A Palestinian woman is reflected in the glass of a money changer's shop in Gaza, April 29, 2010
A Palestinian woman is reflected in the glass of a money changer's shop in Gaza, April 29, 2010 Photo by AP
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It turns out that not only Greece and Spain are suffering economic hardship. The Hamas leadership in the Gaza Strip is facing a severe economic crisis due to the dwindling foreign assistance the organization normally relies on.

The financial distress is raising concern among Hamas leaders that they may not be able to withstand the increasing public pressure, which could lead to a popular uprising against the government.

Hamas depends on a monthly support of tens of millions of dollars to maintain its rule in Gaza, pay wages to thousands of civil servants ‏(who are not identified with the Palestinian Authority and are not paid by it‏) and to carry out various activities. Some 80 percent of the Gaza Strip’s budget consists of foreign contributions.

For the past two months Hamas has been unable to pay the civil servants’ wages. The government is searching for ways to overcome the crisis, even temporarily. Among other things it has imposed several new taxes, a widely unpopular move.
 

Compounding the problem is Egypt’s continued construction of the anti-smuggling wall on the Gaza border in Rafah and Israel’s blockade on the Strip.

The Israeli defense establishment is having difficulty evaluating how the economic crisis will affect Hamas’ Israel policy. It is not clear whether Hamas will try to reconcile with Fatah or show more flexibility in the Shalit deal in a bid to relieve the blockade, or go the other way and set the border on fire again, contrary to the restraint it has practiced over the past year.

The dwindling of funds to Hamas has been brought about, among other things, by Iran’s changing priorities regarding foreign allocations. Muslim groups in Persian Gulf states have also cut back donations.

Egypt has cracked down on groups maintaining ties with Hamas, including Egyptian money changers who were involved in passing funds from Iran and Hezbollah to Hamas. After Egypt exposed Hezbollah’s large terror and espionage network in Egypt at the close of 2008, it took steps to stop the fund transfers as well. At the same time Egypt has stepped up its activity against smuggling in the Rafah tunnels.

Gaza officials told Haaretz yesterday the crisis also stems from the tightened American supervision over fund transfers from Muslim charity organizations to Hamas. The stricter supervision makes it more difficult to move funds from Hamas’ considerable assets in the United States to the Gaza strip.

Hamas treasury director general Ismail Mahfouz said recently that all Gaza government employees would receive a monthly salary of NIS 1,500 this week, compared to NIS 4,000 that many of them normally earn.

Only a little more than 10 percent of the Gaza budget comes from taxes. Hamas is now enlarging this cut with 10 new taxes on cigarettes ‏(NIS 3 per box‏) and on market vendors’ merchandise, among other things. The authorities have also launched a real estate licensing process, requiring apartment owners to pay large sums of money if they buy a home on non-government owned land.

The Gaza Strip’s Popular Front for the Liberation of Palestine last week issued a warning of a public uprising − i.e. an intifada − if the government persists in imposing new taxes.

Hamas responded by arresting 10 senior Popular Front members, who were released eventually following pressure exerted by other factions. The way things appear today, Hamas is having difficulty finding a solution to the situation.