Israel Cracks Down on Banks Over Payments to Palestinian Inmates

JERUSALEM — Even as Israel is collaborating with West Bank officials to fight the coronavirus, a new Israeli military order taking effect on Saturday forbids banks in the occupied territory from processing payments that the Palestinian Authority distributes to the families of thousands of Palestinians who have spent time in Israeli jails.

The Palestinians defend the funds as vital welfare that compensate for an unfair military-run justice system, provide income for families who have lost their primary breadwinners and enable released prisoners to reintegrate into society. But the Israelis denounce the practice as rewarding terrorism.

The decree apparently also bans financial institutions from dealing with stipends that the Palestine Liberation Organization gives to the families of slain assailants, who the Palestinians refer to as “martyrs.”

The order threatens imprisonment for bank workers who refuse to comply, and prompted at least three banks to require recipients of the payments to close their accounts this past week, prompting intense outrage.

The Cairo Amman Bank, which is based in Jordan, was the focus of anger on Friday because of the new directive. Shots were fired at a branch in the West Bank city of Jenin and a Molotov cocktail hurled at another in Jericho, another West Bank city. In Ramallah, signs were posted outside a branch demanding that the bank reverse its “disgraceful decision.”

“Jerusalem is between Cairo and Amman,” the signs read. “For Jerusalem, the prisoners of freedom have sacrificed their lives in the darkness of prisons.”

The violence prompted a statement from the Palestinian prime minister, Muhammad Shtayyeh, who said on Friday that families should be allowed to reactivate their accounts while banking and other officials weighed how to respond to the Israeli decree.

“We will find solutions that preserve the rights of the prisoners and martyrs and protect the banks from the occupation’s tyranny and any legal measures,” he said.

The Palestinian Authority, which governs parts of the West Bank under the Oslo accords, sends stipends each month to as many as 12,000 families of current and former prisoners, some of whom have been convicted of killing Israelis. More than 750,000 Palestinians have been imprisoned by Israel during the 53 years of the occupation. Many Palestinians revere the current and former inmates as national heroes.

But Israel has constantly attacked the payouts, which its officials argue act as an incentive and reward for violence against Israelis.

Nasr Jabreel, 61, a former prisoner from the Jalazone refugee camp north of Ramallah, said he visited his bank on Wednesday to collect the monthly stipend, but the A.T.M. instructed him to see the manager, who told him he had to close his account.

Mr. Jabreel, a father of six, said he had spent 10 years in Israeli custody for participating in clashes with soldiers. “I already paid a price,” he said, noting he received $713 every month. “Why is Israel always looking for another way to make us pay again?”

Despite Mr. Shtayyeh’s efforts to defuse tensions, banking executives say that there is no easy way around the order and that their institutions are compelled to stop dealing with the payments.

“The Israeli order is clear,” said Maher al-Masri, the chairman of the Association of Banks in Palestine and the head of the Palestine Islamic Bank. “Our only option is to find a solution that protects the interests of the banks and the families.”

Mr. al-Masri, a former economy minister with the Palestinian Authority, said he believed that the 14 banks operating in the West Bank would have to cease working with the prisoner funds by the beginning of June. A statement from the Israeli army said the decree would take effect May 9.

The order is the latest example of tensions erupting between the Israelis and the Palestinians even as they work together to confront the coronavirus.

Over the past several months, the two sides reached agreements to facilitate the movement of Palestinian laborers between Israel and the West Bank and support the Palestinian Authority’s budget. But they have also butted heads over the workers and many other issues, including Israeli raids on Palestinian cities and the looming possibility of Israel annexing parts of the West Bank in the coming months.

The Israeli authorities first informed the Palestinians about the new order three months ago, when they communicated its contents to Hussein al-Sheikh, a senior Palestinian official in charge of liaising with Israel, according to Qadri Abu Bakr, the head of the Prisoners Affairs Commission of the Palestinian Authority.

The Israeli Army said that the order intended “to expand the criminal and administrative tools in the hands of the military commander in dealing with terror threats.”

The decree specifically states that “a soldier or authorized party” can seize anything that is suspected of “being given as payment or a reward for carrying out an offense.” It also outlines punishments, including imprisonment, for “transactions” aimed at “rewarding” the execution of a long list of security offenses.

In the past couple of years, Israel has ramped up its efforts to crack down on the payments. In early 2019, the Israeli authorities started to enforce a law allowing them to withhold taxes that they collect on behalf of the Palestinians every month equivalent to the sum of the stipends. In 2019, Israel withheld about $140 million.

Adam Rasgon reported from Jerusalem, and Mohammed Najib from Ramallah.