Israeli fire near aid center in Gaza kills 31 as tensions rise over sanctions and economic retaliation

Israeli forces opened fire on a crowd gathered at a U.S.-supported food distribution centre in Gaza on June 11, killing at least 31 people and injuring nearly 200, according to Palestinian civil defence officials. 

The shooting occurred amid escalating tensions following international sanctions on Israeli ministers and Israeli measures targeting the Palestinian economy.

“At least 31 martyrs and about 200 wounded were transported after Israeli tanks and drones fired on thousands of civilians waiting to receive food,” said civil defence spokesperson Mahmud Bassal, speaking to AFP. He noted that Palestinians had gathered outside the centre from as early as 2 a.m. in hopes of securing aid.

"Israeli tanks opened fire multiple times and intensified their assault around 5:30 a.m., with heavy drone strikes also targeting the area," Bassal added.

The violence is the latest in a series of deadly incidents at aid distribution sites operated by the Gaza Humanitarian Foundation (GHF), which has been working in the besieged territory since May 27. These operations are backed by both the United States and, controversially, Israel, as international scrutiny grows over Gaza’s deepening humanitarian crisis.

Sanctions and Economic Retaliation

The attack occurred just one day after five Western nations—Britain, Australia, Canada, New Zealand, and Norway—imposed sanctions on two far-right Israeli ministers, Bezalel Smotrich (Finance) and Itamar Ben Gvir (National Security), for inciting violence against Palestinians.

In response, Israel swiftly moved to disrupt Palestinian financial operations. On June 11, Finance Minister Smotrich cancelled a long-standing waiver that allowed Israeli banks to cooperate with Palestinian financial institutions. The waiver had previously protected Israeli banks from legal risks associated with such transactions.

Smotrich’s office announced the decision as part of a broader response to what it called the Palestinian Authority’s “international campaign to delegitimize Israel.” The cancellation of the waiver could severely impact the Palestinian banking sector, which is heavily dependent on this arrangement to process international and domestic transactions.

In May 2024, Smotrich had already threatened to sever these financial ties following the formal recognition of the State of Palestine by three European countries.

Vital but Vulnerable

The financial waiver has long been a cornerstone of economic interaction between Israel and the occupied West Bank, enabling billions in cross-border trade and salary payments. Without it, the Palestinian banking system faces the risk of isolation, making essential transactions—including salary payments, international aid transfers, and trade settlements—impossible.

The move is widely seen as economic retaliation and could further destabilize the already fragile humanitarian and financial situation in the Palestinian territories.