OVERVIEW OF HAMAS FINANCES IN GAZA

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 001682

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E.O. 12958: DECL: 08/12/2013
TAGS: EAID EAGR PA IS PHUM KWBG
SUBJECT: OVERVIEW OF HAMAS FINANCES IN GAZA

Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d)


1. (C) Summary: Gaza businessmen told Econoffs that the
Gaza economy produces around USD 500,000/month in value added
taxes, import duties and utility payments for the Hamas
government. This is a small fraction of the Hamas-controlled
government's budget in Gaza, which has consistently been
large enough to pay an estimated USD 24-30 million/month in
salaries. PA salaries in Gaza amount to USD 60
million/month. A businessman in Gaza said most of the 80-100
tunnels at the Egypt-Gaza border can be rented for around USD
60,000/day. Gaza traders said bartering has become
commonplace since the Hamas takeover in June 2007. End
summary.

Open domestic revenue a fraction of
Hamas' monthly revenue stream in Gaza
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2. (C/NF) Four leading Gaza agriculture traders told Econoff
in August that the Hamas-controlled government collects an
estimated NIS 350,000 (USD 100,000)/month in import duties
and VAT on agriculture imported through the crossings. It
reportedly collects NIS 42-62 (USD 12-18)/ton import duties
on agriculture products - similar to the PA customs regime.
However, the Hamas-controlled government requires the payment
(1) in cash and (2) prior to pick-up at the crossings.


3. (C/NF) Gaza businessman Mahmound Khozander (please
protect) met with Econoffs in Jerusalem in August and said
that the Hamas-controlled government collects around USD
500,000/monthly from all value added taxes (VAT),import
duties and utility payments in Gaza. Khozander underscored
that the Hamas-controlled government's openly collected
revenue constitutes less than five percent of its total
revenue in Gaza, most of which it receives via smuggling
operations and foreign donations.

Hamas est. payroll in Gaza: USD 24-30 m/month
PA payroll in Gaza: USD 60 m/month
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4. (C) UN contacts in Gaza said on August 28 that Hamas pays
the salaries of 18,000-23,000 civil employees of the
Hamas-controlled government in Gaza. Poloff contacts
estimated that there are 12,000-15,000 security service
personnel on the payroll in Gaza. Drawing from the estimated
average PA salary of USD 800/month, the payroll funded by
Hamas in Gaza can be estimated to be USD 24-30 million/month.
Our contacts said that the organization pays salaries
promptly at the end of each month in post offices - in
Israeli shekels, US dollars and/or Jordanian dinars.


5. (SBU) The PA paid salaries on September 4 to around
75,000 employees in Gaza - totaling around USD 60 million,
according to our PA contacts. However, insufficient cash
reserves in Gaza banks limits what most PA salary recipients
can withdrawal. (Note: West Bank branches have excess
liquidity, but the GOI has not yet responded to a Sept. 1
request from the Palestinian Banks to transfer NIS 120
million from the West Bank to Gaza. End note.)


Smuggling trade flourishing;
Foreign funds seem flush
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6. (C/NF) Khozander said that rental charges for some of the
80-100 tunnels along the Egypt-Gaza border has been USD
60,000/daily in recent months, and that most anything is
permitted to enter. Alternatively, Gazans can pay USD
six/kilogram to smuggle goods via the tunnels - but delivery
may take weeks. He said that the Hamas-controlled government
does not have a blanket customs policy at the tunnels, but
that individuals connected with Hamas receive compensation
for tunnel usage.

Businessmen hoarding shekels;
Bartering on the rise
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7. (C/NF) Khozander said that Gaza business people have been
holding NIS 1-2 million (USD 300,000-600,000) in their safes
in recent months, as checks are no longer accepted for
payment of goods. The traders said that many shekel bills in
Gaza are too worn to be used and that bartering has become
common practice, allowing Gazans to avoid cash.

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Hamas "ministers" also desperate for fuel
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8. (C/NF) Khozander owns several Gaza gas stations and said
that, on average, current fuel imports to Gaza meet 20
percent of demand. He said a cylinder of cooking gas sells
for USD 16 (NIS 58) and requires a one month wait to fill due
to high demand. Khozander underscored the short supply of
cooking gas, saying that several Hamas government "ministers"
call him frequently to plead for personal shipments of
cooking gas.

WALLES