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Will the Palestinian Authority dump the shekel?

Palestinian President Mahmoud Abbas is taking steps toward complete disengagement from Israel, including examining replacing the Israeli shekel.
A Palestinian man displays an old Palestinian coin in his shop in the West Bank city of Hebron June 8, 2008. The Palestinian Authority has delayed paying its workers this month after Israel withheld tax funds in anger over Palestinian attempts to block upgraded European Union-Israeli ties, officials said on Sunday. REUTERS/Nayef Hashlamoun (WEST BANK) - GM1E469047K01
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In April 2017, Palestinian President Mahmoud Abbas announced that he was severing ties between the West Bank territory under his control and the Gaza Strip, which Hamas controlled. Now, senior Palestinian Authority (PA) officials have told Al-Monitor that Abbas is preparing to disengage from Israel. The first indication of his intentions became evident in a Feb. 6 PA announcement that it has tasked a committee with formulating operational plans for severing ties with Israel in various spheres, including replacing the Israeli shekel with another currency.

The economic sphere is, indeed, crucial to the continued rule of the PA and even more so to the lives of the Palestinians in the West Bank. Under the 1993 Israeli-Palestinian Oslo Accords and the 1995 Cairo Agreement, the Palestinian economy is inexorably linked with the Israeli economy in virtually every respect: currency, infrastructure, land and air passage, employment of Palestinian laborers in Israel and more. Israel also imposes value added tax and customs tariffs on goods for the PA arriving through Israeli ports and transfers the funds to the Palestinians. These taxes come to hundreds of millions of dollars annually, and Israel uses their transfer on occasion to exert pressure on the PA or to punish it.

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