World Bank suspends Gaza Strip operations, warns of economic shock

By Al Mayadeen English
Source: Agencies
11 Oct 2023 16:17
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The World Bank President Ajay Banga says Operation Al-Aqsa Flood caused an an "unnecessary" economic shock that is unwanted.

Ajay Banga, World Bank president, participates in the global infrastructure and investment forum in New York, Thursday, Sept. 21, 2023. (AP)

World Bank President Ajay Banga said on Tuesday that the ongoing events between "Israel" and the besieged Gaza Strip are an "unnecessary" global economic shock and will make it difficult for central banks to achieve a smooth reduction in inflation rates across several economies if it spreads.

Banga further noted, while on the sidelines of the annual meetings of the World Bank and the International Monetary Fund, in Morocco, that the ongoing events are "a human tragedy and an economic shock that we do not want."

Additionally, he perceived that what is happening in occupied Palestine will make it difficult to gradually reduce inflation, after central banks had previously thought it possible to achieve.

Banga explained that the direct economic impact of this is less than the impact caused by the war in Ukraine because the confrontations between the Israeli entity and the Palestinian Resistance do not "affect exports of oil, grains, and fertilizers."

But later it was pointed out that "the effect is transmitted through the financial markets, with dollar assets suddenly rising."

The World Bank President announced that the World Bank temporarily suspended its operations in the Gaza Strip and evacuated a number of its employees after considering the Strip a "war zone," but its operations in the Palestinian territories across the West Bank remain ongoing.

The European Union, on the other hand, “committed a mistake” in the beginning by announcing the cutting of all aid to the Palestinian territories in response to Operation Al-Aqsa Flood, stressed Banga.

EU backs down from decision to suspend aid payments to Palestinians

The European Commission will not suspend due assistance payments to Palestinians, EU foreign policy chief Josep Borrell said Monday, shortly after the EU neighborhood commissioner announced an end to "all payments".

"The suspension of the payments — punishing all the Palestinian people — would have damaged the EU interests in the region," Borrell wrote on social media.

The top EU diplomat said that the review of the EU's assistance for Palestine announced by the commission earlier in the day would not suspend "the due payments, as clarified by the Commission's press release." This comes despite the commission saying that no due payments were forthcoming.

"The Commission will carry out this review as soon as possible... In the meantime, as there were no payments foreseen, there will be no suspension of payments," the commission said.

The EU executive added that the review did not concern humanitarian assistance provided under European Civil Protection and Humanitarian Aid Operations (ECHO).

The announcement by Neighborhood Commissioner Oliver Varhelyi that the EU was freezing all assistance for Palestine over the launch of Operation Al-Aqsa Flood drew criticism from several member states, including Spain, Belgium, and Ireland.