In Gaza, banks aren’t too big to fail, but too small to function

Israel/Palestine
on 10 Comments

Every time I send my mother in Gaza a gift for her birthday or Mother’s Day, I have to worry about a bank too small to function. The bank refuses to give her the amount in US dollars and instead offers her the local currency. Sounds fine, until the bank decides to quote the much lower exchange rate than the market offers. For example, the market exchange rate for the US dollar is 3.5 Israeli Shekels for 1 US dollar. The Bank offers my mother only 3 shekels for the dollar, pocketing the difference and making me look like a cheapskate!  

The local banks maintain that due to the Israeli siege, they are unable to buy US dollars and thus they cannot dispense dollar transactions and instead opt for the local currency. While most banks in the world are faced with challenges of the financial crisis, it seems the banks in Palestine have found a niche on making money by scamming their clients.  While most of the blame goes to Israel for limiting amount of US dollars entering the Gaza banking system, greedy bankers are not entirely off the hook. The only ones who can get in US dollars are employees of international NGOs like UNRWA.  Late last month Israel, allowed them to transfer 13.5 million dollars from their bank account into Gaza to cover salaries of their employees.

While many individuals struggle with this unfair system, many humanitarian organizations have a lot to lose. When an International NGO in Gaza funds a local project and wires the money to the local partner, the bank takes their cut not just in fees, but also in exchange rate difference. Prior to the Israeli siege on Gaza, one had a choice:  you could withdraw the funds in the local currency, or US dollars and convert them on the street for a higher rate than the bank’s. But now you cannot, as the bank only gives funds in local currency at the rate they determine.  

While it seems the Gaza banks are making a killing, they are not. Many branches have closed their doors or reduced their staff due to the pressure on them from various international players. The banks fear getting in legal trouble if they are perceived to be doing business with Hamas, the de facto government in Gaza. This led to an unfortunate incident earlier this month when Bank officials say armed men forced their way into the Palestine Investment Bank in Gaza City and left with at least 250,000 US dollars in cash. Hamas officials have accused the bank of illegally transferring nor did it identify the thieves, but  also said it “resents, denounces and condemns the attack.”

Hamas, whose attempt to bank with the local banks was shut down, started their own bank where the local government banks and employees of the local government get paid. The bank gets its funds in cash from donations, state revenue, as well as local real estate deals.  

I know this is a source of frustration for many in the Gaza Strip, this is a problem that affects the lives of everyone in Gaza from college kids paying tuition, to local business owners. Individuals are not the only victims of this senseless policy, many local NGOs have to do more with less. The Israeli government does not need this ban to isolate Hamas if that’s their goal. The banks have proven they will self-regulate and cease from doing business with Hamas out of self interest. .

10 Responses

  1. fuster
    March 15, 2011, 1:28 pm

    Why is Hamas banned from passing it’s money through banks?
    It surely can’t be something that the Israelis are responsible for. What power does Israel hold over international banking?

    And BTW, is armed robbery usually and customarily described as an “unfortunate incident” or is it usually called …something else…something more like…”felony”.

    • Avi
      March 15, 2011, 2:38 pm

      It surely can’t be something that the Israelis are responsible for. What power does Israel hold over international banking?

      In 2006, when Hamas won in a free and democratic elections, Israel immediately called on the EU, the US and other countries allied to it to impose an economic and political siege on Gaza, as well as, freeze all of Hamas’ assets in foreign banks. The EU, the US and Egypt, among others, immediately obliged.

      And yet, you rhetorically ask, “Geee, what power could Israel possibly have over international banking….durrr?”

      • fuster
        March 15, 2011, 3:21 pm

        You mean that the Hamas was welcome in all international banking circles right up until it won free and fair elections?

        THAT”S the reason that they’re not getting free calendars every year, because they won election?

        GEE WHIZ, I thought that the US had declared Hamas to be a terrorist organization yearsss before that.

        I also thought that the EU, the US and Russia had all offered Hamas a chance to get off the list after it won the election.

  2. Avi
    March 15, 2011, 3:44 pm

    fuster March 15, 2011 at 3:21 pm

    You mean that the Hamas was welcome in all international banking circles right up until it won free and fair elections?

    I can’t say that I’m surprised by your simple thought process. So here, I’ll break it down for you so that you will not have to strain to understand it all.

    Despite Hamas never attacking the US or the EU and having no intentions of doing so, in 1997 the US put Hamas on the list and in 2003 the EU followed suit.

    When Hamas won elections in 2006, that event set in motion — courtesy of Israel — the large scale isolation of Gaza.

    That meant that all commerce, banking and financial assets were restricted, severed or frozen.

    Even charity organizations with no relation to Hamas were targeted by the US. In one case, a US court allowed an Israeli agent for the Shin-Bet to testify in secret behind closed doors.

    Thus, when you claim that Israel can’t be held responsible for such actions, you show yourself for the habitual liar that you are; spin and obfuscation are your tools.

    P.S. – It’s not “The Hamas”, it’s “Hamas”.

  3. fuster
    March 15, 2011, 4:17 pm

    —–I can’t say that I’m surprised by your simple thought process. So here, I’ll break it down for you so that you will not have to strain to understand it all. —-Avi—-

    gee thanks, but perhaps you should not waste your brilliance upon me and instead explain to the USA and EU why they were wrong to condemn the Hamas as terrorists in 97 and 03. after all, maybe the US doesn’t understand that US citizens murdered by that there Hamas in terror attacks aren’t an attack on the US. you could explain it right good, I’m guessing, and they’ll soon see their mistakes and all.

    • Citizen
      March 15, 2011, 5:38 pm

      The US citizens murdered and maimed have all been lucky enough to have that done to them by the IDF. From the Israeli attack on the USS Liberty to Rachel Corrie to the Turkish American kid on the free gaza boat, and the Jewish American girl her lost her eye, etc. The reason Israel has not been declared a terrorist state is due to American politicians being bribed by Israel First donors. Further, Israel was born and bred by documented Jewish terrorists, some of whom became the state’s top elected leaders.

    • ToivoS
      March 15, 2011, 9:28 pm

      Fuster if you haven’t noticed yet Avi gave a very concise and accurate response to your first post. Responding with juvenile sarcasm does not enhance your position. Nor does trying to change the subject. The fact is Israel succeeded in financially isolating Hamas (and convincing the US and the EU to join in) after Hamas won the election.

      You should follow the old Chinese proverb: ‘sometimes it is better to sit silently and be thought a fool than open mouth and remove all doubt’.

      • annie
        March 15, 2011, 11:53 pm

        i don’t know why he is able to continue to highjack threads with this immature baiting form of commentary. it’s hard to have any kind of normal conversation about the post after coming in here and reading all this crap.

      • Avi
        March 16, 2011, 1:21 am

        annie March 15, 2011 at 11:53 pm

        i don’t know why he is able to continue to highjack threads with this immature baiting form of commentary.

        Good question.

  4. fuster
    March 15, 2011, 5:36 pm

    thank you.

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