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Thursday, April 15, 2010    

Western sanctions, Egyptian blockade lead to Hamas cash crisis

GAZA CITY — Hamas has acknowledged a financial crisis in the Gaza Strip.   

A Hamas parliamentarian said the Islamic regime faces a financial crisis amid Western sanctions and Egypt's security barrier. Parliamentarian Jamal Nasser said Hamas was unable to acquire cash from abroad amid the siege of the Gaza Strip.

"The government is facing a crisis," Nasser said on April 12. "The siege on the Palestinian government has been tightened recently, and because of this it has been unable to bring in funds from abroad."


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Officials confirmed Nasser's statement. They said the financial crisis began to affect the Hamas regime in February 2010 when thousands of civil servants, including security officers, failed to receive their salaries for the previous month.

Hamas, with a $540 million budget for 2010, employs more than 30,000 staffers, including police and security officers, Middle East Newsline reported. Officials said some of the senior officials were asked to take a 50 percent cut in salary until the crisis was resolved.

Egypt has also blocked the flow of funds from Iran and other Islamic states, said to provide nearly $500 million per year. Officials said Egypt seized about $50 million, or nearly two months worth of salaries, in January 2010.

"There has been a tightening of the blockade by the Egyptian government," Nasser said.

Nasser also said Gaza's 10 banks have refused to deal with the Hamas regime amid fear of European Union and U.S. sanctions. He said the U.S. Federal Reserve has increased enforcement of sanctions on the Hamas regime and required the Gaza banks to report all transactions.

"They have been ordered by the U.S. Federal Reserve to prevent dealings with Hamas and its government in Gaza," Nasser said. "The most difficult thing has been the government's ability to achieve liquidity."

One casualty of the financial crisis has been Hamas's refusal to pay for fuel for the Gaza Strip's sole power plant. In April, power outages became a daily occurrence as the Gaza power plant was producing about a third of its capacity amid a shortage of fuel. Israel supplies about 70 percent of electricity for the Gaza Strip.

The Hamas government has sought to play down Nasser's statement. Hamas Deputy Prime Minister Ziyad Zaza denied any financial crisis, saying no staffer has been unpaid.

"Most of the employees received a salary, either full or in part for technical reasons," Zaza said.

The interim solution by Hamas has been to increase taxes on Gazans. Officials said owners of businesses were beginning to receive monthly tax bills.

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



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