Hamas faces fiscal crisis due to tight restrictions and blockade: sources

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The deposed government of the Palestinian Islamic Hamas movement, which rules the impoverished enclave of the Gaza Strip, faces a severe fiscal crisis due to the lack of financial liquidity and the tight restrictions of the Israeli blockade, sources close to Hamas said on Sunday.

The sources, which spoke on condition of anonymity, told Xinhua that Hamas government is facing difficulties in bringing money into the blockaded enclave, which resulted in the lack of financial liquidity, adding that “this might lead to a severe financial crisis that Hamas would soon suffer from.”

Israel had imposed a tight blockade on Gaza after Hamas and two minor armed groups’ militants kidnapped the Israeli soldier Gilad Shalit in a cross-border attack in southeast Gaza Strip in June 2006. Israel tightened the blockade after the movement seized control of the enclave in June 2007.

“Hamas government is about to face so many difficulties, mainly about paying the monthly salaries for its civil and security employees and other running costs,” said the sources. Palestinian President Mahmoud Abbas deposed Hamas government after the movement took control of the Gaza Strip.

In addition to the tight blockade that Israel imposes on the enclave, the international community led by the U.S. had imposed an embargo on the movement after it won the legislative elections four years ago. Hamas rejected the world’s requirements, mainly recognizing Israel and denouncing violence.

“The financial crisis is not linked to the sources of finance or its fundamental financial abilities, but it is linked to the difficulties of bringing this money to the Gaza Strip and the shortage of liquidity due to more than three years of Israeli blockades and the restrictions imposed on the banks,” said the sources.

The deposed Hamas government hasn’t yet paid the salaries of January to its 34,200 employees in the Gaza Strip, said the sources, adding that “there are concerns that the government of Hamas wouldn’t be able to pay its employees the salaries of the coming months if the crisis goes on.”

There has been no official announcement made by Hamas government officials in Gaza that the government suffers from a financial crisis and a shortage of financial liquidity to cover its monthly running costs.

Gaza economy experts believed that the reason behind the crisis “is the tight security measures Egypt is imposing on its borders with the Gaza Strip,” adding that Egypt imposes tight restrictions on money entrance into the Gaza Strip either held by individuals or groups.

Hamas had repeatedly expressed concerns over an underground steel barrier that Egypt builds under the borderline between Egypt and the Gaza Strip. The purpose of building the barriers, according to Egyptian officials, is to secure Egypt’s borders and prevent smuggling through underground tunnels.

According to the experts, there is another reason behind the fiscal crisis that Hamas in Gaza is suffering from, where local banks in the Gaza Strip have financially boycotted Hamas and refused to deal with the movement or its deposed government.

According to Hamas government’s official figures, there are 34, 200 employees who receive about 16 million dollars as monthly salaries, adding that 16,700 are police and security officers, and 17,500 are civil employees working at the various ministries of the government.

The sources said that the deposed government of Hamas had recently met with several experts to study the possibilities of carrying out cuts off and closing down some of the less influential ministries, merge other ministries together and reduce the monthly invoice of the salaries.

An official source in Hamas ministry of finance, who also spoke on condition of anonymity, admitted to Xinhua that there are ” serious difficulties the government suffers from, especially bringing financial liquidity from abroad to the Gaza Strip.”

However, the source said that “so far, the government is still able to run its affairs, adding that the delay in paying January salaries to the employees is basically related to “technical problems,” adding that “the salaries will be paid within the coming few days.”

In December last year, the government of Hamas approved its annual budget which is 540 million U.S. dollars. However, and due to the current difficulties it is not clear if Hamas government in Gaza will be able to continue paying the salaries to its employees in the coming few months.

Hamas officials said there are four basic sources of income into the budget of Hamas government: first is the taxes and customs the government collects from the Gaza Strip population, second is the agricultural investment in Gaza, third is the local donations and fourth is the Arab and Islamic donations.

The Palestinian National Authority (PNA) which is a rival to Hamas accuses Iran, Syria and Qatar for supporting Hamas government in the Gaza Strip by sending huge amounts of money to the movement to keep it surviving and controlling the Gaza Strip.