Behind the Headlines: Jordanians, Palestinians and Israelis Fight for Banking Rights in Territories
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Behind the Headlines: Jordanians, Palestinians and Israelis Fight for Banking Rights in Territories

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As nations and agencies commit themselves to aiding Palestinian development, the most prosaic of questions has become political: Where will the money actually go? Will Jordanian or Israeli banks reap the benefits of billion of dollars in deposits?

These questions underlie a recent flurry of diplomatic activity.

Most recently, Farouk Kaddoumi, head of the Palestine Liberation Organization’s political department, flew to Amman early this month to sign an agreement on economic cooperation with Jordan.

The agreement had been drafted last fall but was approved by the PLO only after repeated public pressure from King Hussein.

The deal grants Jordanian banks permission to operate in the West Bank once Palestinian autonomy begins, and it reportedly sets the Jordanian dinar as the official currency in these areas.

But notwithstanding the agreement with Jordan, some senior Palestinian officials appear to prefer Israel as an economic partner.

At issue is who will operate the banks in the territories with the onset of autonomy and the influx of foreign aid.

Forty-six nations pledged $2 billion in aid over five years at a conference in Washington last October.

Much of that international aid, targeted to develop the Palestinian economy, will presumably be administered by the banks, which will profit from the customary fees and charges.

The quest for banking rights is seen as the reason why Hussein pressured the PLO to sign the financial accord and meanwhile concluded his own banking accord with Israel.

But the Jordanians are not the only ones who want a piece of the action. Similar motivations are said to be behind a recent agreement between Israeli and Palestinian business leaders.

According to some observers, it is the Israeli-Palestinian option that is favored within some quarters of the PLO.

“The PLO has made clear that it will not surrender its financial and economic independence in the territories, and will not deposit its aid money in Jordanian banks,” Sevar Plotzker, economics correspondent for Israel’s Yediot Achronot newspaper, wrote recently.

And there are indications from PLO officials that the Palestinians would prefer financial cooperation with the Israelis, he added.

In December, Israel’s Bank Leumi announced the formation of a new commercial bank in conjunction with Spanish, Moroccan and Palestinian partners. It will take over the two existing Bank Leumi branches in the West Bank cities of Bethlehem and Hebron.

The new bank will be launched with $40 million in initial capital, and the partners include the Casablanca-based Banque Commerciale du Maroc and the Madrid-based Banco Central Hispano.

The Palestinian partners are said to be close to the PLO and to include residents inside and outside the territories who are keeping a low profile.

“We hope to deal with the lion’s share of the international aid to the Palestinians,” Moshe Sanbar, chairman of the board of directors of Bank Leumi, was quoted as telling Yediot.

Sanbar added that as far as he knew, PLO leadership in Tunis, including PLO Chairman Yasser Arafat, is “in the picture.”

The bank is in the process of incorporation – Sanbar complained about the paperwork imposed by the Spanish bureaucracy – but even its registration will not make it a reality.

The bank’s future, of course, depends on Arafat, and it is not yet clear how solid his commitment is.

“I believe that Chairman Arafat has not decided to go ahead with this project or any project,” said Mohamed Rabie, a Palestinian economist who heads the Center for Educational Development in Washington.

“Anything you hear has to have his green light, and he has not given any green light.”

Rabie said that the joint Israeli-Palestinian bank had long been rumored and that the a key figure mentioned in the rumor has denied involvement.

But such a venture is considered impossible until the Israel and the PLO reach a political settlement.

Among Palestinians, said Rabie, “there are people who are working very hard to lay the ground for joint ventures and some who are opposed to any kind of concrete movement until the political situation is clear.”

He said he had friends in Jordan who conceived joint projects during the initial euphoria over the signing of the Israeli-PLO accord last September, but who have since backed up in light of the slow progress of the talks designed to implement the autonomy plan.

According to Yediot, the Bank Leumi-Palestinian partnership was suggested by Palestinians, shortly after Jordan reached an agreement on banking with Israel.

The Jordanian agreement was signed Dec. 5 in Washington by representatives of the Bank of Israel and the Jordanian central bank, and it paved the way for the speedy reopening of Jordanian banks in the West Bank.

Palestinians reportedly were furious over the accord, but Israelis explained that they were bound to adhere to international agreements concerning supervision of banks.

Nonetheless, it is interesting to note that, according to Yediot, none of the other clauses in the far-reaching economic accord reached between Israel and Jordan last fall have yet to be implemented.

If the multinational consortium does succeed in turning the present Bank Leumi offices in the territories into a Palestinian banking force during the autonomy period, there will be symbolic significance as well. Bank Leumi, after all, was founded by the Zionist movement in 1902.

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