

Currently released so far... 12404 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
ASEC
AE
AF
AM
AR
AJ
AU
AORC
AG
AEMR
AMGT
APER
AGMT
AL
AFIN
AO
AMED
ADCO
AS
ABUD
ABLD
ASUP
ASECKFRDCVISKIRFPHUMSMIGEG
APECO
AID
AND
AMBASSADOR
AN
ARM
AY
AODE
AMG
ASCH
AMCHAMS
ARF
APCS
APEC
ASEAN
AGAO
ANET
ADPM
ACOA
ACABQ
AORL
AFFAIRS
ATRN
ACS
AFSI
AFSN
ADANA
ASIG
AA
AX
AUC
AC
AECL
AADP
AGRICULTURE
AMEX
ACAO
ACBAQ
AQ
AORG
ADM
AINF
AIT
ASEX
AGR
AROC
ATFN
AFGHANISTAN
AFU
AER
ALOW
AZ
AVERY
BA
BY
BU
BR
BE
BL
BO
BK
BM
BILAT
BH
BEXP
BF
BTIO
BC
BBSR
BMGT
BTIU
BG
BWC
BB
BD
BX
BP
BRUSSELS
BN
BIDEN
BT
CW
CH
CF
CD
CV
CVIS
CM
CE
CA
CJAN
CLINTON
CIA
CU
CASC
CI
CO
CACM
CDB
CN
CMGT
CS
CG
CBW
CIS
CR
CONDOLEEZZA
CPAS
CAN
CWC
CY
COUNTER
CDG
CL
CT
CIC
CIDA
CSW
CHR
CB
CODEL
COUNTERTERRORISM
CTR
COM
CICTE
CFED
CJUS
CKGR
CBSA
CEUDA
CARSON
CONS
CITEL
CLMT
CROS
CITT
CAC
CVR
CDC
CAPC
COPUOS
CBC
CBE
CARICOM
COE
COUNTRY
CLEARANCE
CACS
CTM
CNARC
ECON
EFIN
ETRD
EUN
EFIS
EG
ETTC
EZ
EPET
EAID
EAGR
ENRG
ECUN
EU
ELAB
ECPS
EAIR
EINV
ELTN
EWWT
EIND
EMIN
EI
ECIN
ENVR
ELECTIONS
EINVEFIN
EN
ES
ER
EC
EUC
EINT
EINVETC
ENGR
ET
EK
ENIV
ETRDEINVECINPGOVCS
ECONOMY
EAP
EFTA
EUR
EUMEM
EXIM
ERD
ENERG
EUREM
ESA
ERNG
EXTERNAL
EPA
EINVECONSENVCSJA
ECONOMICS
ELN
EINN
EFINECONCS
ENNP
EEPET
ETRDEINVTINTCS
ENVI
ETRO
ESENV
ECINECONCS
ECONOMIC
EAIDS
EDU
ETRA
ETRN
EFIM
EIAR
ETRC
EAIG
EXBS
EURN
ECIP
EREL
ECA
ENGY
ECONCS
ECONEFIN
ETC
ETRDECONWTOCS
EUNCH
EINDETRD
IR
IZ
IS
IAEA
INRB
IRAJ
IQ
IN
IT
IMO
INTERPOL
ICAO
IO
IC
ITALY
ITALIAN
IRAQI
ICTY
ID
IPR
IWC
ILC
INTELSAT
IL
IBRD
IMF
IA
IRC
ICRC
ILO
ITU
ITRA
IV
IDA
IAHRC
ICJ
ISRAELI
IRS
INMARSAT
ISRAEL
ISLAMISTS
INDO
IZPREL
ITPHUM
ITPGOV
ITF
IBET
IEFIN
INR
IACI
INTERNAL
IDP
IGAD
IEA
ICTR
IIP
INRA
INRO
IF
KJUS
KSCA
KNNP
KU
KCOR
KCRM
KDEM
KTFN
KHLS
KPAL
KWBG
KACT
KGHG
KPAO
KTIA
KIRF
KWMN
KS
KG
KZ
KN
KMDR
KISL
KSPR
KHIV
KPRP
KAWK
KR
KUNR
KDRG
KCIP
KGCC
KTIP
KSUM
KPKO
KVIR
KAWC
KPIN
KGIC
KRAD
KIPR
KOLY
KCFE
KMCA
KE
KV
KICC
KNPP
KBCT
KSEP
KFRD
KFLU
KVPR
KOCI
KBIO
KSTH
KMPI
KCRS
KOMC
KTBT
KPLS
KIRC
KREL
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KFLO
KBTS
KSTC
KTDB
KFSC
KX
KFTFN
KNEI
KIDE
KREC
KMRS
KICA
KPAONZ
KCGC
KSAF
KRGY
KCMR
KRVC
KVRP
KSEO
KCOM
KAID
KTEX
KNUC
KNAR
KNUP
KNNPMNUC
KLIG
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KCRCM
KHDP
KGIT
KNSD
KOMS
KWMM
KPAI
KHSA
KTLA
KO
KMFO
KRCM
KCSY
KSAC
KTRD
KPWR
KID
KWNM
KRIM
KPOA
KCHG
KOM
KSCI
KFIN
KMOC
KESS
KWAC
KMIG
KSEC
KIFR
KDEMAF
KPRV
KBTR
KERG
KTER
KDDG
KPAK
KRFD
KHUM
KDEV
KCFC
KWWMN
KWMNCS
KJUST
MARR
MOPS
MU
MTCRE
MNUC
MY
MASS
MCAP
MOPPS
MAR
MPOS
MO
ML
MR
MASC
MX
MD
MP
MA
MTRE
MIL
MCC
MZ
MK
MDC
MRCRE
MAPS
MV
MI
MEPN
MAPP
MEETINGS
MAS
MTS
MLS
MILI
MTCR
MG
MC
MARAD
MIK
MILITARY
MEDIA
MEPI
MUCN
MEPP
MT
MERCOSUR
MW
MASSMNUC
MQADHAFI
NZ
NATO
NG
NI
NO
NATIONAL
NU
NPT
NIPP
NL
NPG
NS
NA
NGO
NP
NSG
NDP
