Identifier
Created
Classification
Origin
08JERUSALEM2274
2008-12-19 13:10:00
CONFIDENTIAL
Consulate Jerusalem
Cable title:  

NEW "HAMAS BANK" TO OPEN IN GAZA DECEMBER 28

Tags:  ECON EFIN EAID KWBG PTER PGOV PINR IS QA 
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VZCZCXRO0841
OO RUEHROV
DE RUEHJM #2274/01 3541310
ZNY CCCCC ZZH
O 191310Z DEC 08
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3559
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 002274 

SIPDIS

NEA FOR FRONT OFFICE AND IPA, NSC FOR
ABRAMS/RAMCHAND/PASCUAL, TREASURY FOR AHERN/VINOGRAD

E.O. 12958: DECL: 12/18/2018
TAGS: ECON EFIN EAID KWBG PTER PGOV PINR IS QA
SUBJECT: NEW "HAMAS BANK" TO OPEN IN GAZA DECEMBER 28

Classified By: Acting Principal Officer Greg Marchese, for reasons 1.4(
b) and (d)

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 002274

SIPDIS

NEA FOR FRONT OFFICE AND IPA, NSC FOR
ABRAMS/RAMCHAND/PASCUAL, TREASURY FOR AHERN/VINOGRAD

E.O. 12958: DECL: 12/18/2018
TAGS: ECON EFIN EAID KWBG PTER PGOV PINR IS QA
SUBJECT: NEW "HAMAS BANK" TO OPEN IN GAZA DECEMBER 28

Classified By: Acting Principal Officer Greg Marchese, for reasons 1.4(
b) and (d)


1. (C) Summary: Hamas has announced the "licensing" of a new
bank, the Islamic National Bank (INB),in the Gaza Strip.
Palestine Monetary Authority (PMA) Governor Jihad al-Wazir
considers the bank an illegal entity, and said the PMA will
launch a public campaign against it. He said Hamas is
capitalizing on GOI restrictions on cash shipments to Gaza,
which have crippled legitimate Palestinian banks, by
announcing the INB will be free from Israeli authority and
able to provide cash to customers on demand. End summary.

Enter the INB
--------------


2. (C) PMA Governor al-Wazir told Treasury attache December
18 that Hamas has registered the "Islamic National Bank" as a
public stock company at the Gaza Companies Registry
Authority, in contravention of Palestinian Authority (PA)
regulations (which obligate Palestinian banks to register
with the PMA as bank holding companies.) He said INB is
preparing a public stock issuance, to be announced in Hamas
newspapers in the coming days. The bank reportedly has USD
20 million in capital, and plans to become operational on
December 28. Press reports name Ala'a al-Rafati as the INB
chairman. Al-Rafati told the press INB is being established
largely to deal with the shortage of cash in banks in Gaza.

PMA response
--------------


3. (C) The PMA plans to issue bank circulars and public
announcements to direct banks and the general public not to
do business with INB. Al-Wazir said his primary concern is
to prevent INB from gaining access to the international
financial system through the establishment of correspondent
banking services with a regional bank. (Note: A
correspondent banking relationship would transform the "bank"
from being little more than a local money-changer to a more
serious threat to the established banks in Gaza, as well as a
conduit for Hamas financing. Al-Wazir said he is concerned
that the Qatar Islamic Bank would offer correspondent
services to INB. End Note.) Local contacts speculate that
Hamas intends to disburse salaries through INB.

Banks urge against overreaction...
--------------


4. (C) Al Quds Bank Manager Azzam Shawwa told Treasury
attache he urged the PMA to "quietly handle" the INB
situation, as an escalating confrontation with Hamas over INB
could prompt Hamas retribution against legitimate Palestinian
banks in Gaza. Bank of Palestine (BoP) General Manager
Hashim Shawa called the INB "a joke," and told Econoff
December 18 that Hamas just wants to establish a new
institution to improve its credibility. He said he urged
al-Wazir to focus the PMA's media campaign on the fact that
the bank is not legal or regulated. Shawa does not view the
INB as a serious competitor, saying Gazans know political
movements rise and fall, and won't put their hard-earned
money in unproven institutions. Al-Wazir also said Hamas is
trying to score points with the public by promoting the bank
as an Islamic financial institution free from Israeli
authority and restrictions, and therefore able to provide its
customers with cash on demand.

...But the PMA has contingency plans in place
--------------


5. (C) Al-Wazir confirmed PMA has contingency plans in place
to cut linkages between Gaza bank branches and the West Bank,
should Hamas attempt to interfere in PMA oversight of the
banks. Tripwires for this step would include Hamas attempts
to force the banks to work with INB, or to establish its own
monetary authority in Gaza. Al-Wazir said he would not
hesitate to order Gaza bank branches closed if Hamas begins
interfering in the formal financial sector. He said such a
step would be difficult to reverse, but believes the threat
of closure has so far persuaded Hamas to keep its hands off
the sector. The banks also have acted to minimize their
exposure in case of Hamas action. The BoP has already moved
its essential operational infrastructure and technology to
its Ramallah branch, according to Shawa.

Bio Note: Ala'a al-Rafati
--------------


JERUSALEM 00002274 002 OF 002



6. (C) Bio note: Al-Rafati was mentioned as a Hamas
candidate for Minister of Economy in March 2007. According
to al-Wazir, al-Rafati has lectured on economics and has
served as the dean of the business school at the Islamic
University in Gaza. Another board member, Abu Hamid (full
name unknown) directs the land registry authority for the
Hamas government in Gaza, according to al-Wazir. End bio
note.
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