G7 Leaders Agree to New Initiative to Fight Economic Coercionhttps://english.aawsat.com/business/4337841-g7-leaders-agree-new-initiative-fight-economic-coercion
G7 Leaders Agree to New Initiative to Fight Economic Coercion
Japan's Prime Minister Fumio Kishida (C) hosts a working session as part of the G7 Leaders' Summit in Hiroshima on May 20, 2023. (AFP)
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G7 Leaders Agree to New Initiative to Fight Economic Coercion
Japan's Prime Minister Fumio Kishida (C) hosts a working session as part of the G7 Leaders' Summit in Hiroshima on May 20, 2023. (AFP)
Group of Seven leaders on Saturday agreed to a new initiative to counter economic coercion, and pledged action to ensure that any actors attempting to weaponize economic dependence would fail and face consequences.
The initiative, dubbed Coordination Platform on Economic Coercion, will use early warning and rapid information sharing on economic coercion with members meeting regularly for consultations, the leaders said in a statement.
"The world has encountered a disturbing rise in incidents of economic coercion that seek to exploit economic vulnerabilities," the G7 leaders said in a statement following a meeting in Hiroshima, Japan.
The statement did not identify China, but in details released on Friday that outlined the proposed initiative, the British government pointed to attempts by China to use its economic power in political disputes with Australia and Lithuania.
The statement also committed the G7 leaders to deepen cooperation on hardening supply chains and called for a bigger role for lower income countries in promoting economic resilience.
They urged all nations to adhere to principles of "transparency, diversification, security, sustainability, and trustworthiness and reliability" in building supply chain networks.
The group also agreed to deepen cooperation in information sharing as it looks to establish new standards for next generation technologies.
Palestinians queue to withdraw money from an ATM in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024.
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Israel’s ‘Economic War’ Chokes Occupied West Bank
Palestinians queue to withdraw money from an ATM in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024.
Palestinian teenagers bounced on trampolines and jumped through hoops inside a towering tent on the outskirts of Ramallah, the financial hub of the occupied West Bank.
But the circus students weren't the only ones bending over backwards in the pavilion: the school's director faced financial hurdles to buy the tent from Europe and trampolines from Asia.
"We are suffering with international payments," said Mohamad Rabah, head of the Palestinian Circus School, describing a bureaucratic process that could delay equipment delivery by up to a month.
Banking in the Palestinian territories is challenging, with the Palestinian Authority (PA) under scrutiny for potential terror financing, hindering transactions.
Israel has occupied the West Bank since 1967, with strong economic ties allowing two Israeli lenders to serve as correspondent banks in the Palestinian territory.
But this may change if Israel's far-right Finance Minister Bezalel Smotrich carries out threats to sever a vital banking route next month.
Since Hamas's October 7 attack triggered the Gaza war, Israel has imposed economic curbs on the PA, withholding tax revenues it collects on its behalf.
Smotrich said this week he had redirected $35 million in PA tax revenues to families of "terrorism" victims, a move condemned by the United States.
After three European countries recognized Palestinian statehood in May, Smotrich told Prime Minister Benjamin Netanyahu he would not extend indemnity to banks that transfer the funds from the end of June.
Israel's Bank Hapoalim and Israel Discount Bank need protection, expiring on July 1, to avoid sanctions for dealing with Palestinian lenders.
Israel's central bank and finance ministry declined to comment when contacted by AFP.
A Palestinian fruit vendor arranges his street cart in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024. (AFP)
- 'Humanitarian crisis' -
The banking channel used to pay for West Bank imports -- including essential goods like water, fuel and food -- handles $8 billion yearly.
Palestinian businesses receive nearly $1.7 billion annually for exports, according to the Palestine Monetary Authority.
"For us, because our economy is dependent on the Israeli economy, because Israel is controlling the border, the impact will be high," said PMA governor Feras Milhem.
The Palestinian economy is largely governed by the 1994 Paris Protocol, which granted sole control over the territories' borders to Israel, including the right to collect import duties and value-added tax for the PA.
Palestinian livelihoods have also been hurt by bans on laborers crossing into Israel and by a sharp downturn in tourism in the territory, including a quiet Christmas season in Bethlehem.
The United States has urged Israel to improve conditions, warning that severing the banking route would have a dire impact on the West Bank economy.
"I believe it would create a humanitarian crisis in due course if Palestinian banks are cut off from Israeli correspondence," US Treasury Secretary Janet Yellen said last month.
Western governments fear Israel's economic policies could destabilize the West Bank.
"The banking system may collapse and therefore the PA may collapse as well," a European diplomatic source in Jerusalem told AFP on condition of anonymity.
"The PA is in a financial crisis and it could collapse before August."
A Palestinian vendor unloads his stock in front of a shop in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024. (AFP)
- Digital currency -
Palestinian businessmen say their bottom lines have been hit since October 7.
Imad Rabah, who owns a plastics company, said his net income had fallen 50 percent in one year.
Musa Shamieh, who owns a womenswear company said the Israeli policies were designed to push Palestinians to leave the West Bank.
"They want us to leave our land and they know it will be hard for us to stay if we can't do business," Shamieh said.
Israel's harsh economic policies could eventually drive Palestinian policymakers to pursue sweeping changes to the monetary system.
"We need to work on a plan B when it comes to the trade relations," said Milhem, governor of the PMA, which uses an image of the former Palestinian pound as its logo.
Yousef Daoud, professor at the West Bank's Birzeit University, said the territory could scrap the shekel as its de facto currency in favor of a digital alternative.
"We can make our e-currency, just collect all the shekels, issue an equivalent amount of Palestinian pounds, one-to-one fixed exchange rate, and have the Palestinians deal with e-currency," he said.
"Somehow, eventually, we'll get rid of the shekel."