NAFTA
NR
NC
NH
NE
NSF
NPA
NK
NSSP
NRR
NATOPREL
NSC
NT
NW
NORAD
NEW
NV
NSFO
NAR
NASA
NZUS
OTRA
OVIP
OPRC
OPDC
OSCE
OAS
ODIP
OIIP
OFDP
OVP
OREP
OFFICIALS
OSAC
OEXC
OPCW
OIE
OIC
OFDA
OSCI
OPIC
OBSP
OECD
ON
OCII
OHUM
OES
OCS
OMIG
OPAD
OTR
PGOV
PREL
PHUM
PINR
PTER
PSOE
PINS
PARM
PK
PBTS
PEPR
PM
POLITICAL
PARTIES
PREF
PBIO
PROP
PA
PSI
PINT
PO
PKFK
PL
PAK
PE
POLITICS
PINL
POL
PHSA
PU
PF
POV
PFOR
PHALANAGE
PARTY
PARMS
PRGOV
PNAT
POLINT
PRAM
PMAR
PG
PAO
PROG
PRELP
PPA
PCUL
PSEPC
PSA
PREO
PAHO
PGIV
PREFA
PALESTINIAN
PAIGH
POSTS
PTBS
PGOVLO
PORG
PGOVE
PLN
PINF
PAS
PUNE
POLICY
PDEM
PDOV
PCI
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PBT
PHUMPGOV
PMIL
PNG
PP
PS
PHUH
PECON
POGOV
PY
PHUMPREL
PHUS
PRL
PGOC
PNR
PGGV
PROV
PTERE
PGOF
PHUMBA
PEL
RS
RU
RW
REGION
RP
RICE
ROBERT
RSP
RUPREL
RM
RO
RCMP
RSO
RELATIONS
REACTION
REPORT
RIGHTS
ROOD
RF
RFE
RIGHTSPOLMIL
SP
SA
SY
SF
SYR
SENV
SCUL
SOCI
SNAR
SO
SU
SG
STEINBERG
SHUM
SW
SMIG
SR
SZ
SIPRS
SI
SAARC
SPCE
SARS
SN
SYRIA
SANC
SL
SCRS
SC
SENVKGHG
SAN
SNARCS
SHI
SWE
SNARIZ
SIPDIS
SEN
SNARN
SPCVIS
SEVN
SSA
SH
SOFA
SK
ST
TPHY
TU
TRGY
TI
TX
TS
TW
TC
TFIN
TD
TSPA
TH
TT
TIP
TBIO
TSPL
TZ
TERRORISM
TRSY
TN
THPY
TINT
TF
TL
TV
TK
TO
TP
TURKEY
TNGD
TBID
TAGS
TR
UP
US
UNSC
UK
UZ
UE
UNESCO
UV
UNGA
UN
UNMIK
UNO
UY
UAE
UNEP
UG
UNHCR
UNHRC
USUN
UNAUS
USTR
USNC
USOAS
UNCHR
UNCSD
UNDP
USEU
USPS
UNDC
UNDESCO
UNCHC
UNFICYP
UNC
UNODC
UNPUOS
UNCND
UNICEF
UNCHS
UNVIE
USAID
UNIDROIT
Browse by classification
Community resources
courage is contagious
Viewing cable 10TELAVIV413, SHIN BET TALKS GAZA ECONOMICS
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #10TELAVIV413.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
10TELAVIV413 | 2010-02-22 14:02 | 2011-01-28 00:12 | SECRET//NOFORN | Embassy Tel Aviv |
VZCZCXRO9755
PP RUEHROV
DE RUEHTV #0413/01 0531424
ZNY SSSSS ZZH
P 221424Z FEB 10
FM AMEMBASSY TEL AVIV
TO RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 5586
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
S E C R E T SECTION 01 OF 03 TEL AVIV 000413
NOFORN
SIPDIS
STATE FOR NEA/IPA AND SEMEP; NSC FOR KUMAR; TREASURY FOR
MOGER/KNOWLES
E.O. 12958: DECL: 02/22/2020
TAG ECON, PTER, KPAL, KTFN, IS
SUBJECT: SHIN BET TALKS GAZA ECONOMICS
REF: A. JERUSALEM 276
¶B. TEL AVIV 2446
Classified By: Economic Counselor David R. Burnett; reasons 1.4 b/d
¶1. (S/NF) Summary: In February 16-17 meetings, Senior Shin
Bet officials outlined for Emboffs their views on recent
trends in the Gaza Strip's economy, including the paradoxical
effect of "clean" Palestinian Monetary Authority
(PMA)-regulated banks serving Hamas interests, the operating
dynamics of a market split between legitimate and illicit
activity, and the growing economic division between Gaza and
the West Bank. The legitimate market sector, anchored by the
