Netanyahu's comments on possible sanctions

Israeli Prime Minister Benjamin Netanyahu said on Friday, 23 October, that Israel may need to build an economy that can operate outside the conventional banking system if it faces sanctions. The remarks came in a debate programme broadcast by Channel 10 and posted online that day, ahead of the election on Tuesday, 27 October, in which Netanyahu is a candidate for reelection. He acknowledged that the measures could include banking restrictions, saying:

“There may be sanctions, including banking sanctions.”

Asked whether he was referring to blockchain, a technology for storing and transmitting information without intermediaries or a central authority, Netanyahu answered yes and said he had asked for the plan to be prepared. He named blockchain as one of the options Israel is examining. He did not say which countries he expects to impose sanctions.

Pressure over settlement measures

The sanctions debate follows measures announced in September by the United Kingdom and other countries against products from Israeli settlements in the occupied West Bank. Those steps respond to attacks by settlers on Palestinians and to the expansion of settlements. According to Wirtschafts Woche, Western governments have targeted Israel mainly over its occupation and settlement policy and its conduct in Gaza, and several states have sanctioned settlers, organisations and individual government members. Full restrictions on the Israeli banking system have not been imposed so far, the report says. Netanyahu has previously said Israel should gradually reduce its reliance on US military aid.

Speaking about the aid flows, Netanyahu said that large sums of US defence money would not keep arriving, and he said he is worried about a shift in the American stance toward Israel:

“It is over. It is only a matter of time.”

Opposition criticism and wider context

Opposition figures criticised the idea, warning that it would turn Israel into an economic pariah like Iran. Yair Lapid, a centrist former prime minister now in opposition, argued that Netanyahu was conceding that US military aid would end and that sanctions would wreck the economy, drive up prices and cause irreparable damage. The Israeli daily Haaretz argues that exclusion from the global financial system would carry serious dangers, because the economy depends on global trade and investment and its high-tech sector relies on a functioning banking system to deal with the rest of the world. Wirtschafts Woche adds that financial regulators say Iran, North Korea, Venezuela and Russia use digital assets to soften the effects of international sanctions. Netanyahu remains a close ally of US President Donald Trump, although criticism of him in the United States has grown since the Gaza offensive launched in retaliation for Hamas attacks on 7 October 2023. He also recently threatened to resume the war against Iran, a country under heavy international sanctions that has adopted cryptocurrencies and other alternative economic mechanisms.