If "Israel" does not renew a waiver Israeli banks need to maintain relationships with their Palestinian counterparts, an "economic catastrophe" in the occupied West Bank will ensue, according to Western officials, as cited by the Financial Times. 

Due to expire on July 1, the waiver permits payments for vital services and salaries tied to the Palestinian Authority and eases the entry of essentials such as food, water, and electricity into the occupied Palestinian territories.

Three Western officials declared that if the waiver is not renewed, the Palestinian economy will gradually shut down over time. 

"The point that we’re making . . . is that you shouldn’t be threatening people’s access to food, electricity and water at a moment like this, especially in the West Bank," a US official said, adding that it "will be to the detriment not only of Palestinian interests but also to Israel’s and the region’s security and stability" if it is not renewed. 

Two Western officials claimed that the US is leading efforts to renew it by soliciting allies to pressure Prime Minister Benjamin Netanyahu, while British officials revealed that there is concern in the UK over the matter as well.

Read more: Life in the West Bank post October 7: Al Mayadeen Exclusive

The officials noted that this issue is due to be negotiated at the next G7 finance ministers meeting this week in Italy.

The Palestinian economy formally runs on "Israel’s" shekel, and Palestinian financial institutions have to deal with the Bank of Israel and Israeli banks to access the economy. 

Back in February, the World Bank said that the Israeli aggression on Gaza had devastating effects on its infrastructure, which could take years to rebuild, and caused the blockaded Strip's economy to shrink by more than 80% in the last quarter of 2023.

The World Bank declared that the war caused paramount damage all over Gaza, with all economic activity in Gaza coming to a grinding halt.

The United Nations stated in late January that the genocide in Gaza and the drastic magnitude of bombing have destroyed almost half of the Gazan infrastructure, rendering the Strip uninhabitable and in need of billions of dollars for rebuilding.

It is also worth noting that after seven months of war on Gaza, "Israel" racked up a bill of 60 billion shekels ($16 billion), leaving in its trace a deficit way past this year’s target and a deteriorating economy, Bloomberg reported.