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Small businesses allege that a banking sector decision to cut ties with Palestinian banks has hurt them. The president of an umbrella organization for the self-employed said last week, "Israeli factories and businesses that have traded for years with the Palestinians have encountered financial difficulties because of the decision by Israeli banks."

Zeev Weiner said dozens of small businesses were in trouble due to the end of relations, but that number could climb into the thousands. Banks in the Palestinian Authority no longer honor checks written by Israeli businesses.

"A number of Israeli service providers and manufacturers have approached me, saying they were not able to collect from their PA customers," said Weiner.

The Israeli banking sector cut ties with the Palestinian Authority because international law prohibited relations with entities suspected of involvement in or support of terror.

Weiner has approached Bank of Israel governor Stanley Fischer and Interim Prime Minister Ehud Olmert seeking a solution to the problem.

Weiner asked the pair to publish "clear guidelines for Israeli banks regarding PA banks that were not owned by PA citizens and with which trade is permitted, through which PA businesses will be able to pay their debts."