newsIsrael at War

How billions of dollars for Hamas paved way for Oct. 7

Israel "can economically choke Hamas and Hezbollah, but it needs to take immediate action."

Palestinians rally in Hebron in support of Hamas, Nov. 3, 2023. Photo by Wisam Hashlamoun/Flash90.
Palestinians rally in Hebron in support of Hamas, Nov. 3, 2023. Photo by Wisam Hashlamoun/Flash90.

Various government entities in Israel—the Defense Ministry’s Coordinator of Government Activities in the Territories unit, the IDF, and the Israel Security Agency, better known as the Shin Bet, saw the blood money trail.

But they were blinded by the idea that Hamas had become an established governmental entity, and as such it had much to lose, and so despite the accumulation of its military capabilities and power, it would avoid the use of them for murder on a grand scale.

Economic analysts of terrorist organizations with whom we spoke in recent days all expressed deep frustration and anger at this. For years they have been looking at the numbers and the funding channels, and providing warnings regarding the capital being used to fund Hamas’s militarization.

The figures were there for all to see. In this case, seeing is not believing, but rather “disbelieving.”

The annual budget available to the Hamas regime in the Gaza Strip amounts to $2 billion-$2.5 billion. This is the estimate by Yitzhak Gal, an established expert on Middle East economic issues as a whole and the Palestinian economy in particular, who has engaged in comprehensive consulting work regarding the funding of the Hamas regime.

This is an enormous amount compared with the economy in the Gaza Strip. It constitutes 65-70% of the Strip’s GDP.

For the sake of comparison, Gal states, the Palestinian Authority’s budget for Judea and Samaria is slightly over $3 billion, constituting a mere 20% of the GDP of that area. And for the sake of further comparison, in Israel, the state budget accounts for about 25% of GDP.

Following the massacre in the Gaza border communities, in a document published only a week ago by the U.S. Department of the Treasury, the current estimated value of Hamas’s assets is put at hundreds of millions of dollars.

Not for the benefit of the civilians

Dr. Udi Levi, a senior analyst at the Jerusalem Institute for Strategy and Security (JISS), an expert on economic warfare and the person who headed Israel’s Counter Terrorism and Proliferation Finance Bureau (which was closed down in 2016), explains: “In the Gaza Strip a portion of falafel costs NIS 5-7 [$1.27-$1.78], the unemployment rate is at 50%—and so it was clear that the colossal budget run by Hamas was diverted for the purpose of paying workers who built the tunnels, for the procurement of weapons, for training and employing its fighters, and certainly not for the benefit of the civilians there.

“We saw all the trucks bringing in metals to the Gaza Strip over the years, and all this just to buy a little peace and quiet. I was the one who screamed out against this conception of allowing the money to flow into the Gaza Strip, I said that Hamas should have been undermined by facilitating its economic collapse, but none of this worked.

“But it is still not too late. Even now, by adopting a series of measures that will not harm even one soldier, the Israeli government can economically choke Hamas and Hezbollah, but it needs to take immediate action,” Levi said.

In 2007, Hamas seized power in the Gaza Strip from the Palestinian Authority, and since then it gained support from the majority of the residents there. Over the course of time, it established a bank, recruited officials and became a Palestinian government, second in size to that of the P.A. in Judea and Samaria.

“Hamas succeeded in building an enormous budget for itself, by maneuvering both the P.A. and Israel into enabling the constant flow of large budgets from legitimate external sources, covering all the government’s civilian expenditure in the Gaza Strip, while considerable amounts were diverted from these funds to finance the Hamas military systems (mainly military personnel and dual-use products),” added Levi.

“In parallel, they developed indigenous sources of revenue, under their exclusive control, available to fully serve the needs of military buildup and to maintain Hamas’s overall governmental apparatus in the Gaza Strip, which amounts to several thousand senior managers.”

According to Levi, this basic structure of a “double budget” has existed in the Gaza Strip for 15 years now.

Gal, Levi, and a former senior governmental official describe the key money channels through which funds were pumped into the Gaza Strip for a decade and a half.

The first one—the P.A. budget, the second— external economic aid, which in the past came from the international community and in recent years has mainly relied on Qatar. The third—the Hamas Charity Coalition, an entire setup of donations that generates millions and which is mainly based in Turkey. The fourth—the local collection of taxes by Hamas, and the fifth—the Iranian funding provided to counter Israel, which covers the entire areas of Judea and Samaria as well as the Gaza Strip.

The funding routes are known to the Shin Bet, the Mossad and the IDF, and all the experts with whom we spoke recommend taking immediate action to undermine the organization’s economic infrastructure and ensure its collapse.

They stress, and this is crucially important, that while military activity will be able to do away with Hamas’s power, the organization’s financial reserves and its senior figures who reside abroad will in the future be able to rehabilitate this ISIS-like terrorist organization within a relatively short time.

A war on Hamas’s economy

Only a strategic war on Hamas’s economy will prevent it from being rebuilt and again posing a threat to Israel’s citizens. In the hope that some of our senior officials have a peek at this article, here are a number of recommended courses of action.

According to Levi, it is imperative to carry out extensive arrests of the money changers operating in the service of Hamas in Judea and Samaria, and to “treat them as terrorists for all intents and purposes. And in the Gaza Strip—even during the process of rebuilding the damage— not to allow the growth of a new bank.”

Gal also recommends stopping P.A. funds from pouring into the Gaza Strip, and as far as Qatar is concerned, both Levi and Gal strongly recommend sidelining this small, terrorism-financing emirate.

If a foreign financier is required in the Gaza Strip once hostilities have died down, Levi recommends bringing in the Saudis to assume this role, while Gal recommends restoring the P.A. to the Gaza Strip.

“As long as the administration in Gaza is not subordinated to the P.A. in Ramallah, Israel should ensure that no budgets are transferred and should also prevent the entry of imports apart from essential products,” Gal said.

Originally published by Israel Hayom.

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