Among the long list of casualties of Israel's war on Gaza is the running of vital day-to-day financial transactions. Palestinians have been suffering from a lack of basic necessities such as food, water and electricity. Those who have been lucky enough to escape death, disease, and famine are left to face yet another hardship: access to cash.
At a time when Palestinians are at their most desperate, traditional methods of accessing cash have been severely hit. Since it launched its punishing war on Gaza on 7 October, Israel has targeted banks—especially the Bank of Palestine—and the cash dispensing network of ATM machines. And the only two ATMs that are intermittently functioning have been taken over by criminal gangs. These conditions are worsened by a lack of staff at banks, which cannot guarantee the security of their workforce.
In the early months of the war, instant money transfers into Gaza could be made via the major international financial wire services, Western Union and MoneyGram, and one or two currency exchange offices were operating in Gaza. Dozens of people crowded outside them every day—especially in the south.
However, the staff were unable to cope with the large numbers of people receiving transfers, and the facilities could not remain operational throughout the gruelling war. Israel was also pressured to crack down on money transfers on the pretext of preventing funding for what it calls “terrorist” organisations, so it targeted currency exchange bureaus and employees.
Dependent on Israel
The Palestinian financial system has been tied to Israel’s ever since the establishment of the Palestinian Authority in 1994. Israel refused to allow the PA to issue its own currency when the Palestinian Monetary Authority was set up. This meant Palestinians continued to use the Israeli shekel and that banks and financial transfers were also dependent on the Israeli system. That, in effect, left Israel in control of financial and economic decisions taken over the entire Palestinian authority.
This level of dependence has been laid bare during the war. Qassem Abu Shamala, a 36-year-old engineer working with Arab companies, explained to Al Majalla that the acute difficulty in getting hold of payments has become part of daily life: "My whole job depends on receiving quick remittances from clients abroad. But since the war broke out, I haven't received any remittances, even though I desperately needed cash."
Currency traders increased the commission charged in the transfers to 5%. People had to accept payments in shekels rather than the currency the remittances originated in, including dollars. This unfavourable exchange rate further devalued the transfers to recipients.
Another problem is the long queues for cash at ATMs as people try to withdraw their salaries or access savings. An organised group of thugs—known as the “ATM mafia”—exploited the scarcity of cash by controlling access to the machines and demanding a 10%- 15% cut from each withdrawal. Hamas's preoccupation with fighting—with many members already targeted and killed—has left a security vacuum in the Strip that criminal gangs have filled.
Rise in digital currency
Six months into the war, instant money transfer facilities had collapsed, and most banks were out of action. Mobile banking apps became the best way to withdraw funds from accounts via the last remaining source of cash: merchants and currency traders. The Bank of Palestine’s app is the most widely used among Palestinians in Gaza. Customers use the app to send an instant money transfer to the account of a currency trader, who would provide cash after deducting a commission, which recently reached around 20%.
These rates are making cash use more expensive across Gaza as people try to finance their day-to-day needs. Gaza resident Samir Al-Shaghnoubi says the steep commissions for financial transfers add more hardship to his already difficult life. "We lost our homes, jobs, and relatives in this war. Now, we are losing our money, too. The currency dealer is taking a large chunk out of our remittances."
