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. .