Palestinian Authority edging toward collapse, may trigger ‘chaos’ in Judea, Samaria

Officials noted that unemployment is climbing, security forces are going unpaid, and critical government functions are deteriorating.

By Vered Weiss, World Israel News

Senior Shin Bet officials have cautioned Israel’s political leadership that the Palestinian Authority (PA) may be edging toward collapse, a development they warned could ignite unrest in Judea and Samaria, Channel 12 reported Wednesday.

According to the report, the agency raised the alarm during recent closed-door meetings, citing the PA’s deepening financial distress.

Officials noted that unemployment is climbing, security forces are going unpaid, and critical government functions are deteriorating. “These factors could trigger chaos and a flare-up,” the security officials said.

In their assessment, the Shin Bet emphasized that despite tensions, the survival of the PA ultimately serves Israel’s strategic interests by helping maintain relative calm in Judea and Samaria.

They recommended measures to stabilize the PA, including reinstating funds that the Israeli cabinet previously froze. The proposal aligns with the position of much of the international community, but Finance Minister Bezalel Smotrich remains firmly opposed, the report added.

The Shin Bet declined to comment on “matters discussed behind closed doors.”

Smotrich’s resistance has already shaped policy. In June, he ordered the cancellation of a key financial safeguard that underpinned Palestinian banking operations.

His directive instructed Accountant General Yali Rothenberg to revoke the state indemnity granted to Israeli banks conducting transactions with Palestinian financial institutions in Judea, Samaria, and Gaza.

That indemnity shielded Israeli banks from legal liability and was widely regarded as essential for preserving routine monetary exchanges in shekels. Removing it, financial experts warn, could disrupt the Palestinian economy, which relies heavily on its financial linkages with Israel.

Smotrich defended the decision as a response to what he described as a “delegitimization campaign” orchestrated by the PA on the international stage. His office said the PA’s conduct had rendered continued financial cooperation untenable.

As Israeli security officials urge caution, the rift highlights a growing debate within the government: whether preserving the PA’s viability is a necessary safeguard against instability or a concession that undermines Israel’s broader political goals.