The US Ambassador to Israel, Mike Huckabee, warned that the West Bank is on the brink of an economic collapse that could lead to a serious escalation in the region, and that the ongoing financial crisis threatens widespread security consequences.

In an interview with Axios, Huckabee said: “If the Palestinian economy completely collapses, it will be no one’s gain. It will lead to escalation and more despair… desperate people do desperate things.”

The crisis in the West Bank has worsened due to the policies of Israeli Finance Minister Bezalel Smotrich, who in recent months froze hundreds of millions of shekels in tax revenues allocated to the Palestinian Authority and sought to separate Palestinian banks from the Israeli financial system.

Huckabee revealed that negotiations are underway with Israeli and Palestinian officials to release funds and prevent bank collapses. He met with Minister Smotrich and several Israeli officials and visited Ramallah to meet with Palestinian Deputy Prime Minister Hussein al-Sheikh and Prime Minister Mohammad Mustafa. A Palestinian official confirmed that Huckabee emphasized Washington’s desire to avoid a financial collapse of the Palestinian Authority.

The crisis has directly impacted the lives of Palestinians, forcing the Authority to postpone the school year from September 1 to September 8 due to its inability to pay teachers’ salaries. Huckabee said: “It affects businesses, banks, teachers, taxi drivers… everyone is at risk of losing their livelihood.”

Maariv newspaper reported that Israeli Prime Minister Benjamin Netanyahu intended to hold a political-security meeting to discuss the possibility of imposing Israeli sovereignty in the West Bank, as well as steps against the Palestinian Authority and Western countries that have announced their intention to recognize a Palestinian state, but the meeting was postponed.

According to the newspaper, this development comes days before the United Nations General Assembly convenes, where several countries led by France are expected to announce recognition of the Palestinian state, with Belgium officially joining the initiative.

Israeli sources explained that the “sovereignty file” on the West Bank is being managed quietly for fear of provoking a negative stance from US President Donald Trump, who, despite his quiet support for Israel on some issues, has not given any official approval for the “sovereignty” plan.

They added that the likely direction is to impose sovereignty on parts of Area C, especially in the Ariel settlement, while recognizing that Washington’s current priority is supporting Israel in Gaza and confronting Syria and Lebanon.