GOI CALLS GAZA CASH CRISIS A HAMAS PLOY

S E C R E T TEL AVIV 002713



SIPDIS



NEA/IPA; TREASURY FOR GLASER, D. AND KIMMIT, R.



E.O. 12958: DECL: 12/04/2018

TAGS: EFIN, KNNP, KTFN, KPAL, PTER, PREL, IS

SUBJECT: GOI CALLS GAZA CASH CRISIS A HAMAS PLOY



Classified By: CDA Luis G. Moreno for reasons 1.4(b) and (d)



1.(S) Econoff called Udi Levi, Counterterrorism Finance

Bureau Director at the National Security Council (NSC) and a

senior intelligence officer on December 2 to press for

release of NIS 250 million to the Gaza banking system, as

requested by the Palestinian Monetary Authority. Levi said

continued rocket and mortar attacks from Gaza, stalemate in

negotions on release of Hamas-held Israeli Defense Force

soldier Gilad Shalit, and new information on Hamas access to

the Palestinian Authority salary payments funded by the

requested transfer all made it unlikely that the GOI would

honor the request.



2.(S) Levi did say that the GOI is considering a policy to

permit about NIS 40 million in new liquidity to enter the

Gaza Strip banks on a monthly basis. The exact amount is

still under discussion, said Levi, but the Israeli security

services have agreed that monthly transfers of some amount of

shekels to Gaza are necessary to avoid collapse of the

banking system there.



3.(S) However, Levi noted GOI intelligence has indications

that Gaza banks are being forced by Hamas to underreport

their true reserve holdings, so it is difficult for the GOI

to assess the current state of the banking system in Gaza.

He said that the banks have had no choice but to follow Hamas

instructions and conduct business as if they were operating

on insufficient reserves. He posited that the present

pre-Eid crisis might be an attempt by Hamas to further

consolidate its power in Gaza though he was vague on how the

crisis would forward the Hamas agenda. Regarding the PA,s

payroll, Levi told econoff that it included Hamas members and

many other questionable individuals that the GOI did not

believe to be working as civil servants for the

Fatah-controlled PA. He offered to share all GOI information

on the topic in a meeting with relevant USG officials at

their earliest convenience. We will take him up on that

offer and report septel.



4.(S) Comment: USG interlocutors at all levels have been

urging the GOI to provide the needed December salary payments

and greater certainty to Gaza,s banking sector going

forward. Most recently, Charge raised the NIS 250 million

request

with COGAT/MOD PolMil Director Amos Gilad evening of December

3. Gilad,s response was, "They're not getting a dime".

However, we do not expect that to be the last word from the

GOI on the subject.



5.(S) Comment continued: Going forward, the GOI may set the

monthly transfer floor somewhat higher than the 40 million

shekels mentioned by Levi, but it is unlikely to eliminate

uncertainty completely by setting the floor at the roughly

NIS 250 million average level requested by the PA over the

past few months. Therefore, we expect this issue to remain

an agenda item in the Joint Economic Committee for the

foreseeable future, and anticipate continued pressure for USG

intervention in the monthly transfer process. Of greater

concern is Levi's claim to have new evidence that the PA's

current Gaza salaries list is tainted by Hamas sympathizers.

We will work with the GOI to verify that claim and to make

sure the PA has sufficient information to re-vet the list, if

necessary.



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