Since the end of fighting between Israel and Hamas in Operation Guardian of the Walls in May, both the previous Israeli government and the incoming government, and especially Minister of Defense Benny Gantz who has served in both, have repeatedly said that things will change. Specifically they had in mind the mechanism for transferring money from Qatar to the Gaza Strip. The 'suitcases of dollars' were used to buy building materials for constructing tunnels and paying workers on production lines manufacturing rockets.
The pictures of the suitcases of dollars brought to Gaza three years ago by Qatari emissary Mohammad al-Emadi inflicted major damage on both sides. It was perceived as a step that allowed Israel to provide cash to the financially distressed Gaza Strip, which did what it liked with it - whether humanitarian aid, or promoting means of terror and rocket fire on Israel.
Over recent days, we have witnessed renewed unrest in the Gaza Strip over the arrangements to transfer money. And what is happening is exactly what was happening before May. The terror organizations in Gaza are warning - "Prepare the bomb shelters in Tel Aviv, our missiles are on the way." This was an announcement from Islamic Jihad following the most recent Israeli air attacks on the Gaza Strip.
Why is the Israeli government again caught up in an escalation of the security situation, less than three months after the last round of fighting, which was meant to bring an extended period of quiet? The main reason is money. But to understand what is different about the current requirements of Hamas, you need to understand the depth of the current situation in the Gaza strip and the problematic nature of the new mechanism for transferring money that Israel planned.
How do you convert cash into controlled money?
The money around which there is the main dispute is meant to be for salaries for Hamas government workers in the Gaza Strip. On a political level, Hamas, and mainly the Hamas leader in the Gaza Strip Yahiya Sinwar are taking advantage of the sensitive political situation in Israel, under Prime Minister Naftali Bennett, to achieve its aims, without needing to go too far in escalating the situation.
When Israel decided to halt the suitcases of dollars, the Israelis claimed was that this was a cash bribe to Hamas, without any controls, in order to maintain temporary quiet. Hamas also interpreted the money as an Israeli bribe to stop "opposition" to the armed struggle against Israel. Bribe or not, the suitcase mechanism allowed money to flow into the Gaza Strip.
Bennett, who has referred on more than one occasion to the suitcases of money, said, "This was something that we inherited and must be stopped for good." In fact the actual suitcases of money stopped going into Gaza in 2019.
One way or another, since the suitcases full of cash were stopped, an alternative mechanism was established for the transfer of $30 million from Qatar to Gaza each month through banks. This method did not prevent money from reaching the pockets of 'undesirables.' The Qataris as part of the financial transfer, for vitally needed things as well, added a significant extra sum for salaries for Hamas government employees in Gaza. These employees received their salaries from the Palestinian Authority in the past but due to the dispute with Hamas and its economic crisis, it halted paying the salaries. Hamas financed those government employees for a while but eventually Qatar took upon itself to make these payments.
In this way the money injected into Gaza each month amounted to $30 million: $10 million for buying Israeli fuel for the Gaza power station, $10-12 million paid in cash to 100,000-120,000 needy families ($100 each family) and $6-7 million for salaries to Hamas employees. The money was transferred and the relative quiet was maintained.
But this method of transferring money for the salaries and supporting the needy was stopped in the spring and it was one of the reasons for the firing of rockets on Israel. The change of direction by Israel due to Operation Guardians of the Wall was designed to prevent the transfer of money directly to Hamas as well as the entry of building materials like cement and iron etc., a large amount of which was conveyed for the construction of terror tunnels and the Gaza Strip's underground "metro" city for the terror organizations.
No money for Hamas's people. No quiet
Hamas has made it clear that it won't agree to the cutting off of the money pipeline, and in the agreement finally reached between Qatar and UN envoy Tor Wennesland, it was decided that the money for the needy would be transferred via the UN. Here too there was a dispute. The UN demanded a fee of 8% for transferring the money to the needy families in Gaza, compared with the Palestinian Authority, which had agreed to a fee of 1.5%. In the end, Israel managed to lower the UN demand to 3.5% and the agreement was achieved.
Gantz it was revealed had met with Qatari representatives to promote the negotiations. "We decided to change and to improve the mechanism of transferring Qatar's humanitarian assistance to the citizens of the strip in order to be certain that the money reaches those who genuinely need it and to that end I was in contact with Qatari officials who understood Israel's needs and I am grateful for that."
