Hamas facing financial and administrative crisis as revenue dries up

NZ Herald

6 days ago

'Hamas is not rebuilding their tunnels, they're not paying their highly trained fighters, they're only surviving,' Ailam said.
Nor can the Hamas Administration meet the payroll of police and ministry employees in Gaza, where the group has been the governing authority since 2007, or continue to pay death benefits to the families of fighters killed, according to Ailam, a local Palestinian policeman, and two other Gazans.
Ibrahim Madhoun, a Gazan analyst close to Hamas, said that the group had not prepared for more than a year of war and has been forced to adopt austerity measures, such as cutting administrative costs and salaries, while trying to maintain some basic services and thus some semblance of governing authority.
For instance, it set up emergency committees that provide basic local services such as garbage collection and management of generator fuel.
To pick up some of the slack, Madhoun said, Hamas also relies on efforts of the local community and the 'strong social network that helps absorb the shocks'.
Hamas officials did not respond to requests for comment about the group's financial health.
Hamas and Israel are currently negotiating over a possible 60-day ceasefire, with Israel seeking to ensure that it can maintain pressure on Hamas and the militant group looking for a lifeline. All sides say the talks are making progress, but an agreement remains elusive.
Earlier in the war, Hamas relied on taxes imposed on commercial shipments and the seizure of humanitarian goods, according to Gazans and current and former Israeli and foreign officials.
According to a Gazan who has worked at the border, plainclothes Hamas personnel routinely took inventory of goods at the Rafah crossing, until it closed last year, and at the Kerem Shalom crossing, though it was under IDF control.
They also surveyed warehouses and markets.
Most of the Palestinians interviewed for this story spoke either on the condition of anonymity or that only their first name be used, for fear of reprisal by Hamas.
The United Nations, the European Commission and major international aid organisations have said they have no evidence that Hamas has systematically stolen their aid, and the Israeli Government has not provided proof.
Hamas profited 'especially off the aid that had cost them nothing but whose prices they hike up', said a Gazan contractor who has worked at Gaza's border crossings during the war.
Over nearly two years, he said, he saw Hamas routinely collect 20,000 shekels (about US$6000) from local merchants, threatening to confiscate their trucks if they did not pay.
He recalled that civil servants for the Hamas-led government said several times that they would kill him or call him a collaborator with Israel if he did not co-operate with their demands to divert aid. He said he refused. But he added that he knew at least two aid truck drivers who he said were killed by Hamas for refusing to pay.
When Israel imposed a siege on Gaza in March, shortly before breaking a two-month ceasefire with Hamas, most of those shipments came to a halt.
Hamas officials did not respond to requests for comment about accounts that it has taxed or impounded commercial shipments, stolen humanitarian aid, or extorted local businessmen.
Aid trucks pass through the Egyptian side of the Rafah crossing into Gaza on the day the ceasefire agreement between Israel and Hamas came into force, on January 19. Photo / Loay Ayyoub, for the Washington Post
Hamas under pressure
Hamas triggered the devastating war in Gaza by attacking Israel on October 7, 2023, killing some 1200 people and taking about 250 others back into Gaza as hostages.
Since then, the Israeli military campaign has killed more than 58,000 people, mostly women and children, Gazan health authorities say.
An Israeli military official said Hamas has lost 90% of its leadership and 90% of its weapons stockpiles over the course of the conflict. The official spoke on the condition of anonymity because he was not authorised to talk to the news media.
In the early phase of the war, Hamas had rushed to stash cash and supplies underground, but those have run short.
In March 2024, the Israeli Army said that it confiscated more than US$3 million from the tunnels beneath al-Shifa Hospital, in northern Gaza, according to a statement in the IDF's WhatsApp group.
But Hamas has profited off commercial trade and humanitarian aid, netting hundreds of millions of dollars, according to two Israeli military officials and an Israeli intelligence official, who all spoke on the condition of anonymity to discuss sensitive findings.
For instance, the officials said, Hamas seized at least 15% of some goods, like flour, and aid vouchers that international agencies had intended to provide to hungry Gazans. These officials said some of that was given to Hamas personnel and supporters while the rest was sold to make money.
Ahmed Fouad Alkhatib, a Palestinian American who leads the advocacy group Realign for Palestine, said that Hamas repeatedly modified its strategy for profiting off aid and commerce while counting on the humanitarian crisis to bring the war to an end.
'Hamas's strategy relied on the suffering of Gazans,' said Alkhatib. 'But when this strategy failed, it foolishly doubled down on this approach, in large part because it had nothing else in its toolbox to deal with Israel's ferocious reaction to October 7 and the world's inability to stop it.'
'Hamas sees aid as its most important currency,' said a man from Deir al-Balah, in central Gaza, who helps manage the distribution of aid.
He said that while most of the population had to scrape for water and food, people affiliated with Hamas had been gifted boxes of aid meant for wider distribution.
The IDF, citing intelligence, says the aid organisations targeted by Hamas have included UN agencies and NGOs.
The Israeli Government has used allegations of widespread Hamas theft to justify draconian restrictions on humanitarian assistance entering Gaza and to justify bombing aid depots.
Some far-right members of the Israeli Government have said these restrictions are useful in pressuring Hamas into making negotiating concessions and in turning Gaza's population against Hamas.
