Tuesday, October 23, 2007
I previously noted the scandalous fact that Israeli banks, in spite of it all, were continuing to supply shekels to Gaza (see: Banking in Gaza and Israel's biggest bank says cutting Gaza ties (Finally)). Now the cash-crunch is setting in: Sanctions create serious cash shortage in Gaza
...In the Gaza Strip these days, not even a trip to the bank or the Western Union is without drama. Last week, the Israel Discount Bank, the last Israeli bank to do business with Gaza's financial institutions, cut its ties with the isolated territory. Now cash, the only form of payment most Gazans will accept, is running out.
According to both Gaza bank managers and the local Hamas-run administration, there is a severe shortage of U.S. dollars and Jordanian dinars, the two currencies in which most Gazans keep their savings. Banks are still distributing Israeli shekels, but even those could start running low as early as next week, leading to talk that the impoverished Gaza Strip, a place where increasing numbers of people now get around on donkey carts and cook their meals over open fires, could take another step backward in time and return to the barter system.
"There is no cash in the banks. We go to the black market to buy enough shekels to give to our clients. But tomorrow, who knows, we could be out of shekels...
Related: Bar-On urges World Bank to halt cooperation with Gaza projects
Finance Minister Roni Bar-On met Monday in Washington with World Bank President Robert Zoellick, and urged him not to cooperate in any manner with Hamas and economic projects in the Gaza Strip.
"We must strengthen moderates through economic cooperation, but there is no room to include Hamas in this framework," said Bar-On.
"We must adopt a policy of isolating the Gaza Strip, which is controlled by Hamas, from the West Bank, which is controlled by moderates," said the finance minister.
Bar-On added that Israel would like to contribute to the development of job opportunities and proper living conditions in the West Bank in order to demonstrate to Palestinians that terror does not pay...
Update: More Economy stuff: Gaza goes hungry as Israeli sanctions bite
While the Gazan economy is in free fall, Hamas, the main target of the Israeli sanctions, and its political rival, Fatah, appear to be awash with cash.
There were crowds in the main streets last week surveying lists of names to see if they had been nominated to receive a $100 (£50) gift for Ramadan from either Hamas or Fatah. Hamas was offering the sum to 40,000 people, while Fatah was giving to 65,000.
Both parties, through their respective governments in Gaza and Ramallah, hope to pay their civil servants and security forces in full this month. Hamas says it will pay 16,000 salaries this week, averaging $400 a person, while Fatah will pay around 60,000 - on the understanding that the recipients stay at home and do not work with the Hamas government.
