reaffirmed its commitment to mitigating obstacles blocking the equitable reallocation of taxing rights for major multinationals and decried Iran’s ongoing military support for Russia and recent escalated hostilities against Israel.
The statement emerged in Washington following intensive discussions late Friday among G7 finance ministers and central bank governors, where the delegates reiterated the indispensability of Israel maintaining correspondent banking relationships with Palestinian banks. Such connections, they noted, facilitate “vital financial transactions and essential trade and services” and are considered critical to the economic viability and social welfare of Palestinian communities. U.S. Treasury officials echoed these concerns earlier, warning that the severance of banking relations could exacerbate economic hardships for Palestinians and further destabilise the region.
In an appeal for broader economic coherence, the G7 ministers advocated for Israel’s prompt release of clearance revenues owed to the Palestinian Authority. These revenues, largely derived from customs duties on goods passing through Israeli ports en route to Palestinian territories, have historically represented a significant portion of the Palestinian Authority’s budget. Delays or withholding of these funds, typically enforced under politically tense circumstances, can have severe economic repercussions for the Palestinian administration and its people.
Adding weight to their concerns, the G7 finance officials also pushed for Israel to consider the reissuance of work permits to Palestinian labourers, subject to security assessments. The movement of Palestinian workers to Israel has long been a vital economic lifeline for many Palestinian families, and restrictions on these permits have frequently been imposed amid heightened security concerns. However, the ministers emphasised the potential benefits of permitting carefully monitored Palestinian employment within Israel, suggesting that these channels not only support Palestinian livelihoods but also contribute to regional stability.
The G7’s carefully calibrated statement was issued against the backdrop of broader global security and economic discussions, with finance leaders condemning Iran for its continued provision of advanced weaponry to Russia. The communique did not mince words, describing Iran’s military transfers as a destabilising factor not only in the ongoing Russia-Ukraine conflict but also within the Middle Eastern theatre, where Iran’s recent escalation against Israel has been particularly troubling to Western democracies.
Separately, the G7 ministers expressed cautious optimism on the ongoing negotiations regarding a $50 billion aid package for Ukraine, backed by frozen Russian sovereign assets. The initiative, they noted, could materialise by December, with preliminary discussions highlighting the potential for bilateral loans that would ensure vital economic and humanitarian support for Ukraine, now entrenched in a protracted conflict with Russia.
This G7 appeal to Israel also highlights a nuanced approach towards regional diplomacy, reflecting a desire to balance Israel’s security imperatives with the socio-economic needs of Palestinians. By prioritising stable Palestinian banking relations and urging Israel to maintain open financial and employment channels, the G7 appears to be advocating a form of economic diplomacy aimed at fostering mutual stability in an environment rife with complexity and tension.
The measured tone and timing of the communique signify the G7’s attempt to project a unifying stance on issues of international stability and justice. The explicit condemnation of Iran’s dual role in fuelling Russia’s military apparatus and exacerbating hostilities against Israel further aligns the G7’s economic priorities with its security commitments. As Israel navigates these multi-layered challenges, its response to the G7’s recommendations could serve as a bellwether for broader international alignment on economic and security strategies in volatile regions.