Tuesday, September 25, 2007
We discussed this a bit back here: Banking in Gaza. Gaza runs on the shekel and relies on Israeli banks for currency. Remarkable, isn't it? Since Gaza is now officially considered a "hostile entity," Bank Hapaolim is cutting them off. This isn't even sanctions, it's just common sense. Responsibility for electing a terror group and unceasingly launching rockets: Israel's biggest bank says cutting Gaza ties
The decision could deepen economic hardship among Gaza's 1.5 million residents. Israeli currency is used by President Mahmoud Abbas's Western-backed government in the West Bank to pay salaries to its employees in the Hamas-controlled Gaza Strip.
A Palestinian banking official said Bank Hapoalim's move could force Gaza banks to shut down if other Israeli institutions follow suit and stop transferring shekel notes to them.
"In light of the government's decision to declare the Gaza Strip hostile territory, Bank Hapoalim has decided to terminate its banking activity with banks and branches in the Gaza Strip," the Israeli bank said in a statement.
A Hapoalim spokeswoman said it would take several weeks for the bank to cease completely what she described as "minimal services" to Gaza's financial institutions.
Sami Abu Zuhri, a Hamas official, called the move "a grave decision" that would have a strong impact on life in the Gaza Strip.
Israel Discount Bank, also a main provider of shekels and services to Palestinian banks, said the issue of severing ties with Gaza was under discussion "but we have not reached a decision"...
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As usual, I find myself torn here. I understand the reasons, fear the consequences.
As a matter of interest, why doesn't the PA have its own money? Would that be totally impractical? If they are trying to move toward statehood, would that be a rational step?
I don't understand much about these matters so forgive me if I'm asking dumb questions.
Thanks.
Not a stupid question. I'd say, think "Confederate dollars." Since the PA does most of its business with Israel, and Arabs who were frequently getting paid to work in Israeli jobs were getting paid in shekels, there's no need to invent your own money that wouldn't be able to hold value anyway. Someone with a better hold on economics could explain this better, I'm sure.