Hamas Facing Cash Crunch Over Loss Of Smuggling Income


US media reported last month that according to the Israeli military, Hamas was under what was described as severe economic strain as a result of losing income from the shuttered Gaza smuggling tunnels. According to a New York Times report:


January 30, 2014 TEL AVIV — Hamas, the Islamic militant group that controls Gaza, is in severe economic straits, having lost a major source of income in recent months because of an Egyptian clampdown on hundreds of smuggling tunnels, a high-ranking Israeli military official told reporters at army headquarters here on Thursday.

Dozens of tunnels running beneath Gaza’s border with Egypt are still operating, he said, but the $200 million that Hamas collected annually in tax revenues from the tunnel trade has been reduced to a few million dollars at most.

The Israeli official, from the military’s southern command, which deals with Gaza and Israel’s border with Egypt, was speaking on the condition of anonymity in line with military protocol.

A variety of goods, including cheap flour, subsidized Egyptian fuel and building materials, had flowed into Gaza through the tunnels, as well as weapons and operatives, he said, describing the tunnel system as Gaza’s economic lifeline. More goods are being imported from Israel, but at a much higher cost.

The tunnel clampdown began over the summer, when the military in Egypt ousted President Mohamed Morsi of the Muslim Brotherhood, who was Hamas’s most important ally. The Egyptians acted against the tunnels because of what they saw as their own security interests, the Israeli military official said.

Isra al-Modallal, a spokeswoman for Hamas, said Gaza had suffered overall losses of more than $500 million in all sectors because of the closing of the tunnels, but she could not provide a figure for how much Hamas had lost in tax revenue. The amount of goods entering Gaza through the tunnels has been cut by 95 percent, she added.

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The GMBDW also reported last month on what was described the “rapprochement” between Hamas and Iran following a three year breach as well as on the continuing decline of relations between Hamas and Egypt.

The Hamas charter says that it is “one of the wings of the Muslim Brothers in Palestine” and soon after Hamas took over the Gaza strip, Muslim Brotherhood representatives traveled to Gaza from Egypt through the newly-opened border to review Hamas military formations.  A Hamas journalist has acknowledged the role that the “international Muslim Brotherhood” has played in providing funds for the purchase of weapons and Hamas is known to be supported financially and politically by the global Muslim Brotherhood. A Muslim Brotherhood spokesman revealed that a coalition of London-based Muslim groups, including the Muslim Brotherhood, were behind the mass demonstrations staged to protest Israeli actions in the 2008 Gaza war and the Global Muslim Brotherhood and its Turkish affiliates were also intimately involved, along with the Turkish government, in the June 2010 Gaza flotilla that was involved in a violent altercation with Israeli naval forces. Following a period of seeming ascension related to the period of Egyptian rule by the Muslim Brotherhood, the organization was forced to scramble to try and find other state sponsors after Mohamed Morsi was deposed as President. In September 2013, it appeared that Hamas had succeeded in re-establishing close ties with Iran. In January 2013, Israeli intelligence sources claimed that Turkey has replaced Iran as the chief source of Hamas financing.

As a result, the Hamas government in Gaza has been unable to pay full salaries on time to its nearly 50,000 public servants for a fourth month.

Nevertheless, the Israeli official said, Hamas is sticking to its 14-month cease-fire with Israel, refraining from attacking the country. Instead, he said, the group is focusing on building up its arsenal of long-range rockets and on maintaining control of the coastal territory, which is home to 1.7 million Palestinians.

His assessment came after several recent episodes of violence across the Israel-Gaza border that suggested a fraying of the cease-fire, which ended a fierce, eight-day round of cross-border fighting in November 2012.

The Israeli military has attributed recent rocket fire from Gaza against southern Israel to elements in Islamic Jihad, an extremist group that sometimes tries to challenge the more powerful Hamas.

A couple of rockets were fired into open ground immediately after the funeral of former Prime Minister Ariel Sharon, who was buried on Jan. 13 at his ranch in southern Israel, near the Gaza border. Days later, five more rockets were launched toward the Israeli coastal city of Ashkelon. The rockets were intercepted by Israel’s Iron Dome missile defense system and caused no injury or damage, but it was the first time since November 2012 that rockets had been fired at a major Israeli population center.

In both cases, the Israeli military responded forcefully with airstrikes against militant targets in Gaza. In the week after the rocket attacks, Israeli missile strikes killed an Islamic Jihad militant along with his cousin and wounded another Islamic Jihad militant. Israel said the two militants were responsible for the recent rocket fire.

The military official briefing reporters on Thursday said the rocket fire against Ashkelon was the result of an internal dispute between Hamas and Islamic Jihad and had little to do with Israel. In a ‘cold analysis,’ he said, it did not appear to be in any of the sides’ interest to set off another major confrontation between Gaza and Israel in the coming months.

But he added that there was always a risk of a conflagration, noting that things could have turned out very differently had the rockets hit residential buildings in Ashkelon and killed Israeli civilians.”


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