Thursday, July 5, 2007
How do they do it? Hamas' hidden economy
How did Hamas fund this Gaza coup? What of the international "economic siege" that Hamas complained of against its government? Wasn't Hamas so strapped for funds that its leaders resorted to smuggling suitcases of Iranian cash into Gaza across the border with Egypt?
Part of the answer lies in — or rather under — the city of Rafah, on the Egyptian border. Smuggling tunnels, operated primarily by Gaza clans more interested in profit than ideology, run between houses on either side of the border. Egyptian and Israeli authorities have discovered tunnels dug as deep as 98 feet below ground in an effort to avoid sonar detection. Some tunnels include air ducts, electricity and lighting, and even rails and wagons to help smuggle heavy objects. Even when the mouths to the tunnels are found and sealed, the midsections remain intact and new openings are dug to reconnect them.
For a few thousand dollars, groups like Hamas rent tunnels for a night or more to smuggle in weapons and other material, according to Israeli and Egyptian officials and press reports. Hamas was able to smuggle and pay for the weapons, despite the international sanctions regime, through a variety of means — in a textbook example of the seamless cooperation between its military, political and charitable wings...
An Israeli journalist emails in some musings...quote:
First note this bit from the very interesting Conflict Blotter blog:
These armored cars are delivering cash - Israeli shekels - into Gaza. The Palestinians (West Bank and Gaza) are using the Israeli monetary system.
Is there some law that makes Israel provide its own sovereign currency to Hamas-controlled Gaza?
Here is what goes on here: Hamas gets millions of euro from Iran in cash and smuggles it into Gaza. See: Hamas smuggled $66m. in 8 months, Hamas minister carries millions of dollars into Gaza, and Hamas Slips Millions Through Border.
What can they do with this money in Gaza? Nothing. To buy goods in the Gaza market one needs Israeli shekels. So they put the millions of dollars and euros in the Gaza bank.
Now, would the bank want to keep them? No way. They may be robbed or the bank safe may be blown up (either by Israel or the locals) and the money does not earn any interest.
So the Gaza banks have this constant need to ship out dollars and euros -- not in wire transfer but real hard cash -- and exchange it for Israeli shekels.
The question is:
Why should/is Israel taking part in this?
Why not stop delivering Israeli hard currency into Gaza and instead let the local banks find another way to deal with the smuggled cash? Would they need to smuggle it back into Egypt? (If they would do that -- one should wonder why they had to bring it via Egypt into Gaza the first time.) Clearly the involvement of the Israeli banking system is something that raises questions here.
If Israel can stop providing cash to Gaza the currency in circulation will be damaged over time, the ability to get new cash into Gaza harder - if they will start using Egyptian lira instead it would at least be clear that they have closer ties to Egypt than to Israel and it may be a good reason for Egypt to stop the cash smuggled today from Egypt into Gaza.
Or maybe Hamas can start printing their own money? It would set them apart from the West Bank.
Related Update: July 15: Despite blockade, Hamas pays full wages to fighters
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