World Bank: Urgent action needed to avoid PA fiscal crisis

The World Bank called on donors to act “urgently” to prevent a “deepening fiscal crisis” in the Palestinian territories.

Israel also needs to remove barriers to developing the West Bank economy, the World Bank said.

In a statement about its report published this week on the PA’s economy, the World Bank called for “immediate donor action coupled with freeing of untapped West Bank resources.”

Yet, “even with this financial support, sustainable economic growth cannot be achieved without a removal of the barriers preventing private sector development,” Mariam Sherman, World Bank Country Director for the West Bank and Gaza.said in the statement.

She added this applied “especially” to Area C – a non-contiguous area which makes up 60% of the West Bank and is under full Israeli control. Approximately 5.8% of the Palestinian population of the West Bank lives in Area C. 

Entitled “Fiscal Crisis, Economic Prospects: The Imperative for Economic Cohesion in the Palestinian Territories”, the report highlights the untapped resources of the West Bank as a potential source of private sector growth.

Tokyo bank freezes Iranian assets

A Japanese bank has halted transactions by the Iranian government in response to a U.S. court ordering a $2.6 billion asset freeze over the 1983 bombing of the U.S. Marines barracks in Beirut.

A spokesman for the Bank of Tokyo-Mitsubishi UJF confirmed the move to the Agence France-Presse, on Thursday.

The court order reflects “the amount that the court in 2007 upheld for compensation demands by families of victims of the 1983 attacks on US forces in Beirut,” the spokesman said.

The bank lodged an appeal against the U.S. court order on Thursday, saying that the action is “problematic” under Japanese law. He would not reveal the amount of money involved or who held the assets. The spokesman, however, said the bank “handles a relatively large number of transactions for trade with Iran,” AFP reported.

The ruling stems from the Oct. 23, 1983 bombing of the U.S. Marines barracks in Beirut, which killed 24 U.S. troops. Tehran has denied responsibility for the attacks, but Washington subsequently named Iran on a list of terrorism-supporting states. A 2007 court ruling in the United States ordered Iran to pay $2.65 billion to victims’ families.

Shut down Iranian bank, Germany’s leaders say

A call by Germany’s top Jewish leader for the European Iranian Bank of Commerce in Hamburg to be shut down was echoed by the German government.

Shortly after Dieter Graumann, head of the Central Council of Jews in Germany, made his statement to the Handelsblatt online newspaper, the government of Angela Merkel announced that no further payments from India for Iranian crude oil may go through the German banking system.

“This bank should not be part of the world of German banking—it should be banned,” Graumann said Monday.

Graumann’s remarks followed revelations that India, under pressure from the United States to halt trade with Iran, planned to deposit billions of dollars in payments for Iranian crude oil in the Bundesbank, Germany’s Federal Bank. The intention was for the bank to transfer about $12 billion annually to Iran via the Bank of Commerce in Hamburg.

Now Merkel says no further Indian oil payments to Iran may be made through Germany, the Handelsblatt reported.

According to the German Ministry of Finance, the Bundesbank must be notified of transactions of more than 10,000 euro, or about $14,000, involving Iran, and must give explicit approval to any transaction worth more than 40,000 euro, or nearly $57,000, in keeping with EU sanctions imposed on Iranian business.

The Bundesbank had argued that it could not stop the deal because it had no relation to Iran’s nuclear ambitions.

In a statement issued to JTA last week, a bank spokesperson said both the German government and Bundesbank “abide strictly and completely by the standards set by the United Nations … and the European Union with regard to Iran.”

“If an account holder instructs the Bundesbank to make a payment that is permissible under these regulations … the Bundesbank is obliged to carry out this transaction. In this respect, the Bundesbank is no different than other banks,” the statement said.

The Hamburg-based EIH bank has been the focus of several protest rallies organized by the Stop the Bomb campaign in Germany in recent months.

“The bank is vital for the German and global trade with Iran, and with the revenues for energy trade flowing through this bank, sanctioning the EIH would severely hurt the Iranian regime and also increase its internal conflicts,” Jonathan Weckerle, a spokesman for the organization,  told JTA.

The bank is not the only problem, Graumann told the Handelsblatt.

“Too many German companies are still carrying on unchecked with their vile business with the Iranian terror regime, the reigning world champion in Holocaust denial,” he said, “and I simply cannot fathom how the Bundesbank, of all institutions, one which for me personally remains practically sacrosanct, could stoop to covering up for or even promoting business with this evil regime.”

Diminished Returns

Matt Fong
California Treasurer Matt Fong is having second thoughts aboutthe sanctions he imposed on Swiss banks, partly due to what he saysare “mixed signals” from the Jewish community.

Since July, Fong has liquidated some $2 billion worth ofCalifornia funds in Swiss banks by not renewing short-terminvestments, and he has declared a moratorium on future deposits.

Fong took the publicly unannounced action after reading newspaperreports on the slow pace by Swiss banks in settling the accounts ofvictims and survivors of the Holocaust.

“As a banker, I questioned whether I could retain confidence in(Swiss) banks to handle my money, if they failed to identify theseaccounts and return the money,” Fong said in an interview in his LosAngeles office.

However, to his surprise and chagrin, he received little feedbackfrom the Jewish community on his action, after it was finally madepublic in October. He even received some criticism.

“Because the Jewish community is active in so many other issues, Iwas surprised that I received very little input, pro or con, on this,so it doesn’t seem to be as important to them as I had expected,” hesaid.

The initial objections came from U.S. Under Secretary Stuart E.Eizenstat, who told Fong that the Swiss were taking a number ofinitiatives to rectify past mistakes and that the Californiasanctions would antagonize the Swiss people and provecounterproductive.

What seemed to upset Fong the most, though, was a letter from theAnti-Defamation League, signed by its national director, Abraham H.Foxman, along the same lines as the Eizenstat communication.

“That letter took me by surprise, coming from ADL, a respectedorganization,” said Fong. “There were no phone calls, they didn’t askfor a meeting, they just sent me this letter saying, ‘butt out.'”

Commenting on Fong’s remarks, David A. Lehrer, the local regionalADL director, said that, “This is a very complicated issue. While wemay differ on the best tactics, we applaud Mr. Fong’s efforts andintentions.”

The state treasurer had earlier received strong verbal supportfrom the World Jewish Congress and individual Jewish leaders, and,like many outside observers, he seemed baffled that the Jewishcommunity was not speaking in one, monolithic voice.

Fong, a leader in the Chinese-American community and son of formerCalifornia Secretary of State March Fong Eu, is a declared Republicancandidate for the U.S. Senate seat held by Democrat Barbara Boxer.The question was put to him whether his action against the Swissbanks was linked to the hope of attracting Jewish votes in nextyear’s election.

He denied any ulterior motive. “I never even told anyone (aboutimposing the sanctions), because I believe in quiet diplomacy. If Ihad wanted attention, I would have stood in front of a synagogue andmade a big public announcement,” he said.

As things stand now, Fong is reassessing his position but willmake no decision until he attends a Dec. 8 meeting in New York,convened by New York City Comptroller Alan Hevesi.

The meeting will bring together state and city officials who haveinitiated sanctions against Swiss banks, representatives of majorSwiss banks, and leaders of various Jewish organizations to explorefuture courses of action.

“I will be satisfied with a process in which we can ‘trust’ theSwiss bankers, but at the same time enable us to verify and monitortheir promises,” said Fong.