(IsraelNN.com) Hamas approved establishment of a new Gaza bank on Tuesday. Islamic National Bank chairman Ala al-Rafati said that the new bank has received approval from the Hamas-run government, and he hopes that the financial institution will be open for business early in the coming year.

The PLO, run by its chairman Mahmoud Abbas (Abu Mazen), assumes that Hamas will take control of the bank, although Hamas denies this assertion. The Islamic National Bank chairman claims that the bank is not politically affiliated with any faction. Rather, the venture was intended to boost local investment in Gaza’s economy, which has been affected by Israel’s financial blockade.

Nevertheless, the Palestine Monetary Authority (PMA) in Ramallah, which regulates banks, said that it would avoid the Islamic National Bank. The institution would therefore have to function autonomously, without funding from the Arab or global banking system.

“The PMA has not authorized the licensing of such a bank, and, accordingly, if there is such a bank, we will pursue every legal action to prevent it from operating,” said PMA governor Jihad Wazir.

A former senior US Treasury Department official stated that such a bank would face serious legal hurdles. “This would be a bank in name only,” said Matt Levitt, an expert on the financing of terrorist organizations at Washington Institute. Levitt stated that it is unlikely that any international bank, let alone any Israeli bank, would have any dealings with a bank registered with Hamas.

Not Surprised
Western officials were not surprised at news of the emergence of an alternative banking system in Gaza. The US and Europe have shunned the Hamas terrorist organization, which refuses to recognize the State of Israel. After Hamas seized control of Gaza in June 2007, Israel increased monetary restrictions against Hamas. Concurrently, the PMA has tightened its money-laundering rules, making it harder for Hamas’ terrorist activities to be funded.

However, Western diplomats claim that clandestine tunnels connecting Egypt to Gaza would allow the free flow of cash to the new bank, which would be free of the restrictions imposed by the Israelis.