NextFin News - In a move that threatens to dismantle the foundational framework of Middle East diplomacy, Israeli Finance Minister Bezalel Smotrich formally proposed the total abolition of the Oslo Accords and the subsequent dismantling of the Palestinian Authority (PA). Speaking on Tuesday, February 17, 2026, at a conference of Judea and Samaria settlement leaders, Smotrich outlined a strategic roadmap for the next government term centered on the destruction of the "idea of an Arab terror state" and the assertion of full Israeli sovereignty over the West Bank. The proposal comes as the Israeli government accelerates administrative measures to integrate occupied territories, including a recent ruling to allow the registration of land in Area C as Israeli state property.
According to Jewish Breaking News, Smotrich characterized the 1990s-era peace agreements as "cursed" and argued that the PA has become a liability rather than a partner for peace. The Finance Minister’s plan is not merely rhetorical; it is backed by concrete legislative shifts. Defense Minister Israel Katz has already moved to implement land registration in Area C, a move Katz described as an "essential security and governance measure" to ensure full freedom of action for the State of Israel. This administrative shift effectively bypasses the civil governance structures established under the Oslo framework, moving the region closer to de jure annexation.
The timing of this proposal is particularly significant given the current geopolitical climate. With U.S. President Trump back in the White House since January 2025, the Israeli right wing appears to be testing the limits of American support. While U.S. President Trump has historically shown strong support for Israeli security, recent reports from Haaretz suggest that even his administration has expressed reservations regarding unilateral annexation that could spark a regional conflagration. However, Smotrich and his allies seem to be betting that the U.S. President’s focus on "America First" and his transactional approach to foreign policy will ultimately provide the diplomatic cover needed to finalize the integration of the West Bank.
From a financial and administrative perspective, the dismantling of the PA would create a massive vacuum in civil services, security coordination, and economic management. Currently, the PA manages a budget that supports over 150,000 public employees and provides essential services to millions of Palestinians. If Smotrich succeeds in abolishing the Oslo Accords, the State of Israel would, under international law, become directly responsible for the welfare of the Palestinian population as an occupying power. This would impose a multi-billion dollar annual burden on the Israeli treasury, potentially straining the national credit rating and diverting funds from domestic social programs.
Furthermore, the economic integration of Area C—which comprises roughly 60% of the West Bank—is already underway. The declaration of large swaths of land as "state property" allows for the rapid expansion of settlement infrastructure and industrial zones. According to the Diplomat in Spain, European nations have already begun issuing condemnations, with Spain leading a diplomatic push to label these land registrations as a violation of international law. The risk for Israel is a potential wave of sanctions or the withdrawal of preferential trade status from the European Union, Israel's largest trading partner.
The security implications are equally dire. The Oslo Accords provided the legal basis for security coordination between the Israel Defense Forces (IDF) and Palestinian security forces. Abolishing these agreements would likely lead to the immediate cessation of this cooperation, forcing the IDF to deploy significantly more battalions to the West Bank to maintain order. This comes at a time when the Israeli military is already stretched thin by ongoing tensions in Gaza and the northern border with Lebanon. Smotrich, however, remains undeterred, pushing for the implementation of martial law in Gaza and the resettlement of Jewish communities there, suggesting a broader vision of territorial expansion that rejects the two-state paradigm entirely.
Looking forward, the success of Smotrich’s proposal depends on the internal stability of the Israeli coalition and the reaction of the U.S. President. If the Israeli government moves forward with the formal cancellation of the Oslo Accords, it will mark the end of a thirty-year era of international diplomacy. The most likely trend is a "creeping annexation" where the PA is not dismantled overnight but is instead starved of funds and authority until it becomes irrelevant. This strategy allows Israel to seize the land without immediately assuming the demographic and financial burden of the Palestinian population, though it remains a high-stakes gamble that could lead to a total collapse of regional stability by the end of 2026.
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