Despite U.S. pressure to end the practice, the Palestinian Authority (PA) pays stipends to Palestinians in Israeli jails as well as to the families of “martyrs” who died committing terrorist acts. Jerusalem, however, continues to seek loopholes to protect Palestinian banks from terrorism-related sanctions. Nitsana Darshan-Leitner writes:

In 2015, [Israel’s] Bank Hapoalim and Discount Bank informed the Finance Ministry that they were severing their business ties with Palestinian banks that transfer PA payments to terrorists, for fear of being prosecuted under Israel’s counter-terror laws.

The decision was not made in a void: the same year saw a U.S. federal court order the PA to pay $655 million in damages to victims of terrorism. The ruling was partially based on the financial assistance Ramallah affords terrorists and its monthly payments to security prisoners jailed in Israel. Soon afterward, a verdict was handed down against the Arab Bank for financing terrorism, also in a federal court in the United States, which concluded in a $1 billion settlement in favor of the victims.

Israel’s response to the local banks’ decision was to force its financial institutions to keep up the practice, i.e., to fund terrorism. . . . After victims of terrorism appealed to the High Court of Justice against the decision, the state exempted commercial banks from providing services to Palestinian banks. But Israel . . . recently announced that it will establish a new mechanism, in the form of an independent company that would provide financial services to Palestinian banks. In doing so, the state will, in effect, allow and endorse the transfer of payments from Palestinian banks to Palestinian prisoners and the families of terrorists.

Examining the effects of Iran’s decision to launch nearly 200 ballistic missiles at Israel on October 1, Benny Morris takes stock of the Jewish state’s strategic situation:

The massive Iranian attack has turned what began as a local war in and around the Gaza Strip and then expanded into a Hamas–Hizballah–Houthi–Israeli war [into] a regional war with wide and possibly calamitous international repercussions.

Before the Iranians launched their attack, Washington warned Tehran to desist (“don’t,” in President Biden’s phrase), and Israel itself had reportedly cautioned the Iranians secretly that such an attack would trigger a devastating Israeli counterstrike. But a much-humiliated Iran went ahead, nonetheless.

For Israel, the way forward seems to lie in an expansion of the war—in the north or south or both—until the country attains some sort of victory, or a diplomatic settlement is reached. A “victory” would mean forcing Hizballah to cease fire in exchange, say, for a cessation of the IDF bombing campaign and withdrawal to the international border, or forcing Iran, after suffering real pain from IDF attacks, to cease its attacks and rein in its proxies: Hizballah, Hamas, and the Houthis.

At the same time, writes Morris, a victory along such lines would still have its limits:

An IDF withdrawal from southern Lebanon and a cessation of Israeli air-force bombing would result in Hizballah’s resurgence and its re-investment of southern Lebanon down to the border. Neither the Americans nor the French nor the UN nor the Lebanese army—many of whose troops are Shiites who support Hizballah—would fight them.