Barak approves transfer of NIS 100 million to Gaza banks

Defense Minister Ehud Barak agreed on Wednesday to transfer NIS 100 million ($25 million) to Gaza from banks in the West Bank. The transfer is expected to take place in the next few days.

Barak's decision came after special appeals to him from both the Palestinian Prime Minister Salam Fayyad and the Bank of Israel Governor Stanley Fischer to help ease the cash shortages in Gaza.

Right-wing faction Yisrael Beiteinu criticized Barak, saying that the NIS 100 million being transferred to Gaza will be returned to Israel in the form of 100,000 Qassam rockets. The party also accused Barak of pandering to the Palestinians.

Israel has not allowed money to enter Gaza since October, causing cash shortages in local banks. Last week, on what was meant to be pay day for tens of thousands of civil servants, many Gazans were unable to collect their salaries because money ran out.

Gazans use other currencies, including U.S. dollars and Jordanian dinars, but the Israeli shekel is the territory's main currency.

Jihad al-Wazir, head of the Palestinian Monetary Authority, said the money would help but that Gaza needed a regular supply of cash. The Israeli move, he said, does not resolve the overall problem of regular inflow of liquidity.

Palestinian monetary officials earlier said they needed an immediate infusion of 250 million shekels to cover salaries.

The Gaza blockade was imposed by Israel and Egypt last year when the Islamic militants of Hamas came to power in a violent takeover, leaving moderates in charge only of the West Bank.

The sanctions were slightly loosened in June of this year when Israel and Hamas reached a cease-fire agreement, but Israel sealed the territory again when violence erupted in early November.

It has largely kept the crossings shut since then because militants have kept up near-daily rocket fire at Israeli towns.