Hamas, Smuggling and Transparency

June 29, 2006

The Funding for Peace Coalition has already reported on the attempts by Hamas leaders to smuggle monies across their own borders. This involves by-passing their own customs officials, who sit next to European Union inspectors.

Throughout the month of June 2006, this illicit smuggling has continued. The reports have been confirmed by leading Hamas officials to several members of the international media. For example, one account was published by a leading Pakistani newspaper on June 7, 2006.

More recently, the Guardian newspaper noted that:

The Palestinian foreign minister, Mahmoud Zahar, a member of Hamas, returned from a trip abroad to the Gaza Strip with an estimated $20m (16m) packed in 12 separate suitcases,

Ostensibly, the money is to pay for the salaries of Palestinian Authority (PA) officials. However, if this were the case, it is unclear why the money needed to be smuggled past PA border guards, rather than handed over for immediate deposit in Finance Ministry accounts according to PA law. This practice would seem to confirm that Hamas is diverting at least some of the funds to pay for its own militias, who are acting in direct confrontation with the forces of the Palestinian President Abbas.

More interesting is whether the money also finances the war against Israeli citizens. A few days before the Guardian released its item, Hamas claimed credit for an armed attack on an Israeli position. The action was carried out via a tunnel, dug underneath the Gaza border.

It is evident that this tunnel had involved months of planning. Significant resources had been invested in its construction. It is not yet clear where the funds to pay for all this came from. Nor has it been explained why finance was available for this project but not to pay the salaries of teachers and medical staffs.

At this time, it is provident to recall that in a recent poll conducted by Birzeit University, 54% of Palestinians felt that their new government, elected under the banner of reform, distributes money in an unjust manner.

The report from the Guardian is reproduced below in full.,,1797729,00.html

Hamas minister takes $20m into Gaza

Conal Urquhart in Ramallah

Thursday June 15, 2006


The Palestinian foreign minister returned from a trip abroad to the Gaza Strip yesterday with an estimated $20m (11m) packed in 12 separate suitcases, according to officials.

Mahmoud Zahar, a member of Hamas, declared the amount he was carrying to Egyptian officials at the Rafah border crossing between the Gaza Strip and Egypt. The cash was held by Palestinian border guards who are commanded by the Palestinian president Mahmoud Abbas.

The Palestinian government has had great difficulty paying the wages of around 165,000 staff since Hamas took control of it. Most have received no salary for three months although some of the lowest-paid have received a fraction.

A spokesman for Mr Abbas confirmed that Mr Zahar had crossed the border with a large amount of money but could not confirm the amount. "We have no idea how much is there because it is still being counted. This is a completely amateurish way of doing business but once we know how much we have we will transfer it to the ministry of finance," he said.

Mr Zahar had visited Indonesia, Malaysia, Brunei, China, Pakistan, Iran and Egypt.

The Hamas government has been boycotted by western governments for its refusal to formally recognise Israel, refute violence and adhere to previous treaties between Israel and the Palestinians. As a consequence many banks have refused to handle money for the Palestinian Authority, fearing international sanctions.

Hamas officials have been forced to carry suitcases full of cash into Gaza from Egypt. On Saturday one transported €4.5m (3.1m) and earlier in the month another attempted to smuggle $804,000.

The amount the PA has accumulated is still far from the 225m it owes workers, and it will have difficulty distributing the money it has accumulated. Israeli banks have stopped releasing shekels, the currency of the PA, and bank reserves are expected to run out within a month.

Elsewhere in Gaza, Mr Abbas and Ismail Haniyeh, the prime minister, made progress in reducing factional tensions. Mr Haniyeh agreed to withdraw a Hamas-led force set up to rival the Fatah-dominated PA police. He said the new 3,000-strong force would be incorporated into the established police. "We will not allow the political differences to turn into fighting in the streets," Mr Haniyeh said.

Rivalry peaked on Saturday, when Mr Abbas called a referendum to force Hamas to recognise Israel and support peace negotiations. But factional fighting was partially defused after Israel launched two attacks on Friday and Tuesday which left around 18 civilians dead.

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