US warns against West Bank economic collapse as Israeli minister pushes for annexation

The US has warned Israel against letting the Palestinian economy collapse into “desperation” in the occupied West Bank, as Prime Minister Benjamin Netanyahu was urged by one of his ministers to annex most of the territory.

US ambassador to Israel Mike Huckabee said “if the Palestinian economy were to completely collapse, it won’t be a winning deal for anyone”. He told US media outlet Axios: “Desperate people do desperate things.”

The warning by the ardently pro-Israel envoy comes as the West Bank endures Israeli military occupation and settler violence, often overlooked with the world’s attention on Gaza.

Israel’s far-right government contains a number of leaders attached to the settler movement occupying senior positions, for whom Palestinian economic collapse is seen as a precondition to a large-scale military takeover by Israel.

Finance Minister Bezalel Smotrich has taken dramatic steps to undermine the West Bank economy, including withholding vast sums of tax revenue used by the Palestinian Authority to pay public sector salaries.

On Wednesday, Mr Smotrich called on Mr Netanyahu to accept a plan to annex most of the occupied West Bank, saying it would prevent the establishment of “a terrorist state in the heart of the country”.

He claimed there was “broad consensus” in Israel for the plan, which he presented in Jerusalem alongside a prominent settler leader.

A map circulated proposes Israel taking the vast majority of the region, excluding six Palestinian urban areas, which are disconnected from each other.

The Palestinian Foreign Ministry condemned the plan, calling it “an extension of a series of provocative calls” by Israeli officials to destroy the prospects of a two-state solution.

Mr Smotrich has also supported a ban on Palestinians from the West Bank crossing daily into Israel for work. A huge network of checkpoints and barriers, along with settler violence, have reduced people’s ability to move around.

Mr Huckabee said he has been negotiating a deal to release tax revenue in talks with Mr Smotrich in Israel and Palestinian Vice President Hussein Al Sheikh in Ramallah.

The ambassador’s comments come as a crisis between Israel and some of its closest allies deepens over an international push to recognise a Palestinian state at the UN General Assembly this month. This has increased calls within Israel for it to declare sovereignty over the West Bank, possibly in phases.

There has been increasing concern internationally that Mr Netanyahu is preparing to annex the area, which would put an end to the two-state solution, the preferred route to ending the Palestine-Israel conflict of most of the international community.

Such a declaration would signal that Israel is definitively moving away from a two-state solution, which is the desired route to ending the Israel-Palestine conflict across most of the international community.

Belgium on Tuesday became the latest country to say it will recognise Palestine, shortly after others including the UK, France and Canada.

Israel's Foreign Minister Gideon Sa'ar called Belgium's decision “very strange, which was taken under pressure”.

“The question of whether a Palestinian state will exist or not is not linked to the decision of the government in Brussels, but rather to the decisions of the government in Jerusalem,” he added, in an interview with Belgium's Sudinfo newspaper.

Two Israeli officials told CNN that Israel is weighing whether to annex parts of the West Bank in response to the wave of recognition.

Israel has taken other actions in recent weeks that undermine the prospect of a Palestinian state, in particular approving construction of E1 – a new illegal settlement with thousands of homes near Jerusalem. The settlement would divide the West Bank in two and separate it from East Jerusalem, making a Palestinian state unviable, critics say.