If Gaza Is A Prison, Then Members Of Hamas Are The World's Richest Wardens

In February 2009, for example, Gaza banks actually turned to Israel's Central Bank with an odd request: to deposit excess cash reserves in Israel.
Gaza's Economy: How Hamas Stays in Power

We have all seen the pictures and videos that prove the lie to the claim that Gaza is some kind of vast prison, lacking in the most basic goods and services.

Another misconception has to do with Hamas's allegedly desperate need for funds.
This is also a myth.

The Washington Institute has an article indicating that Hamas is not lacking in money, even if it does not share it with the rest of Gaza:

The IMF estimated Gaza's 2009 gross domestic product (GDP) growth at 12 percent, an impressive number. According to a September 2010 IMF report, the total Gazan and West Bank GDP was $7 billion, while the gap in per capita income between the two areas was 48 percent; this data, combined with other relevant statistics, implies that Gaza's per capita GDP was around $1,400, much of which derives from payments by the PA. Transfers and remittances added 50 percent more income, implying that average total per capita income was, in fact, $2,100. Yet much of this income does not represent productive economic activities, and unemployment remains high -- probably around a third of the workforce.

That does not take into account the 800 tunnels going into Egypt, which generate as much as $600-850 million per year. Then there is also the cash flowing out of Gaza through the tunnels and bank transfers to safe havens in the Persian Gulf countries and Europe.

This still leaves the question of where all this money is coming from--and the answer reveals a truly bizarre situation, where Hamas is being supported not only by Europe, but also by the Palestinian Authority and by Israel:

According to Palestinian banking officials, an average of $2 billion per year has been transferred into Gaza via the Palestinian banking system since Hamas's June 2007 military takeover. The PA alone wires an estimated $1.2 billion per year into Gaza banks, much of it as pensions and salaries for the 77,000 employees kept on the payroll even though they are not working. In fact, this estimate may be conservative; according to PA prime minister Salam Fayad, 54 percent of the PA's $3.17 billion 2010 budget went to Gaza. Most of that figure appears to be salaries, although it also covers what the PA pays directly for electricity, fuel, and water provided to Gaza by Israeli firms.

In addition, the UN Relief and Works Agency annually transfers about $200 million in cash to Gaza, along with $250 million per year worth of goods, grains, and fuel. Cash is also transferred into Gaza by the 160 nongovernmental organizations operating there, by international organizations such as the World Bank, and by foreign government aid organizations, although much of what they spend arrives in the form of goods shipped via Israel.

Then of course there are Iranian subsidies to Hamas, which total approximately $100 million each year--less than 20 percent of the Hamas proclaimed budget, which last year was approximately $540 million. Most of those funds go to the Hamas Political Bureau in Damascus for weapons purchases and shipments.

In addition, Hamas collects taxes, which amount to about $250 million per year--including charging 3 Israeli shekels on each pack of cigarettes and 1,400 as a car registration fee, raising $80 million and 25 million respectively each year. That does not include licensing fees for different businesses and taxes on luxury goods coming in from Israel.

All this cash has led to an exponential increase in the funding of Hamas, and has provided it with a payroll bigger than what the Palestinian Authority has to work with:

In 2005, Hamas was a modestly sized organization of 4,000-7,000 military personnel, with a small charity and education network and a skeletal party bureaucracy. From 2006 to 2010, however, the funds at the group's disposal reportedly grew from $40 million to $540 million. At the same time, Hamas has gained full control over all government ministries and municipal councils in Gaza, as well as many civilian agencies. It also holds a monopoly of power over every security and intelligence service in the territory, such as the 10,000-strong "blue" police. In total, Hamas pays salaries to at least 35,000 employees, among them many of the 20,000-plus armed personnel. Given this apparent payroll and an estimated average monthly salary of NIS 1,500 ($425), the group may be spending -- according to Prime Minister Ismail Haniyah -- as much as $300 million per year on salaries, a sum greater than the entire PA payroll. Hamas also claims that it allocates $30 million annually to its activities in the West Bank, without disclosing the methods by which funds arrive there.

The bottom line is that Hamas has defeated attempts to blockade, boycott, and deny it recognition and assistance--despite the best efforts of Israel, the PA, most Arab countries and the West, which kind of makes you wonder about how effective the sanctions on Iran will be.

After its electoral victory in 2006, Hamas was faced with major financial problems--and we read stories about them smuggling millions of dollars in cash through Egypt in suitcases.

Today it is a different story, and it is important not only to be aware of the huge financial success of Hamas and its implications, but also to devise ways to prevent Hamas from stealing this money away from Gaza and using it for itself.

Technorati Tag: Gaza and Hamas.