As the Israeli military campaign continues in Gaza, an economic collapse looms in the Israeli-occupied West Bank, where tens of thousands were rendered jobless by the war, Palestinian civil servants have not been paid in full for months and near-daily Israeli raids have disrupted even basic travel.

Israel’s far-Right finance minister, Bezalel Smotrich, has wielded his position to deal blow after blow to the Palestinian Authority, which administers some West Bank areas under Israeli occupation. Smotrich, who believes Israel should rule the territory forever, has withheld the majority of the Palestinian government’s budget and threatened not to renew a crucial waiver protecting Israeli banks that work with Palestinian counterparts.

The measures have alarmed the Biden administration, which wants the Palestinian Authority to have a role in running post-war Gaza. US officials also worry that an economic crash in the West Bank could lead to a surge in violence in the territory.

Earlier, the Israeli cabinet appeared to grant the authority a brief reprieve, agreeing to release some Palestinian funds and to temporarily extend the bank waiver, three Israeli officials said. To mollify Smotrich, the ministers agreed to measures including authorising five Israeli settlements in the West Bank that had been built illegally, according to Smotrich’s office.