If I'm reading this correctly, this decision was made because Smotrich threatened to sever all Israeli banking relations with the Palestinian Authority, which since the PA depends on Israeli banks to function, would have ruined the Palestinian government in the West Bank. I don't like that this is how it's going down, but definitely see the rationale, and don't think the Biden Admin is wrong to protect the PA. There's plenty criticism to heap on the US for their relationship with Israel, but I don't think this is one of them. The problem here is Smotrich and the Netanyahu government.