Israel has not provided public proof that Hamas has systematically stolen aid brought into Gaza under the UN system, and despite requests from the Washington Post to officials in the IDF, the Israeli Foreign Ministry and the prime minister's office, no evidence has been provided to substantiate reports of widespread diversion of UN food aid.
Nor has Israel privately presented proof to humanitarian organisations or Western government officials, even when they have pressed for evidence, according to interviews with more than a dozen aid officials and several current and former Western officials.
Carl Skau, deputy executive director for the UN's World Food Programme, one of the main providers of flour in Gaza throughout the war, said in an interview that systematic aid diversion by Hamas 'has not been an issue for us so far in the conflict'.
WFP previously reported three instances of looting of its supplies during 21 months of war.
'We have mitigating measures that we have drawn lessons from over the past 40 years operating in these kinds of complex environments with armed groups,' he said. 'We are putting all those mitigating measures in place.'
Officials from several major international aid organisations have also said that there has been no systematic diversion of their aid by Hamas and that they have robust procedures for tracking aid as it enters Gaza and is distributed.
An Egyptian official briefed on intelligence, however, said that Hamas had indeed stolen some of this food aid.
'Hamas is trying to use the aid to survive. It's happening,' said the official, who spoke on the condition of anonymity because he was not authorised to talk to the news media.
Thousands of displaced Palestinians evacuate shortly before the Israeli warplanes targeted a building in the Al-Nasr neighbourhood in central Gaza on July 21. Photo / Getty Images
Push for old system
Among the group's demands in negotiations with Israel over a new ceasefire deal is the reopening of Gaza's borders and the surging of humanitarian aid - partly to alleviate the severe shortage of food that has turned public opinion against Hamas, but also to revive its cash flow, said an official familiar with the talks who spoke on the condition of anonymity to discuss sensitive deliberations.
'One of the reasons that Hamas is pushing for a return to the old system is that they have guys in all of the warehouses,' said a Western official.
The presence of employees of the Gaza government allows Hamas to regulate and monitor market activities, as well as tax or seize some of the supplies at times, said a high-level Israeli official.
Until commercial shipments into Gaza were suspended in October, Hamas taxed these imports at the border and, if traders refused, commandeered a portion of their trucks and sold their contents to Gazan merchants, according to a Gazan economic reporter.
He said that before the war, 'fuel and cigarettes were the highest taxed and most profitable items for the Hamas government in Gaza', adding that revenue data has been difficult to access.
A Gazan businessman said Hamas had imposed a tax of a least 20% on many goods.
But the group also would take control of trucks carrying high-demand goods like flour, which could sell for up to US$30 for a kilogram, and steal fuel meant for aid groups.
Fuel supplies have produced high revenue for Hamas during the war, with the group both taxing and seizing fuel stored at service stations for sale, said an Israeli military official.
In addition to taxing goods, Hamas also made money by allowing associated merchants to sell imported staples like sugar and flour at inflated prices without fear of being punished for price gouging, according to the IDF, which cited an internal Hamas document obtained by the military.
The Gazan economic reporter, who spoke on the condition of anonymity out of fear of retaliation, confirmed that these merchants are allowed to sell goods at inflated prices.
He said Hamas would at times constrain supply on the market by ordering others to withhold distribution for several days, thus forcing up prices.
When Israel resumed the war in March, Hamas saw its revenue tumble as imports and aid shipments into Gaza largely were reduced to a trickle.
The establishment in May of the Gaza Humanitarian Foundation - a food assistance programme backed by the US and Israel whose operations have been overshadowed by the repeated fatal shooting of Palestinians seeking aid at its centres - has deprived Hamas of earlier revenue, the Israeli military official said.
Palestinians carry sacks of food aid in Gaza City on July 20. Last weekend Israeli soldiers shot Palestinians near an Israeli-backed aid site and a UN convoy. Photo / Saher Alghorra, the New York Times
Mounting repression
As Hamas has come under growing military and financial pressures, it has become increasingly repressive in a bid to show it is still in control.
Gazans interviewed for this story spoke of growing fear of retribution. In videos posted since this northern spring on social media by a Hamas-linked unit formed to dole out punishments, masked gunmen are shown beating up and shooting the legs of men accused of stealing aid.
Gazans said Hamas is also seeking to intimidate those critical of the group.
Last month, for instance, Mowafeq Khdour, 31, was robbed and brutally beaten by dozens of armed Hamas men after he spoke out publicly against Hamas, his brother Mahmoud said over WhatsApp.
As Hamas adopts harsher policies, the group's popularity is falling, said Rami, a 40-year-old employee of the Hamas-run government who spoke on the condition that only his first name be used out of concern for his safety.
He said the anger on Gaza's streets is markedly different from the optimism earlier in the conflict, when 'we believed we were on the brink of liberating Palestine or achieving a major victory in the war', especially with Hamas and its allies holding about 250 people hostage.
'Israel's actions are undeniably criminal, but Hamas's poor judgment and failure to account for the war's aftermath have also contributed significantly to this disaster,' Rami said.
- Miriam Berger and Lior Soroka contributed to this report.