Daily Israel Report

Circumventing Boycott of Gaza

Trucks laden with millions of shekels in cash make their way to Gaza each month, thus neutralizing the banks' boycott of Hamastan.
By Hillel Fendel
First Publish: 10/29/2007, 11:45 AM

Despite Israel's declaration of Hamas-run Gaza as a hostile entity, trucks filled with hundreds of thousands of shekels each are allowed to enter Gaza monthly.  The Finance and Defense Ministries have given their approval.

With a shortage of dollars and Jordanian dinars in Gaza, the money is used by Hamas to keep Gaza's economy flowing - including the payment of salaries to terrorists.  Terrorists fire near-daily Kassam rockets at Israeli towns and cities from northern Gaza.

Bank Boycott on Hold
The only two Israeli banks working with the Palestinian Authority, Discount and HaPoalim, announced over the past several weeks that they were cutting monetary ties with banks in Gaza. Discount has announced it is considering an end to ties with Arab banks in Judea and Samaria as well.

The Bank of Israel, however, asked the two banks to continue working with Gaza for the meanwhile, out of concern that a cash-flow crisis would greatly harm the local economy.

It could be that this problem has been solved, however, by the entry of cash-filled trucks into Gaza, via the Kerem Shalom crossing on Gaza's southern tip. 

Last week, a convoy of money-laden trucks made its way from Ramallah, in southern Samaria, to southern Gaza.  Security sources estimate that tens of millions of shekels have made their way into Gaza over the past few months, and that some 500 million shekels ($125 million) are currently in Gaza.

The money is used largely to pay salaries.  Hamas pays its military personnel in cash. Weapons smugglers, terrorist group members and charity organizations are also paid in this manner. Suitcases filled with cash are brought to local post offices, and the salary payments are made there.

On October 6, Hamas paid a total of 35 million shekels in September salaries to some 20,000 security force members - an average of 1,750 shekels ($435) each.

Iranian money also apparently finds its way to Gaza/Hamastan in this manner.  It is transferred from Iran or Hizbullah to Arab banks in Judea and Samaria, from where some of it makes its way in cash to Gaza.

Israel is thus a silent partner in transferring money to terrorists in Gaza, but is searching for a way out.  Finance Minister Roni Bar-On has held recent talks with his Egyptian counterpart, Boutrous Ghali, on the option of enlisting Egyptian banks to replace the Israeli banks that had been working in Gaza.

Cutting Back on Fuel to Gaza
Israel began this week reducing fuel supplies, food and medicines to Gaza. Defense Ministry spokesman Lt.-Col. Shlomo Dror said Israel was limiting food and medicines to "the minimum the Palestinians need to avoid a humanitarian crisis."  He said fuel supplies would be reduced by 13%, with the heaviest cuts coming on gas for private cars.

The Karni freight terminal has been closed indefinitely, with only the Erez and Kerem Shalom crossings continuing to operate.  Gaza-Israel border crossings have frequently been the sites of Palestinian terrorist attacks, some of which have claimed multiple casualties.  "If they fire at the checkpoint," Dror said, "we will have no choice but to close it. Hamas will have to think about how it takes care of its own people."

Israel's attempt to disengage, once and for all, from Gaza, has drawn criticism from left-wing groups - those who always claimed that Israel had no business being in Gaza. Sarit Michaeli of the B'Tselem group, said, "Cutting fuel supplies into Gaza will only exacerbate the humanitarian problems that already exist... [Israel] has obligations under international law to allow the normal running of everyday life."

Haggai Huberman contributed to this article.