Israeli banks fear international sanctions over settlement financing

Israeli banks and the Bank of Israel are expressing concern over potential international sanctions related to the financing of settlement construction in the West Bank. The Israel Bank Association has warned that upcoming British sanctions may extend beyond individuals involved in settler violence to include financial institutions that fund or provide guarantees for settlement construction.

A primary focus of this concern is the strategic ‘E1’ project, located between Jerusalem and the Ma'ale Adumim settlement. This project aims to connect the settlement to Jerusalem by seizing Palestinian land, a move Western nations warn could sever the connection between the northern and southern West Bank.

In response to these risks, Israeli banks are currently declining to clarify whether they will provide the necessary banking guarantees for contractors participating in government tenders for the E1 area. This hesitation stems from a dilemma: providing financing could trigger international sanctions, while refusing to do so could result in a self-imposed boycott of settlement activities.

British Foreign Secretary Ed Miliband has indicated intentions to expand the UK's sanctions regime to include those involved in settlement building and financing. Other nations, including France and Canada, have previously announced intentions to restrict trade with Israeli settlements.