The Coordinator of Government Affairs in the Territories instructed the Bank of Israel to stop allowing shekels in the Palestinian Authority from being exchanged into other currencies, such as dollars, according to Maariv.
The move was made in response to the decision by the Palestinian Authority to stop buying calves from Israel and to begin importing calves from other countries.
COGAT's decision has caused problems with both Palestinian and foreign banks in the West Bank. Finance Minister Moshe Kahlon is looking into the matter and Bank of Israel Governor Professor Amir Yaron claimed that the issue was now solved. The bank itself refused to deny or confirm Yaron's claim.
The ban on importing calves from Israel was taken in October by PA Prime Minister Mohammed Shtayyeh as part of his plan to achieve “gradual economic disengagement” from the Jewish State.
The move angered both Israeli and Palestinian farmers, who complained that they were suffering major financial losses as a result of the sudden decision to ban the entry of the calves into the West Bank.
Israel had threatened to ban Palestinian produce from its markets in response to the calf ban. “Israel will not allow boycotts of any kind against Israeli produce,” COGAT head Maj.-Gen. Kamil Abu Rukun said, noting that the ban was hurting the economies of both sides.
Ibrahim Milhem, spokesperson for the PA government, said that the ban is still in force and accused Israeli media of seeking to “undermine Palestinian national immunity and cast doubt about the government’s strategic decision, which was taken on instructions from President Mahmoud Abbas.”
The decision, Milhem said, is “irreversible” and was made in the context of Abbas’s decision to “strategically disengage” from Israel.
Khaled Abu Toameh contributed to this report.