Banks in the Gaza Strip closed their doors yesterday to protest the Hamas police raid of one branch and the confiscation of NIS 1 million from a frozen account.

On Monday, Hamas armed security personnel entered the branch of the Palestine Bank located in the Gaza City neighborhood of Rimal, demanding that the funds from the frozen account be produced. The branch was subsequently closed and the banks in the Strip heeded the call of the Palestinian Monetary Authority to protest the move by declaring a day of strike.

Despite the fact that the confiscation had the backing of a Gaza court, there is now concern that this latest action will damage relations between Hamas and the Palestinian Monetary Authority, which oversees Palestinian banks. To date, the authority had remained one of the few Palestinian institutions that operates as a single body in both the West Bank and the Gaza Strip, as opposed to the government and the parliament.

Hamas has for the most part avoided retaliating against stringent regulations on Palestinian banks set by the Palestinian Monetary Authority which targeted money laundering. Last year, however, businessmen affiliated with Hamas established an independent bank in the Strip, which is not part of the Palestinian monetary system or under the control of the authority.

The frozen account from which the funds were confiscated belongs to a large non-government organization, Friends of the Sick Association, which has ties with Fatah. In May 2009, the NGO was brought under Hamas control, with the Hamas Interior Ministry imposing 200 new members on the organization, just before elections for its General Assembly.

The new members subsequently deposed the board of directors and selected a new group. The organization's building, clinics (including a hospital) and all of its activities were brought under the new management affiliated with Hamas.

In July, the Palestinian Monetary Authority froze the NGO's bank account, claiming there was a legal dispute over who was authorized to sign checks for the organization. The decision to carry out the freeze was made on the basis of a request from the Palestinian chief prosecutor, who is based in Ramallah.

The group's new management, however, argued that the decision was politically motivated and endangers the lives of patients being treated by the NGO.

Meanwhile, since the Hamas takeover in the Gaza Strip in the summer of 2007, contributions from foreign sources to the organization have ceased. This, in turn, has led to serious difficulties in funding its activities. The new management turned to the Gaza courts, asking that the bank account be reopened. The court ruled in its favor, but the Palestinian Monetary Authority has refused to recognize the decision.

Jihad al-Wazir, governor of the Palestinian Monetary Authority, said yesterday that this is a dangerous development which could harm the stability of the Palestinian banking system. The official body is considering further steps to counter the Hamas move.

There is now further concern within the Palestinian Authority that Hamas will once again use the police and the courts to confiscate funds belonging to other "disputed," Fatah-affiliated, organizations in Gaza.