Trump Administration Warns Israel of Palestinian Authority Collapse Due to Economic Situation

Translation by SadaNews - The U.S. Ambassador to Israel, Mike Huckabee, has warned senior Israeli officials that his administration is concerned about the economic collapse of the Palestinian Authority in the West Bank, which could lead to security escalation.

Huckabee told Channel 12 in Hebrew, as translated by SadaNews, "If the Palestinian economy collapses completely, it will not be a victory for anyone; instead, it will lead to escalating and deepening despair, as desperate people do desperate things."

According to the Hebrew channel, Huckabee conveyed this message clearly to senior Israeli officials during a recent conversation with them.

The warnings from Huckabee come against the backdrop of steps taken by Israeli Finance Minister Bezalel Smotrich to weaken the Palestinian Authority in an attempt to enhance the annexation of the West Bank.

Previously, Smotrich described the Palestinian Authority as a threat to Israel, stating that Hamas serves as an asset because its support weakens the power of the Palestinian government and reduces the chances of establishing a Palestinian state.

In the last four months, Smotrich has taken additional steps to economically choke the Palestinian Authority, the most notable of which was halting the transfer of $500 million from tax revenues collected by Israel for the Authority. This is in addition to another $2.5 billion in Palestinian tax funds that Israel has withheld in recent years.

Smotrich decided to separate Palestinian banks from the Israeli financial system, a decision that is pending cabinet approval before it can take effect.

The channel states, as translated by SadaNews, that the collapse of the Palestinian economy and banking system could lead to the collapse of the Palestinian Authority, creating a governmental vacuum that would push the West Bank into chaos and exacerbate the regional conflict.

Huckabee said he is in talks with senior Israeli and Palestinian officials about a deal that would free Palestinian funds, remove threats from the banks, and reduce the risk of economic collapse in the West Bank.

Huckabee recently met with Smotrich and other senior Israeli officials and met in Ramallah with Palestinian Vice President Hussein al-Sheikh and Prime Minister Mohammad Mustafa.

A senior Palestinian official stated that "Ambassador Huckabee informed Palestinian leaders that he assured Israeli officials that the United States does not want to see the economic collapse of the Palestinian Authority and promised to continue pressing."

According to the channel, Huckabee's diplomatic efforts failed in late July after France and other Western countries announced they would recognize Palestine at the UN General Assembly in September.

Huckabee stated, as translated by SadaNews: "We were in the midst of tough negotiations, making progress, to resolve the financial crisis ... I was shuttling between Jerusalem and Ramallah to reach a solution, but as soon as the Palestinian Authority and the Europeans began talking about recognizing a Palestinian state, discussions suddenly stopped ... The Israeli position was that if the Palestinians announced a state, there was no point in showing goodwill."

The channel pointed out the step taken by the Palestinian Authority in February to suspend payments for the families of martyrs, the injured, and prisoners, transferring them to a private institution, which was a point of contention with Israel and the United States.

The U.S. State Department recently conducted a review of the new system to ensure compliance with U.S. law, and Huckabee commented: The review is still ongoing, and there are serious questions about whether prisoner payments have been completely halted.

Huckabee stated that President Abbas's remarks that prisoners will continue to receive their allocations hinder reaching a solution.

He added, as translated by SadaNews: We do not have a clear answer regarding the flow of funds today, but this rhetoric is concerning; if he says he will not stop the payments, Israel will have no incentive to release funds that could be allocated to the families of Palestinians who have killed Israelis.

The channel noted the delay in the school year in the West Bank due to the financial crisis, and Huckabee commented: It is crucial to find a solution to this crisis ... There is great concern over the impact of the crisis on businesses, banks, and ordinary citizens, such as teachers and taxi drivers, and their ability to receive their salaries.

Palestinian officials say that negotiations regarding the economic arrangement remain stalled, asserting that the United States is not exerting enough pressure on Israel in this regard.

On the other hand, Smotrich's office responded: "The Israeli government is working in close coordination with the Trump administration and the best ambassador for the State of Israel ever, Mike Huckabee, and Israel agrees with the position recently expressed by the Trump administration and Secretary of State Rubio against the activities of the Palestinian Authority and its senior officials against Israel."

Smotrich's office continued: "The Palestinian Authority must stop funding and promoting terrorism and cease unilateral actions against Israel and its unilateral recognition, and it must condemn terrorism, stop funding the families of terrorists, and halt its international legal warfare against Israel. Until then, the Palestinian Authority should not be involved in anything."