How New US Sanctions Threaten the Future of West Bank Settlements

Nuha Yousef | 8 months ago

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The impact of the U.S.’s intensified sanctions on Israeli settlers in the West Bank has been brought to light. 

Initially perceived as a political gesture aimed at extremists, these sanctions are now viewed within the Israeli occupation as a significant economic deterrent to the ongoing settlement activities and related business ventures in the occupied territories.

The punitive measures, which began in February and were subsequently expanded, target a select group of individuals and organizations linked to violence against Palestinians.

Policy Shift?

This move by Washington has been interpreted both in Israeli Occupation and internationally as a stinging rebuke to a close ally, rather than a substantial shift in policy.

Yet, Israeli experts across the political spectrum argue that the implications of these financial restrictions are underestimated.

They suggest that even a limited list of sanctions could lead financial institutions to sever ties with any person or business operating within the settlements, out of concern for inadvertently engaging in unlawful transactions.

The recent executive order from the U.S. extends its reach, authorizing action against any entity deemed a threat to the region’s peace, security, or stability.

This order encompasses politicians who may support or partake in actions subject to sanctions, including policy implementation or lack thereof—a clause that could implicate members of the Israeli government.

U.S. Secretary of State Anthony Blinken has linked the sanctions to the broader goal of establishing a Palestinian state, asserting that the Israeli occupation must address the violence against civilians in the West Bank and hold the perpetrators accountable.

He affirmed the U.S.’s commitment to pursuing its foreign policy objectives, including the two-state solution.

Following alerts from the Financial Crimes Enforcement Network, many Israeli banks have begun reassessing their dealings with the West Bank.

Shuki Friedman, a legal expert and advisor on sanctions, emphasized that while the executive order targets individuals, its broader implications cast a pall over all activities emanating from the West Bank, effectively delegitimizing them.

Financial entities, he noted, must exercise caution and potentially withdraw from these activities.

Israeli human rights attorney Michael Sfard initially dismissed the sanctions as a mere political statement from the Biden administration.

However, he now recognizes them as a pivotal change in American policy that could halt the expansion of settlements in the West Bank.

Sfard pointed out that the sanctions could redefine the Green Line, the internationally recognized border established post-1948 war.

Domestic Pressure

The Yesha Council, representing settlers, has acknowledged the policy shift signified by the sanctions, despite their rejection of the measures.

The Council’s spokesperson argued that the sanctions are not merely about individuals but reflect the Biden administration’s broader strategy to penalize Israelis who oppose the two-state solution.

The settlement movement, which commenced following Israel’s occupation of the West Bank and East Jerusalem, seeks to permanently annex these territories.

Despite international law deeming such actions illegal, approximately half a million settlers reside in the West Bank.

Sfard highlighted that the Green Line is virtually non-existent in Israeli politics, economy, and infrastructure. Living and conducting business in the settlements faces no opposition.

However, should the U.S. expand its sanctions to include businesses linked to settler violence, Israeli banks might struggle to service those operating in the West Bank.

After the initial sanctions, Israeli financial institutions faced domestic pressure to maintain services for those affected.

Yet, the public seems unaware that these institutions have little choice but to comply with U.S. directives if they wish to operate within the dollar-based financial system.

Unlike countries like Russia and Iran, which have sought alternatives to circumvent U.S. sanctions, the Israeli occupation lacks such options.

The unfolding scenario suggests a complex interplay of political messages, economic repercussions, and potential shifts in the geopolitical landscape of the region.

Overt Measures

Tariq Bodyafa, A Palestinian researcher, told Al-Estiklal that the sanctions could present a dilemma for Israelis, potentially making them weigh their support for extremist settlers against their access to the global financial system.

He speculated that when faced with a choice between leisure travel to European destinations and backing the settlements, preferences would become evident.

The U.S. has implemented “secondary sanctions,” which are not based on actions deemed criminal by American standards, such as violence against Palestinian civilians, but rather aim to deter dealings with individuals and entities on the sanctions list.

These measures could inadvertently affect any party that engages, whether knowingly or not, with those listed.

Bodyafa highlighted the complexities for banks operating in West Bank settlements, noting that the sanctions landscape resembles a “minefield.” 

“Financial institutions are cautious to avoid supporting sanctioned individuals, as doing so could trigger additional penalties,” Bodyafa said.

Contrasting views are present within the Israeli occupation. Yehuda Scholl, a human rights advocate, argues that the U.S. should directly target the financial underpinnings of the settlements to effectively curb violence in the West Bank.

He contends that sanctions should extend beyond individuals to the broader financial networks that enable settlement activities.

Yehuda Shaffer, a former Attorney General, believes that Israeli banks may avoid transactions with sanctioned parties without facing significant consequences.

He views the sanctions as a symbolic gesture by an American administration under duress, attempting to convey a balanced stance despite its strong support for Israel.

Shaffer finds the comparison of “Israel” to pariah states like North Korea to be offensive and asserts that the sanctions insinuate a misalignment between Israeli and American legal standards.

Despite these perspectives, the consensus is that the sanctions’ impact will be minimal. Banks are expected to adhere to the restrictions, avoiding listed organizations and individuals, while continuing to service the settler population in the West Bank.

Bodyafa remains cautious about the potential effectiveness of the sanctions. He suggests that if the U.S. is serious about its stance, it might be more strategic to exert pressure without public announcements, as overt measures that fail to produce results could inadvertently reinforce the settlers’ resolve.