Gaza’s banks have run out of cash, an economic adviser to Ismail Haniya, the Hamas leader in Gaza, said Thursday. The cash shortage followed a decision by Israeli commercial banks to halt all business transactions with Palestinian bank branches in the Hamas-run Gaza Strip.
“People responded by withdrawing their deposits,” said Ala al-Araj, the adviser to Mr. Haniya. The spate of withdrawals brought about the cash shortage.
Later on Thursday, Israel allowed some cash into the strip to alleviate the crisis, according to a Gaza bank manager who spoke on condition of anonymity.
Israel has declared Gaza under Hamas “hostile territory,” and the legal risks of doing business with banks in an area controlled by a group listed as a terrorist organization by Israel, the United States and the European Union have prompted Israeli banks to cut their ties. Hamas seized Gaza in June, routing the forces of the rival Fatah faction there. Since the takeover, Israel has closed the main crossings in and out of Gaza to ordinary traffic.
The decision of the Israeli banks has added to the pressure exerted on Hamas by both Israel and the West Bank-based Palestinian Authority, led by President Mahmoud Abbas of Fatah.
In a statement late on Wednesday, Israel’s Discount Bank said it had “decided to end all activities with banks associated with Gaza and with all branches of other banks located there.” It said its decision was made in light of the Israeli government decision last month to declare Gaza “hostile territory.”
Bank Hapoalim, the only other Israeli lending bank that did business with Gaza bank branches, made a similar statement on Sept. 25, although bank officials in Gaza and an Israeli official spokesman said that the new policy had not been implemented.
Thousands of Gaza’s public sector employees and workers were paid at the beginning of October, meaning that they are able to buy food for Id al-Fitr, the three-day festival that starts on Friday and marks the end of the Muslim holy month of Ramadan. But those payments contributed to a shortage of currency in the Gaza banks, and residents who came to draw cash this week were turned away.
The Israeli shekel is the official currency in the Palestinian territories, in keeping with agreements under the Oslo peace accords in the mid-1990s. The shekels must be supplied from Israel.
Usually, Gaza’s bank branches send vans to the Erez crossing, on the Gaza-Israel border, to fill up with currency. Shlomo Dror, a spokesman for the Israeli government agency that deals with the Palestinians, said that Israel supplied currency to the Palestinian banks in the West Bank, and that the Palestinian Authority then transferred cash to Gaza via Israeli territory, in coordination with the Israeli authorities. The Erez crossing has frequently been closed because of mortar and rocket attacks by Palestinian militants, Mr. Dror noted.
The cash that arrived Thursday afternoon was the first to get through in three weeks, according to officials in Gaza. Still, there are 500 million shekels in circulation in Gaza, according to Muhammad Kirresh, a Palestinian economic analyst — enough, he said, to meet current needs. The bank shortages, he said, were caused by the “uncertainty and fear of the future” after the Bank Hapoalim announcement, which led people to withdraw large sums of cash.
In the longer term, said Mr. Araj, the Gaza government adviser, the Bank of Israel, an Israeli state institution, could supply currency to Gaza. Alternatively, he said, the main Bank of Palestine could carry out transactions with Israeli commercial banks through its branches in the West Bank, which would, in turn, deal with Gaza. As a last resort, he suggested, Gaza could look into bringing out its own currency or, he said sardonically, go back to bartering.
Four months after the Hamas takeover, though, the economic pressure on Hamas appears to be having some effect. Speaking in a mosque after prayers late on Wednesday, Mr. Haniya said that the Hamas rule of Gaza was “temporary,” and that Hamas had agreed to enter into dialogue with Fatah in one of the Arab capitals after Id al-Fitr.
Nabil Amr, a media adviser to Mr. Abbas, told reporters in the West Bank city of Ramallah, “There are no arrangements to hold any dialogue with Hamas in any Arab countries after the Muslim holiday.”
In Jerusalem on Thursday, police officers questioned Israel’s prime minister, Ehud Olmert, for a second time as part of a criminal investigation into whether he tried, as acting finance minister, to help steer the sale of an Israeli bank to a friend in 2005.
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