European investment in West Bank prompts debate over PA reform, 'pay-for-slay' policy

A recent European investment in Judea and Samaria (West Bank) has drawn criticism over its potential impact on Israel’s efforts to end the Palestinian Authority’s “pay-for-slay” policy, which provides financial payments to individuals convicted of attacks against Israelis and Jews, Palestinian Media Watch (PMW) founder Itamar Marcus told The Jerusalem Post on Thursday.

The warning followed an announcement by the European Investment Bank (EIB) and the European Commission this week that they had transferred €395 million ($47.25 million) to support the Palestinian Authority (PA) economy, with funding directed toward local small and medium-sized businesses.

The EIB said the funds would bypass the PA and be transferred directly to the Bank of Palestine, the National Bank, Quds Bank, Cairo Amman Bank, and Palestine Investment Bank, and aim "to expand access to credit through local financial intermediaries."

“Palestinian businesses need reliable access to finance if they are to continue operating, investing, and protecting livelihoods under extremely difficult conditions,” EIB Vice President Gelsomina Vigliotti stated.

“With these agreements, we are putting into operation the €400 million facility announced in October 2025 and making available up to $395 million through local partner banks to support Palestinian MSMEs where financing is most needed. At the same time, €3.5 million in technical assistance will help reinforce the sector at multiple levels.”

Palestine Monetary Authority Deputy Gov. Mohammad Manasrah welcomed the European investment.

“The implementation of this $395 million package marks a concrete step in reinforcing the Palestinian financial sector’s ability to support businesses during a period of exceptional strain. Through five sub loans to local banks – part of which is structured as sub-debt to strengthen banks’ capital base – while the use of proceeds remains exclusively directed toward financing micro, small, and medium-sized enterprises, this cooperation will broaden access to financing across Palestine, enabling businesses to continue operating, adapt to difficult conditions, and sustain economic activity,” Manasrah said.

However, Marcus revealed that the Bank of Palestine has refused to close some 3,400 accounts that have reportedly been used as financial transfers to released terrorists.

“Banks that are receiving the money directly from the EU have the bank accounts paying terror salaries to terrorists and their families,” the PMW founder told The Jerusalem Post. Marcus warned that the European investments without reform in the PA risked entrenching widespread anti-Israel sentiment and undermining the chances for genuine peace.

“As long as the EU continues injecting money to strengthen the economy that enables the PA to limp along, without first seeing fundamental reforms throughout Palestinian society, it is responsible for Palestinian youth being brought up to believe that violence and terror will ultimately destroy Israel. Conflict and terror will continue for another generation, courtesy of the EU,” he said.

Israel has supported international efforts to improve the economic situation for the Arabic-speaking population in Judea and Samaria. At the same time, it has opposed unrestricted financial transfers that it says could be diverted to anti-Israel terrorism, including the “pay-for-slay” policy.

The PA reportedly promised the U.S. that it would end its controversial policy. However, it was reported last month that the PA had reinstated it.

“The EU timing could not be worse. Israel and the United States are demanding that the PA reform, and given the PA’s financial crisis, it could eventually be forced to submit to international pressure and start a serious reform process,” Marcus assessed.

“Giving over so much money to the PA at a [single] time enables the PA to relax, and undermines any chance for PA reform.”

Marcus also highlighted the difficulty of distinguishing between legitimate economic activity and support for terrorism.

“For example, clothing factories and stores are producing and selling the shirts for children that have pictures of terrorists, teaching them that murderers of Israelis are their heroes and role models. Other factories and stores produce and disseminate the maps of “Palestine” that erase and replace Israel. Sporting goods are sold to teams that are named after terrorists.”