VZCZCXRO6017
OO RUEHROV
DE RUEHJM #1486/01 1991325
ZNY CCCCC ZZH
O 181325Z JUL 07
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8399
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 001486 
 
SIPDIS 
 
SIPDIS 
 
NEA FOR FRONT OFFICE; NEA/IPA FOR 
WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS; 
TREASURY FOR SZUBIN/LOEFFLER/NUGENT/HIRSON 
 
E.O. 12958: DECL: 07/18/17 
TAGS: ECON EFIN KFTN KWBG IS
SUBJECT: PALESTINIAN MONETARY AUTHORITY AND GAZA BANKS 
CONTINUE COUNTERMEASURES 
 
REF: A. JERUSALEM 1276 
     ¶B. JERUSALEM 1372 
 
Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d). 
 
¶1.  (C) Summary.  The Palestinian Monetary Authority (PMA) 
and banks operating in the Gaza Strip continue to implement 
measures to thwart Hamas interference in the banking sector, 
according to PMA Deputy Governor Jihad al-Wazir.  Most 
commercial banks have moved their headquarters to the West 
Bank or established parallel operations there.  Banks have 
limited shipments of cash into Gaza to amounts necessary to 
maintain normal operations.  Funds in Palestinian Authority 
(PA) and PMA accounts are now being held only in the West 
Bank.  An instruction letter from Former PM Haniyyah to two 
banks was ignored with no adverse repercussions.  End summary. 
 
Private Bank Actions 
-------------------- 
 
¶2.  (C) PMA Deputy Governor Jihad al-Wazir told Econoffs July 
17 that the PMA continues to work closely with commercial 
banks in implementing countermeasures to prevent Hamas 
interference in the banking sector (ref. A).  Per PMA 
instructions, banks have developed business continuity plans 
which will allow them to close down operations in Gaza, if 
necessary, while maintaining operations and protecting data 
through their branches in the West Bank.  Only two banks 
continue to maintain their headquarters in Gaza:  the 
Palestine Islamic Bank and Al-Quds Bank.  The PMA instructed 
older bank branches with an inadequate vaults to transfer 
funds to other Gaza branches with more secure vaults. 
 
PMA Steps 
--------- 
 
¶3.  (C) Wazir said that after the Hamas take-over of Gaza, he 
closed PMA accounts there "in seconds."  He estimated that PA 
funds held in the main branches of banks there totaled about 
USD 100 million.  These accounts, frozen by Prime Minister 
and Minister of Finance Salam Fayyad shortly after he took 
office, have been "zeroized," according to Wazir.  Changes in 
signatory authority initiated by Fayyad continue to govern PA 
banking activities.  Wazir said PMA staff in Gaza continue to 
work with limited authority as a means of protecting banks 
and the employees themselves from possible Hamas intimidation. 
 
Cash Shipments As Needed 
------------------------ 
 
¶4.  (C)  Wazir reported that shipments of cash into Gaza 
resumed (ref B.), but banks are limiting orders to amounts 
needed to maintain normal operations only.  He noted that, 
due to force majeure being applied in Gaza, cash shipments 
cannot be insured.  Wazir estimated that a total of about USD 
80 million in all currencies is currently in circulation in 
Gaza. 
 
Haniyyah Letter 
--------------- 
 
¶5.  (C) Wazir said that, with one exception, Hamas has taken 
no action so far to interfere with banks.  Former PA Prime 
Minister Ismail Haniyyah sent a letter to two banks notifying 
them of the appointment of a Hamas-affiliated individual to a 
PA position.  The banks, in consultation with the PMA, 
elected to ignore the letter, and there have been no adverse 
repercussions. 
 
Possible Scenarios 
------------------ 
 
¶6.  (C) Wazir outlined four possible scenarios for Hamas 
relations with banks operating in Gaza: 
 
-- 1.) Status quo:  Hamas continues a "hands off" approach to 
the banking sector. 
-- 2.) "Hamas Minus:"  Hamas begins low-scale interventions, 
such as letters to banks demanding certain action along with 
Executive Force acts of intimidation.  Hamas may also attempt 
to appoint some of its own members to the PMA's Gaza office. 
-- 3.) "Hamastan:"  Hamas prohibits all banks except Islamic 
banks and appoints its own PMA governor. 
-- 4.) "Armageddon:"  Israeli and Jordanian banks cut their 
ties with Gaza.  The economy of Gaza totally collapses. Banks 
 
JERUSALEM 00001486  002 OF 002 
 
 
fall prey to fraud, embezzlement, robbery, and bombings. 
Electricity is turned off, forcing banks to close, if they 
had not already.  Anarchy prevails. 
 
WALLES