Banks in Israel and the Territories are boycotting the Palestinian-Saudi Arabian bank El Aksa el Islami, regarded as a key financing arm of the Hamas movement in the Territories. This is in accordance with the Israeli defense establishment’s recommendation, apparently backed by the Palestinian Authority. The report was confirmed today to "Globes" by banking, defense and Palestinian sources.
The bank started operating in Ramallah in December 1998 with the support of a Saudi investment company. Two months ago, the bank’s chairman was arrested by the GSS and interrogated on suspicion of transferring funds to the Hamas organization. He was released a few days later, but Israeli security sources briefed Israeli banks about the allegations against him, recommending they do not cooperate with him. Against this backdrop, all contacts between the bank and Israeli banks were terminated.
At the same time, it was learned that all contacts between the bank and Arab and Palestinian banks in the Territories ceased. The El Aksa el Islami bank had intended by means of these contacts to find an intermediary to clear shekel checks, in dealings with the Israeli correspondent bank of the Palestinian bank. All the Arab and Palestinian banks in the Territories, including the small ones, have correspondent ties with Israeli banks.
Sources close to El Aksa el Islami Bank noted that the answer it received from all the banks in the Territories was that Israeli banks had warned they would terminate existing ties with them if they transferred El Aksa el Islami Bank’s checks. Israeli defense sources noted that the Palestinian banking sector’s response could have been due to directives from the Palestinian Authority in the Territories not to cooperate with the bank, in order to prevent the transfer of funds to the Hamas. They noted that on this matter, cooperation exists between Israel and the Palestinian Authority, based on mutual interests.
Published by Israel's Business Arena March 2, 1999