WikiLeaks: Hamas Passes Along Its Financial Problems to Gazans

Khaled Meshaal(Pictured: Hamas leader Khaled Meshaal.)

We’re honored to have Michael Busch dissecting the latest WikiLeaks document dump for Focal Points. This is the thirty-seventh in the series.

In the face of the bombshell Palestine Papers published this week by al Jazeera and the Guardian, today’s offering from WikiLeaks of a single cable examining the situation in Gaza will doubtlessly be seen as weak tea.

Still, where the Palestine Papers succeed in demonstrating Palestinian Authority weakness, the cable just WikiLeaked shows rival Hamas to be no less insecure. The 2010 Jerusalem embassy dispatch reports rumors from trusted contacts which suggest that the organization suffers from a liquidity crisis which, if true, would certainly undermine prospects for the group’s long-term popular support.

Most alarmingly, embassy contacts in Gaza reported to American diplomatic officers that

Hamas was late in paying January salaries to civil servants on its payroll, and has not yet paid those salaries in full. While Hamas salary payments are typically available on the first day of every month, employees of the de facto Hamas government did not line up at post offices or the Islamic National Bank…until February 8 when, according to contacts, Hamas paid low-level employees with salaries up to NIS 1,500 (USD 400) per month.

One source reported overhearing an employee at Hamas’s Ministry of the Interior

complain on the phone that his salary was late and he would only receive a portion of it. The employee further complained that this was at least the third month he had received only a “portion.”

If true, Hamas has a problem on its hands. The group reportedly employees some 34,000 workers on a payroll that pays out roughly $16 million in monthly salaries, on top of the $9 million allotted for other operational costs. One source confided to embassy personnel that Hamas only collects between $3.5 and $4 million a month in levied taxes and other fees and thus relies heavily on outside assistance to make up the difference.

For instance, XXXXXXXXXXXXXXX employee salaries at Hamas’s “Ministry of Education”—except those receiving salaries from the Palestinian Authority in Ramallah are covered by Qatari donations.

Recently, however, Israeli and Egyptian crackdowns on entry and exit to the Strip compromised Hamas’s ability to capitalize on foreign largesse. Contacts reported that tighter Egyptian restrictions were especially deleterious to the organization’s checking account,

Including increased interference with smuggling operations. Gaza contacts note that Egypt has also cracked down on travel of Hamas officials outside Gaza by restricting their access through the Rafah crossing. In particular, Egypt reportedly no longer tolerates “Hamas VIP bags,” a reference to suitcases of cash transported across the Rafah border into Gaza.

But the cable notes also that while all of the American embassy’s contacts inside Gaza reported Hamas’ financial troubles, they “interpret the nature and depth of the problem differently.” One contact speculated that Hamas indeed possessed enough money to cover all of its various expenses at the moment, but was “protecting its fiscal position by holding back on payments. ” Another asserted that Hamas has plenty of cash on hand, but instead of honoring the payment schedules of its employees, chooses to invest it in real estate accumulation in Gaza. The source provided intelligence that Hamas was offering “bids on properties…well above market prices,” and speculated that “purchasing real estate is a sustainable investment for Hamas, a money laundering scheme, and/or part of a strategy to strengthen its financial position (or physical presence) in Gaza as a bulwark against future events.”

At the same time, Hamas was reported to have been not only cutting costs but also accelerating its efforts at rent-seeking.

According to multiple contacts, municipalities in Gaza are stepping up the collection of electricity and water bills. Hamas-run ministries also charge fees for various services, like the issuance of official documents. The first-time “registration” fee for a car is USD 12,000…Gazans must also pay an annual fee to renew their car or motorcycle. New traffic signs are being installed, and traffic laws are being aggressively enforced by the police. For an infraction, according to a Gazan contact, police typically confiscate a driver’s license or car documents and require the driver to retrieve his documents at a police station, where he will likely pay a penalty fee.

If the reports are to be believed, some cases are outright predatory:

In one anecdotal account…a man who used his van to transport children to school was confronted by Hamas authorities and instructed to register his van as a school bus, and then pay requisite taxes.

The attack on education isn’t relegated solely to making transportation difficult. “Another contact said that Hamas now demands private school to pay taxes based on tuition fees, and threatens to shut down schools for non-compliance.” Purported school taxing would be of a piece with other reports that increased taxes and fees were also being levied against local businesses.

The fact that Hamas is unable, or unwilling, to pay salaries, combined with its practice of increased taxes and random fees cannot have positively contributed to the party’s already sagging popularity in Gaza. Despite claims that the Gazan economy is improving, Hamas’s favorable ratings currently remain at less than half of what they were five years ago when they assumed power of the territory, numbers that dropped precipitously in 2010. This is surely in large part due to the organization’s difficulties staking out political positions on the continuum between rhetoric and responsibility since 2006. And needless to say, worsening humanitarian conditions on account of the Israeli blockade haven’t helped. But until Hamas learns that candy and greeting cards are no replacement for basic attempts at effective governance—especially as the wealth of a new political elite within the organization grows—the party’s goal of securing its political future through ballots, not bullets, will remain elusive.