Last update - 00:00 26/09/2007
Israel's Hapoalim severs ties with Gaza Strip banks
By Tal Levy, Ram Dagan and Avi Issacharoff , Haaretz Correspondents and Reuters
Israel's largest bank announced yesterday that it is cutting business ties with Palestinian banking institutions in the Gaza Strip, thereby essentially severing the Hamas-ruled territory from a steady money supply.
Bank Hapoalim's decision is expected to be echoed by Israel Discount Bank, the other Israeli bank with the necessary clearing mechanisms in place for working with Palestinian banks. Assuming the Bank of Israel approves IDB's decision, Gaza would then be completely cut off from many banking services.
Both banks are being motivated in part by the government's recent decision to declare Gaza "hostile territory." However, Israeli banks have been concerned for some time about the possibility of legal liability for transactions with Gaza, in view of the stringent laws against money laundering and financing terrorist organizations.
In a statement yesterday, Hapoalim said that "in light of the government's decision to declare the Gaza Strip hostile territory, Bank Hapoalim decided to cease its banking activities with banks and branches whose base of operations is the Gaza Strip."
But a Hapoalim spokeswoman said it would take several weeks for the bank to completely cease what she described as "minimal services" to Gaza's financial institutions.
A Palestinian banking official said that if other Israeli institutions follow suit and stop transferring shekels to Gaza banks, Hapoalim's move could result in their being forced to shut down.
"This will entail reducing economic activity between Gaza and Israel," added Naser Abdel-Karim, a Palestinian economist.
Sami Abu Zuhri, a Hamas official, called the move "a grave decision" that would have a major impact on life in Gaza.
A Hamas spokesman, Fawzi Barhum, termed the decision part of an Israeli-American plan to vanquish the Palestinians. "This has nothing to do with Qassam rocket attacks, only an attempt to defeat the Palestinians and deny them their basic rights," he said.
The amount of currency that has been transferred to Gaza since Hamas's takeover is disputed. Israeli officials said the August shipment totaled NIS 400 million. A Palestinian Monetary Authority official said shipments over the past 35 to 40 days totaled half that amount.