PMA-regulated private banking system is mirrored by an
alternative Hamas financial system, both of which are linked
by currency flows and trade. End Summary.
- - - - - - - - - - - - - - - - - - - - -
The PMA-regulated private banking system
- - - - - - - - - - - - - - - - - - - - -
¶2. (S/NF) The PMA-regulated private banking network provides
the backbone for the legitimate sector of Gaza's market.
Salaries paid by the Palestinian Authority, international
aid, and legitimate trade finance all flow through these
banks. New Israeli Shekels (NIS) and U.S. Dollars (USD)
comprise the majority of hard currency transfers. The
private banks that operate under PMA-supervision are
well-regulated according to PMA-prescribed Anti-Money
Laundering legislation. According to Shin Bet, suspicious
activity is usually reported, and Hamas has been unable to
make any significant inroads in bank activities. The banks
have maintained their independence from the Hamas regime with
the threat that they will close if Hamas attempts
infiltration. The banks will not let Hamas operatives open
bank accounts or have their salaries deposited in any
existing accounts. Shin Bet has not seen any attacks on the
banks by Hamas-affiliated groups or individuals.
¶3. (S/NF) However, Shin Bet officials assess that Hamas is
significantly benefiting from the PMA-regulated banks, even
though they do not directly utilize them for commercial
activity. These well-operated banks, which are "clean" of
money-laundering or terror finance, provide the non-Hamas
population of the Gaza Strip with a key financial service
that improves their quality of life. Shin Bet believes that
due to a lack of successful strategic messaging by the PA and
PMA that makes clear how they--and not Hamas--are providing
these private banks as a public service, Hamas has been able
to take full credit. Hamas has led the Gaza population to
believe that it is their leadership which has enabled these
banks to function relatively effectively and without
corruption. As such, even though they are not under Hamas
control, the PMA-regulated private banks support Hamas
because they provide a necessary financial service at no cost
to the Hamas regime. Shin Bet argues that this is why the
banks' threats of closure have proven effective against Hamas
encroachment.
¶4. (S/NF) Shin Bet also believes that the private Palestinian
banks operating branches in Gaza would prefer to close them
due to low profitability relative to risk. Political
considerations and pressure from the PA, PMA, and others, are
the primary reason why they remain in operation. While Shin
Bet faults the PA for not getting more street credit for the
Gaza banking system, they agree that a pull-out by the banks
would be a political and psychological blow to the PA.
