Gaza’s Hamas govt facing financial "crisis"

Taxing street vendors and shopkeepers


Hamas has begun taxing Gaza street vendors and shopkeepers, raising speculation the ruling Islamist group is in a financial crisis fuelled partly by Egypt's building of a border wall to stop smuggling tunnels.

Experts said on Monday that perhaps only a few dozen of the hundreds of tunnels are still functional as a result of the steel wall being pounded deep into the ground along the 14-km (8-mile)-long frontier.

For Gaza's Hamas government, which takes a cut from Palestinian merchants who move items ranging from cars to fuel to food along the subterranean route, that means lower revenues in an impoverished enclave under an Israeli-led blockade.

Weapons, and it is widely believed cash, also come in via the tunnels.

"Financial crisis"

"There is a real financial crisis," Palestinian economist Omar Shaban said.

The Hamas administration, he said, employed 34,000 people in the Gaza Strip and had put much of its liquidity into the purchase of buildings and land.

"The crisis may also indicate either a lack of foreign financial support, Arab and Islamic, or a difficulty to get that support into the territory for some reasons," Shaban said.

For the first time since Hamas seized the Gaza Strip from the rival Fatah movement of Western-backed President Mahmoud Abbas in 2007, it has begun to collect taxes from street merchants and small business owners.

"They asked me to pay 1,100 shekels ($290) a month. How much did I earn to give them what they asked for?" asked the owner of a shop selling falafel (fried chickpea) snacks.

"Instead, I asked them to take the store and pay me the 1,100 shekels every month. It would be a better deal for me," he joked.

Taher al-Nono, a Hamas government spokesman, denied it was going through any financial problems.

"We have not imposed any new tax that did not exist in the past and we are charging tax only to those who are doing great business," Nono said.

One lucrative levy is a $6,000 license fee that Hamas charges a car buyer to bring a new vehicle into the Gaza Strip through a tunnel. The buyer also pays the tunnel owner $5,000.

The crisis may also indicate either a lack of foreign financial support, Arab and Islamic, or a difficulty to get that support into the territory for some reasons

Palestinian economist Omar Shaban

Sealing the border

A Hamas lawmaker confirmed that the Islamist group ruling Gaza was facing a financial "crisis" because of Egypt's moves to seal its border and a boycott by local banks.

"The government is facing a crisis," MP Jamal Nassar said in a statement. "The siege on the (Hamas-run) Palestinian government has been tightened recently and because of this it has been unable to bring in funds from abroad."

Israel and Egypt have sealed Gaza off to all but very limited humanitarian aid since Hamas seized power in June 2007 after routing forces loyal to Western-backed Palestinian president Mahmoud Abbas.

But the closures have never appeared to have much of an impact on the Hamas-run government, which pays regular salaries to more than 20,000 civil servants and as recently as February recruited hundreds of new security personnel.

Iran and Qatar have been major financial supporters of Hamas and it is widely believed that much of the cash they provide comes through the tunnel network now in jeopardy.

Three months ago, the Hamas government presented an annual budget of $540 million, of which only $50 million was listed as local revenue, with the rest of the funds slated to come from undisclosed foreign donations.

"So the crisis was expected but I do not think there was a genuine thinking about immediate solutions," Shaban said.