Reuters’ Adam Entous has the fascinating back story on why Israeli banks decided to sever ties with banks in the Gaza Strip. Bank Hapoalim, the first bank to decide to cut off Gaza, said it was doing so simply because the government had declared Gaza an “enemy entity.” But that now seems to be only part of the story. Israel’s Discount Bank, reports Entous, unknowingly turned over three million shekels, or about $750,000, to the Hamas-run Executive Force. Now, with Israel authorities investigating, the Discount Bank and other Israeli banks fear they may have broken the law.
The investigation by Israel’s anti-money laundering authority centres on how shekels from Discount Bank, Israel’s third biggest, ended up in accounts held by the Hamas Executive Force at the Palestine Islamic Bank in the Gaza Strip when Abbas’s government paid salaries in early August.
According to investigators, the Palestine Islamic Bank received the shekels from the Bank of Palestine, which in turn got them from Discount Bank under a long-standing arrangement. Bank of Palestine officials had no immediate comment.
“Unbeknownst to Discount Bank, it was clearing money for the Executive Force,” said a senior Israeli official.
Israeli regulators said banks including Hapoalim have been pushing for months to sever banking ties to Gaza, arguing there was little profit in it and no way to know whether their shekels could end up with Hamas, putting the banks in legal jeopardy.
The Israeli banks’ decision to sever ties with Gaza means a looming cash crunch in the territory. There will literally be a dwindling supply of hard currency as importers, unable to pay by check, will have no choice but to use only cash. Gaza banks have been urged to establish parallel branches in the West Bank to prevent a total financial meltdown in the event that the strip becomes financially isolated. Gaza banks will start to shut down by year end, according to the governor of the Palestine Monetary Authority. It’s a prospect Hamas is clearly worried about, as it went to great lengths today to try and allay banks concerns by paying their people from suitcases of cash and keeping them away from the ATMs.
So what will happen to Gaza if the supply of hard currency does start to dry up? The most recent real world example I could find was Zimbabwe’s 2003 cash crunch after Mugabe’s economic whiz kids changed the currency but didn’t issue enough new bank notes. No doubt there are a dozen differences between Zimbabwe and Gaza, but here’s what the BBC reported in August 2003 on the Zimbabwe currency crisis:
In recent weeks local banks have been crowded with thousands of ordinary Zimbabweans seeking to get money. Many workers are not getting their salaries paid. Some banks have been restricting withdrawals to Z$5,000 a day. Unemployment is rising and inflation has risen to a record level of 365%, one of the highest rates in the world.
9 responses so far ↓
1 Rattling The Kettle // Oct 5, 2007 at 9:10 pm
Zimbabwe is a pretty bad economic analogy to Gaza. Hyperinflation in Zimbabwe is largely driven by Mugabe’s absurd economic decrees, such as mandated price caps (which drives the capped goods from store shelves to the black market), the currency shift you mentioned, and others.
2 10millionin3years.com » The real reason Israeli banks cut off Gaza // Oct 6, 2007 at 2:37 pm
[…] unknown wrote an interesting post today onHere’s a quick excerptReuters’ Adam Entous has the fascinating back story on why Israeli banks decided to sever ties with banks in the Gaza Strip. Bank Hapoalim, the first bank to decide to cut off Gaza, said it was doing so simply because the government had … […]
3 Pappe // Oct 7, 2007 at 11:19 am
“No return = No Peace”
“No Peace = Forever War”
http://www.jpost.com/servlet/Satellite?c=JPArticle&cid=1191257234810&pagename=JPost%2FJPArticle%2FShowFull
4 Anony mouse // Oct 7, 2007 at 6:36 pm
Israel is continuing to wipe Palestinians off the map. Israel is now threatening to demolish the village of Al-Akkaba, located in North of the West Bank, claiming that is was built with ‘no authorisation’ and therefore it can be demolished. Israel has given itself power to demolish any building, village or town in the West Bank while it builds new illegal settlements all the time for itself. Sickening hypocrisy indeed, but no doubt the zionist robots will be here to defend the indefensible soon with their lies. The villagers of Al-Akkaba may soon be homeless but it this terrorism will remain hidden although it is exactly t he kind of thing that Conflict Blotter should be reporting.
The number of checkpoints in on the increase as well so Israel is effectively banning palestinians from moving on their own land. Those are the actions of a racist terrorist state.
5 Pappe // Oct 7, 2007 at 8:08 pm
No one is defending the occupation. The occupation is wrong and must end.
The “Sickening hypocrisy” is not recognizing that Arabs and Palestinians also need to recognize the rights of the Jewish people to a home land in the middle east. Instead, in the name of their “rights” Palestinian are happy with continuing the war until “winner takes all”.
6 Anony mouse // Oct 8, 2007 at 8:33 pm
No that is just your slogan and your illusion. You are a just a bot who campaigns for the status quo whilst couching it in the language of peace. Meaningless demands of Palestinians must stop. They have no choice but to recognise a nuclear armed superpower that occupies their land. They have accepted it time and time again, but you just go on forever pretending they haven’t. It is a favourite tactic of the zionist reshime. Pretence and drama. It’s about time you came to your senses. Not a single Palestinian labours under the illusion that they will take all of it and you know it full well. Stop the lies.
7 Pappe // Oct 9, 2007 at 11:50 am
“nuclear armed superpower ” - more sloagns.
Palestinians have not recognizedthe rights of the Jewish people to a home land in the middle east. Instead, in the name of their “rights” Palestinian are happy with continuing the war until “winner takes all”.
8 Shual // Oct 9, 2007 at 3:07 pm
The only one who uses slogans is you, Pappe.
The palestinians are represented of a fraction that undersigned and welcomed the rigth “of the Jewish people to a home” and the refusal of that fact of the Hamas movement is absolutly meaningless.
“Palestinian are happy with continuing the war” is one of your insulting generalizations and another proove that some streams of Zionists live on a different planet. [Support to a peace settlement with Israel.= 73,5%]
9 Anony mouse // Oct 9, 2007 at 6:29 pm
Pappe is like a broken record repeating the same tired stuff over and over. Yada Yada Yada. He has no evidence to back up his slogans. In fact the evidence points to the complete opposite.
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