- - - - - - - - - - - - - - - - - - - -
The Hamas Alternative Financial System
- - - - - - - - - - - - - - - - - - - -
¶5. (S/NF) A Hamas alternative financial system exists
parallel to the PMA-regulated banking system. Hamas smuggles
in large quantities of foreign currencies (primarily USD and
Euros) in order to fund its operating expenses. According to
Shin Bet, their budget consists of three major parts: 1) USD
200 million annually for government operating expenses; 2)
USD 50 million each year to support the Hamas movement's
civilian side and organization; and, 3) USD 40 million
annually for its military wing and security apparatus. Over
the past several months, shortages of cash for Hamas salary
payments (usually made in USD) have been reported (see REFs A
and B). Shin Bet now believes that this was due primarily to
Israeli efforts to thwart terror funds and Egyptian
counter-smuggling operations, not a lack of actual funding
from abroad. Recently, however, Hamas has adapted to this
TEL AVIV 00000413 002 OF 003
crackdown and re-rerouted its smuggling operations, bypassing
Cairo and heading directly through Sinai, thereby more easily
evading detection. They have also reduced the size of
amounts smuggled into Gaza at one time to avoid large losses
after any one interdiction. Shin Bet also notes dwindling
levels of support from the Egyptians in stemming this flow of
funds. Additionally, Hamas has increased tax collection, as
detailed in REF A.
¶6. (S/NF) With these modifications, the parallel economy has
been flourishing, and the delayed salary payments are not
symptomatic of a more endemic problem. Hamas has also
established a second branch of its own National Islamic Bank
in Khan Yunis, and is attempting to initiate correspondent
relations abroad. Shin Bet reiterated the importance of a
timely U.S. designation of the Hamas "bank" to prevent this
from happening, given that it would significantly increase
the ease by which Hamas could receive and transfer funds.
Hamas also continues to receive funding from Iran.
- - - - - - - - - - - - - - -
Overall Gaza Market Dynamics
- - - - - - - - - - - - - - -
¶7. (S/NF) These parallel dynamics lead to an overall Gaza
economy based on imports from Egypt through the smuggling
tunnels, paid for in foreign currency--not Israeli shekels.
There has been a steady influx of shekels -- mostly from PA
salary payments into Gaza -- with limited outbound
circulation. Instead, these shekels are used predominately
for internal exchange. Under the PMA-regulated private
banking system, individuals are paid in NIS from the
Palestinian Authority. Local merchants conduct their business
with the average Gazan in NIS, who in turn use NIS for most
of their daily purchases. However, in order to procure
non-Israeli imports (through the smuggling tunnels), the
local merchants are required to convert these NIS into USD,
since the exporters from Egypt and elsewhere operate
primarily in USD. This results in a large amount of outgoing
foreign currency for imported goods, while an insignificant
amount of shekels leave the Gaza market due to the near
complete lack of trade with Israel (and, to a lesser degree,
the West Bank). When combined with Israel's restrictions on
the transfer of hard currency both into and out of Gaza, this
has led to a surplus of shekels and deficit in foreign
currencies (including USD and Jordanian Dinars), which has
allowed speculators (including Hamas, merchants and banks) to
exploit the system and profit from arbitrage.
¶8. (S/NF) In the long run, Shin Bet assesses that these
currency imbalances destabilize Gaza's economy and will lead
to pendulating NIS/USD exchange rates, the result of
intermittent incremental changes in currencies permitted in
and out by Israel, variation in the quantities and types of
currencies smuggled into Gaza, and incentives to exploit
systemic changes through arbitrage. They are concerned that
there will be an eventual shift from the current mixed
currency system, dominated by NIS, to sole use of foreign
currency (likely USD). Local merchants have already
attempted to require that Gazans pay for goods in USD or
other foreign currencies, to minimize exchange-rate losses
when they are forced to exchange the shekels for dollars or
other foreign currencies, whether through the banking system
or through the Hawala (money-changers), to purchase restock
imported inventories. Because of the current shortage of USD
in the banking system, Gazans have been unable to oblige and
the local merchants have relented, according to Shin Bet
analysts. Israel's policy, per the Paris Protocol, is to
maintain use of shekels in the Palestinian territories, and
the GOI worries that if the shift to a non-shekel economy in
Gaza takes place, it will further solidify the separation of
Gaza from the West Bank.
¶9. (S/NF) From a counter-terrorism perspective, Shin Bet sees
less of a security threat from a shekel-based Gaza economy
than a foreign-currency-based Gaza. It sees no direct
security threat from excess shekels in Gaza. Shin Bet
analysts have not seen any attempts to rob banks vaults, nor
are they concerned that Hamas or others could use shekels to
purchase any materials from abroad that could be used for
terrorism (given that they would have to be exchanged first
for currently lacking foreign currencies). Given the
separation between Hamas and the PMA-regulated private banks,
Shin Bet assesses there to be little connection between these
banks' stability and Israel's counter-terrorism goals. In
the short-term, security concerns from a decrease in
confidence in these banks by average Gazans is negligible for
TEL AVIV 00000413 003 OF 003
Israel. However, in the long-run, Shin Bet officials
conceded that it is important to preserve these institutions
as one of the few alternatives to Hamas in the Gaza Strip,
and as a foundation for economic stability in Gaza.
Cunningham