However, no mechanism has yet been found for paying the salaries of the Hamas employees. Israel is refusing a direct transfer on the grounds that part of the money was being directed to strengthening the military forces of Hamas. The Palestinian Authority is also not allowing the transfer through its auspices and Hamas is threatening that if a solution is not found, it will renew the fire. In order to demonstrate this it has allowed apparently popular resistance activities against Israel that are well orchestrated by Hamas and organized by its people.
The shooting of border police sniper Barel Hadaria Shmueli at the end of last week during a demonstration illustrates the deep involvement of Hamas in these protests. As a result Hamas found itself in hot water with Egypt which had promised Israel that demonstration would remain low key. Egypt responded by closing the Rafiah border crossing between Egypt and Gaza, the only way that Palestinians can get in and out of the Gaza strip. Egypt is also increasing scrutiny of goods at the Rafiah crossing, which has served for smuggling in weapons including rockets.
Hamas is exploiting the fragility of Bennett's coalition Hamas and its leader Sinwar are banking on Israeli politics and the fragility of the government coalition, which includes Mansour Abbas's Ra'am and Meretz, which are not enthusiastic about IDF operations in the Gaza strip. Minister of Regional Cooperation Issawi Frej (Meretz) has even proposed direct talks with the leaders of Hamas. Sinwar knows that until the Israeli budget is passed in two months Bennett and Yair Lapid won't try to upset any of the coalition members and that provides him with a window of opportunity in which to act.
So what happens now? Bennett is in the US for his first-ever meeting with President Biden and the issue of Gaza will be raised. Just as his predecessors had no magic solutions for Gaza, neither has Bennett. He will tread carefully and make assertive statements and send fighter jets to bomb arms depots that are empty of fighters but on the other hand he will allow goods to enter Gaza including building materials and let hundreds of Gazan merchant enter Israel to conduct business deals.
The economic crunch in the West Bank can set things on fire
The escalation of the Palestinian situation has also affected the West Bank. In recent months dozens of Palestinians have been killed, most of them taking part in protests or attempting to attack Israeli soldiers during clashes or after being detained. Palestinian casualties incites the population but why did the rioting start and who is interested in seeing it escalate? Firstly Hamas is intensifying its efforts to see that the West Bank is also a hotbed of unrest, something it was unsuccessful in doing during Operation Guardians of the Wall in May, or in previous rounds of fighting between Israel and Hamas in Gaza.
The current escalation in the West Bank is mainly in places where Hamas and Islamic Jihad have a strong foothold like the refugee camp in Jenin and Silwad in the Hebron region. The Palestinian Authority, due to the many casualties, some of which it were from its own forces, is struggling to contain Hamas. Even among the Palestinian Authority itself, especially its less organized militias, there is a shift towards confrontations with the IDF.
But there is also another catalyst - the economic situation, which has been the most important factor in maintaining relative quiet in the territories in recent years. The Covid pandemic has ended several years in which the economic situation in the territories was not bad. In those years the private sector grew and expanded, agriculture developed (partly because of growing cooperation with Israeli farmers) and the number of Palestinians working in Israel rose to more than 130,000. Towns in the Jenin, Tulkarm and Kalkilya areas saw income rise threefold due to Israel's Arabs regularly coming to shop there.
But Covid brought all that to a halt or at least a serious slowdown. The private sector has been hit hard by restrictions and employment of Palestinians within Israel has been cut by 30%-40%. Only recently have Israeli Arabs begun shopping again in West Bank Markets. According to the Palestinian Central Bureau of Statistics, the GDP in the Palestinian Authority shrank by 11.5% in 2020, after modest rises in the previous years. Unemployment has risen to 19% and among young people the percentage is double. In the Gaza Strip unemployment is more than 50%.
The Palestinian Authority received $500 million in external aid in 2020, down 20% from 2019, and the lowest amount for years. On top of all this the budget deficit of the Palestinian Authority in 2020 widened to $1.6 billion, the highest figure in recent years.
With all these factors taken together, it is surprising that the clashes with the IDF have remained at such a relatively low level. The concern is that if the economic and political situation in the territories worsens then the violence will escalate with the word Intifada re-entering the regional lexicon.
Economic woes in the Gaza Strip
Difficulties in transferring $10-12 million a month from Qatar to 100-120,000 needy families.
58% poverty rate (according to the Palestinian Central Bureau of Statistics).
50% unemployment
Economic woes in the West Bank
Employment of Palestinians in Israel has fallen 30-40%
GDP in the Palestinian Authority contracted 11.5% in 2020
Unemployment 19%
Published by Globes, Israel business news - en.globes.co.il - on August 26, 2021
Copyright of Globes Publisher Itonut (1983) Ltd. 2021