The UK, Australia, Canada, Norway, and New Zealand have jointly imposed sanctions on two senior Israeli ministers, Itamar Ben-Gvir and Bezalel Smotrich, citing incitement of violence against Palestinians and aggressive settlement activity in the occupied West Bank.

Announced in a coordinated statement by the five countries’ foreign ministers, the sanctions include personal travel bans and asset freezes. The punitive measures target the ministers individually and do not extend to the ministries they lead. In response, Israeli Prime Minister Benjamin Netanyahu vowed retaliation, stating that his government would respond in kind.

Meet the incendiary figures

Ben-Gvir, the police minister, and Smotrich, the finance minister, are central figures in Netanyahu’s far-right coalition. Both have long attracted international condemnation for incendiary rhetoric and policies tied to the expansion of illegal settlements and the repression of Palestinians in both the West Bank and Gaza.

The joint statement accused the ministers of encouraging “extremist violence and serious abuses of Palestinian human rights,” with a direct link made between their actions and the erosion of conditions for a future Palestinian state.

“We are united in holding individuals accountable for undermining peace and security,” the statement read. “Extremist settler violence and unchecked expansion of illegal settlements threaten stability and obstruct the path to a just resolution.”

The foreign ministers also condemned the humanitarian crisis in Gaza, warning against any attempt at forced displacement or territorial reduction. “There must be no unlawful transfer of Palestinians from Gaza or within the West Bank, nor any reduction in the territory of the Gaza Strip,” the statement added.

US criticizes sanctions amid war on Gaza

US Secretary of State Marco Rubio quickly condemned the coordinated sanctions, urging the five nations to reverse their decision. “These sanctions do not advance US-led efforts to achieve a ceasefire, bring all hostages home, and end the war,” Rubio said. “We remind our partners not to forget who the real enemy is.”

The critique underscored the divergence between Washington and other Western allies over how to address settler violence and the deteriorating situation in the occupied territories.

UK's Lammy defends sanctions

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UK Foreign Secretary David Lammy defended the sanctions in Parliament, declaring, “These two individuals have been inciting violence against Palestinian people for months and months and months.”

The UK Foreign Office later clarified that the sanctions were based on persistent incitement and failure to stop illegal settlement growth, both seen as threats to the viability of a "two-state" solution. Officials also pointed to multiple public statements made by the ministers that they said legitimised or encouraged violence.

Smotrich has openly called for the expansion of settlements across the West Bank and has consistently opposed humanitarian aid to Gaza. In May, he declared that he would allow “not even a grain of wheat” to enter Gaza. He also suggested that Gaza’s destruction was inevitable and civilians should be “encouraged” to relocate to third countries. In one particularly controversial comment, condemned by Germany, he claimed that the starvation of Palestinians could be “justified and moral” until all captives were released.

Ben-Gvir, meanwhile, sparked outrage after storming the Al Aqsa mosque compound in May. He has openly advocated for transforming the site, sacred to Muslims, into a synagogue and has pushed for the “voluntary expulsion" of Palestinians from Gaza.

International pressure grows against Israeli officials

Israeli Foreign Minister Gideon Sa'ar condemned the sanctions as “unacceptable” and an attack on elected officials. Smotrich responded defiantly, “Britain has already tried once to prevent us from settling the cradle of our homeland, and we will not allow it to do so again.” Ben-Gvir added, “We passed Pharaoh, we will also pass Starmer’s wall,” referencing UK Labour leader Keir Starmer.

Even within "Israel", reactions were divided. Former Security Minister Benny Gantz criticized the sanctions but also reiterated his opposition to the ministers’ policies. “I vehemently disagree with ministers Smotrich and Ben-Gvir on a wide range of issues – but the imposition of British sanctions on ministers in the one and only democracy in the Middle East… is a profound moral mistake and sends a dangerous message to terrorists,” he said.

The UK had considered similar measures in mid-2024 but postponed action due to political sensitivities surrounding its general election. By coordinating with four other nations, the UK appears to have cushioned the diplomatic fallout while reinforcing "Israel’s" growing international isolation.

While the European Union would require unanimous consent from all 27 member states to enact similar sanctions, a move likely to be blocked by Hungary, the bloc is reportedly exploring trade restrictions that need only a qualified majority.

Calls for broader measures

Public pressure for stronger action has also been mounting in several participating countries, particularly in Canada, Norway, and Australia. Lawmakers from across the political spectrum have voiced support. Labour MP Emily Thornberry welcomed the move but urged broader measures, including formal recognition of a Palestinian state. Former Conservative minister Andrew Mitchell also backed the sanctions as a necessary response to settler-led violence.

A statement from Labour Friends of Israel concluded: “By their words and deeds, Ben-Gvir and Smotrich’s actions in government have given succour to those who perpetrate disgraceful and utterly unacceptable violence against Palestinians in the West Bank.”

Smotrich targets Palestinian economy after sanctions fallout

In response to the sanctions imposed by five Western nations, Smotrich has ordered the cancellation of a critical financial safeguard that underpins the Palestinian economy, escalating already tense relations between "Israel" and its international allies.

On Tuesday, Smotrich instructed accountant-general Yali Rotenberg to revoke the indemnity granted to Israeli banks that enables them to maintain correspondent relationships with Palestinian financial institutions. The indemnity has long served as a cornerstone of economic stability in the occupied territories, ensuring the continued circulation of the shekel, the currency used across both the West Bank and the Gaza Strip.

How it works

The Palestinian financial system relies heavily on shekel transactions due to the absence of a sovereign currency or an independent central bank, due to the Israeli occupation. According to official data, Palestinian banks processed approximately NIS 53 billion (around $14 billion) in 2023 alone. The loss of the indemnity could paralyze this system, threatening to reduce the West Bank to a largely cash-based economy and disrupt vital financial operations.

Israeli banks function as intermediaries in processing these transactions. Without the indemnity, they risk legal and financial exposure, likely forcing them to sever ties with Palestinian counterparts. The policy had previously required periodic renewal by "Israel". Although Smotrich resisted renewing it last November, pressure from the Biden administration and Western governments prompted a one-year extension.

Smotrich goes after PA despite no involvement in sanctions

The finance minister's office framed the move as a response to what it called the Palestinian Authority’s “delegitimization campaign” against "Israel". However, there is no indication that the PA had any involvement in the sanctions issued by the UK, Canada, Australia, New Zealand, and Norway. Smotrich, nonetheless, reiterated his long-standing goal to bring about the collapse of the PA.

By undermining financial structures that support daily life in the occupied territories, Smotrich’s decision could have far-reaching humanitarian and political consequences. Critics warn that the move constitutes economic collective punishment aimed not at governments, but at ordinary Palestinians.