Yesterday, I wrote that the Israeli economy is essentially sound, relatively well placed to face the international credit crunch.

Sure enough, the Tel Aviv stock market did plung 8% on opening. By the end of trading, it had lost “only” 3.8%. During the day, a statement from the Ministry of Finance gave official government backing to private deposits in the local banks.

Few have considered how this international mayhem will effect the Palestinian – Israel peace process. One immediate thought is that if governments are having to spend more on domestic needs, there will be fewer spare resources for overseas aid – ie, less for the Palestinians.

Bad thing? Possibly. This may provoke a turn to more senseless violence. Alternatively, the Palestinians and Fatah may finally understand that the pot is not bottomless. The billions of annual support from UNRWA, the EU and elsewhere require fuller accountability, both towards their own and for the overseas community.