The Joe Biden administration has clarified a new round of sanctions targeting violent Israeli settlers in the occupied West Bank, saying it would allow local banks to process routine transactions with people on the blacklist.
The US Treasury Department elaborated on the penalties in a letter to Tel Aviv’s central bank – first obtained by the Times of Israel, which reported that the message was intended to “cool anger” over the sanctions by the country’s finance minister, Bezalel Smotrich.
“Israeli banks can process transactions for individuals designated under [the penalties] that are ordinarily incident and necessary to basic human needs or subsistence without exposure to OFAC sanctions risk, provided these transactions do not involve the US financial system or US persons,” the Treasury said.
A number of Israeli banks froze the accounts of sanctioned individuals last month over fears of violating the US measures, which were imposed through a February executive order by President Joe Biden. In an effort to curb “extremist settler violence,” the sanctions bar transactions with those who undermine “peace, security, and stability” in Palestine and Israel, including settlers who have engaged in attacks, land theft or intimidation targeting Palestinians.
So far, seven Israelis have been designated under the order, though its effectiveness remains to be seen as the sanctioned settlers look largely unfazed.
The US clarification appears to limit the sanctions beyond what is specified in Biden’s order, which bars all “services to or in support of any person” named under the penalties. A Treasury spokesperson later told AFP that Washington “fully intends to enforce” the sanctions, however, suggesting the order had always permitted “humanitarian exceptions.”
Smotrich – a fervent supporter of Israeli settlers and himself a resident of the occupied West Bank – has reportedly threatened to retaliate to the US penalties with harsh measures against Palestinians. According to the Hebrew-language daily Israel Hayom, the minister vowed to take steps to “freeze… economic activity in the Palestinian Authority” and even “collapse the Palestinian economy” outright.
“Smotrich refuses to renew his signature on a document that provides protection from lawsuits to the Israeli banks Discount and Po’aleim, which have financial ties to Palestinian entities,” the newspaper explained. “In the absence of protection, the Israeli banks are expected to sever ties with the Palestinian banks, fearing that they will be exposed to lawsuits on the charge of transferring funds to terrorism.”
Israel Hayom later reported that Smotrich’s threat pushed Biden to “dramatically soften” his settler sanctions, dubbing the move a “great achievement for Israel.” A fellow member of the minister’s ultranationalist Religious Zionism party also cheered his pressure on Washington, saying the US sanctions had “crossed the line.”