New private company hopes to stabilize West Bank economy, and security

Company for Correspondence Services to provide services to Israeli and Palestinian banks

Cool pic Palestine money 370 (photo credit: REUTERS/Tarmizy Harva)
Cool pic Palestine money 370
(photo credit: REUTERS/Tarmizy Harva)

A new private company hopes to be the main corresponding bank between Israeli financial systems and Palestinian banks and might be one of the stabilizers of the West Bank.

Company for Correspondence Services hopes to reduce the use of cash and see the transfer of salaries by a computerized system that is affiliated with the Civil Administration to allow for the close supervision of the funds.

The company would provide corresponding services to Israeli banks and Palestinian ones.

The defense establishment believes that while there has been a significant increase in terror, there has not been a broad call to violence because of the number of Palestinian workers who are able to bring home a salary capable of feeding their families. 

A stabilizing economy

The Palestinian economy has been relatively stable in recent years, with 12% unemployment rate in the West Bank compared to 46% in the Gaza Strip. The Palestinian economy in the West Bank is largely dependent on work in Israel and the settlements, whether legal or not-there are some 150,000 Palestinian laborers in Israel and in the settlements. 

Illustrative photo of the 200 New Israeli Shekel bill. (credit: NATI SHOHAT/FLASH90)Illustrative photo of the 200 New Israeli Shekel bill. (credit: NATI SHOHAT/FLASH90)

The currency is the shekel and the volume of bank transfers between the two reaches some NIS 70 billion each year in the commercial business sector.

Since the signing of the Oslo Accords and the Paris Protocol, the transfer of funds to Palestinian banks were done through Bank Hapoalim and Bank Discount group. 

Following the September 11th, 2001 attacks, the global banking system led by the United States began to crack down on money laundering and the funneling of funds to terrorists. Then, in 2016 the two Israeli banks decided to sever ties saying that the risks were too great for them to continue.

But, Israel knew that it could not cut all financial ties with the Palestinians. Doing so would destroy the Palestinian economy, already weak, and in turn, the security situation would deteriorate even further.

In 2018 the government established the alternative banking company that would be private yet the shares owned by the government. In May 2019 the company was established and registered.

Led by Dr. Gitit Gur Gershgoren, the former Chief Economist of Israel’s Securities Authority, it got a bank identification code (62) this past summer and was accepted into the SWIFT system.

According to Gershgoren, the company will not only reduce the amount of funds that will reach terror groups, it provides an alternative for the Palestinian people to work peacefully and earn money.

“If you make sure that the legal routes exist and operate normally and continuously, there is a lesser chance and  no trigger for the creation of alternative routes like crypto or the use of cash involving money laundering that would allow criminals or terrorists to take advantage of the routes.”

 HAMAS ABIDES by its charter: Graffiti depicts Hamas fighters firing rockets, in Khan Younis, May 30. (credit: ABED RAHIM KHATIB/FLASH90) HAMAS ABIDES by its charter: Graffiti depicts Hamas fighters firing rockets, in Khan Younis, May 30. (credit: ABED RAHIM KHATIB/FLASH90)

According to a senior official, it is in Israel’s interest to have this company.  Last week, the Palestinian Cabinet decided to form a special committee to study the issue of the Palestinian currency.

Though the Palestinians continue to use the shekel, the increased discussion within the PA to have their own currency is a step that can be viewed as a measure of increased independence. 

“If there are no financial ties, it will be easier for Hamas to take over,” the source said.

“It’s never good to have a boiling pot next to you, even if you want to fight the bad guys, you need to give an alternative to the good guys,” the source continued. “The new battlefield is not guns, it's access to money. We’ve tried everything, and right now if you are reading the map you understand this is the only way.”