Israeli cabinet votes to extend Palestinian bank relations for one year

• The cabinet decision is in response to heavy international pressure and came after the Biden administration told the Israeli government it isn't planning to take any action at the United Nations Security Council to recognize a Palestinian state before the end of Biden's term in January.

Catch up quick: At the end of October, days before the U.S. presidential election, the Israeli cabinet agreed to extend the approval for Israeli banks for only one month.

• The U.S. and other Western countries criticized the decision and called for it to be extended for more time.
• Secretary of State Antony Blinken and Secretary of Treasury Janet Yellen said at the time that the decision would "create another crisis until November 30 and increase uncertainty for international banks, Israeli companies operating in the West Bank, and Palestinian citizens who will suffer more than anyone else as a result of this uncertainty."

Driving the news: In recent days, as the deadline for the next extension was approaching, international pressure grew again for Israel to approve a one-year extension.

• Finance Minister Bezalel Smotrich opposed a one-year extension, claiming the Palestinian Authority does not meet standards for supervision of preventing terrorist financing and money laundering.
• Smotrich, who eventually voted in favor of the cabinet decision, wrote on X on Thursday that "in a smart and quiet move, we thwarted a major threat to the settlements and the State of Israel, and we promised that no resolution would be passed in the Security Council to recognize a Palestinian state during the transition period between the U.S.  administrations."

• The State Department did not immediately respond to a request for comment.

Behind the scenes: In talks with the U.S., Israel made it clear it previously extended the approval for the banks by one month to have leverage in case the Biden administration tried to advance a UN Security Council resolution in support of Palestinians before January 20, a source familiar with the issue said.

• The source said senior Biden administration officials made it clear to Israel that the U.S. has no intention of advancing such a move before Biden leaves office, and therefore, Israel doesn't need this leverage and can extend the authorization for the banks by a year.