Palestinians search for survivors of the Israeli bombing in Rafah, Gaza Strip. Photo / AP
Through the rubble of north Gaza, under cover of a brief Israel-Hamas truce, a convoy of vehicles last Tuesday mounted one of the most unusual missions of the war: the retrieval of about 180 million shekels in cash.
The stash of notes, weighing close to a metric tonne and worth the equivalent of US$50 million ($81.1m), was kept in two Bank of Palestine branches based in some of the most devastated parts of the besieged enclave, where today barely a building stands unscathed and no cash machines function.
Worried about a growing cash shortage in Gaza’s south, where the majority of the enclave’s 2.3 million population has fled, and where most of the beneficiaries of humanitarian aid are now based, Bank of Palestine officials saw the truce as a chance to retrieve the 200-shekel notes stranded in the north — and help stave off the collapse of the economy.
The rescue operation, dubbed “ConOps-Gaza”, required extensive planning: UN backing, guards, clearance from Israel and security so elaborate that one person involved with the plan asked the Financial Times to omit some details.
The roughly 900,000 banknotes, were enough to fill a small shipping container. “It was certainly an unusual convoy. Surreal, but necessary,” said another person involved in the logistics.
Mission complete, the notes are now available to circulate in southern Gaza, where similarly fraught efforts are being made every day to maintain the flow of cash in the face of Israel’s intense bombardment.
As missiles have rained on Gaza for most of the past two months, bank staff have driven private cars to closed branches, removed cash from vaults and replenished cash machines to keep them running — albeit with frequent outages.
“We did this in ATMs and branches located in relatively safe areas,” said a Bank of Palestine official, noting that only six BoP cash dispensers were operating in the south and middle of Gaza.
Sometimes staff have even resorted to moving cash covertly between branches and cash points, according to one person familiar with the operations; the basic security vehicles that banks typically use to move used notes in peacetime are no longer an option in southern Gaza.
The measures by Palestinian banks are an attempt to ease the overwhelming crisis in Gaza’s cash-dependent economy, where besieged residents face soaring prices, severe food shortages and the continuous threat of bombing. With the UN secretary-general warning that public order in Gaza could soon “completely break down”, keeping cash machines running will only become harder.
Even before the conflict, Gaza’s economy was unique: 81 per cent of the population was considered poor and relied on international aid, according to UN figures.
Those who are given support from outside Gaza or who are paid into bank accounts — such as civil servants and families receiving stipends for suffering deaths or injuries in wars with Israel — rely on the cash machine networks.
Payments from the Palestinian Authority, whose funding has been squeezed by Israel, have also been patchy. It has been forced to cut wage payments to public workers, paying only two weeks’ salary since the start of the war.
“I’ve borrowed from just about everyone since the start of the war,” said Iyad Khaled, a civil servant displaced with 10 members of his family from the north of Gaza to the southern city of Khan Younis.
The father of three now has to look after his parents as well as his sister and her children. “Isn’t it enough that we lost our houses and everything we own?” he said. “I now have to survive on half my salary with all the additional people I need to take care of. We can barely manage, people will die of hunger.”
Banknotes are in short supply, electronic payments are rare, and inflation is raging. Basic goods such as powdered milk, flour, salt and yeast are extremely scarce and their prices have shot up.
There is no fresh milk, eggs have tripled in price, flour has gone up tenfold and the price of a packet of processed cheese went from 3 to 10 shekels before disappearing completely from the market.
During the truce, some bank branches in southern Gaza reopened “to offer emergency services”. The Palestinian Monetary Authority, which regulates lenders, issued instructions to offer loans to workers in the territory whose salaries have been delayed or reduced.
It has also asked banks to extend emergency funds to companies and to reschedule debt for borrowers. Shopkeepers who use point-of-sale machines have been authorised to give “cash back” to customers who request it from their cards.
Banks have also introduced measures such as extending the validity of bank cards that were about to expire. But access to cash is ultimately dependent on electricity and the internet; cash machines do not work during the frequent blackouts.
Om Saher Khalil, 52, the mother of seven children displaced from north Gaza to Rafah in the south, said she had not received anything from the Palestinian Authority since the war began.
“There are no stipends for us,” she said. “We live on whatever help people give. We’re cold, we never eat enough and there’s a bombardment. What life is this?”
Many say that even if they live through the war, all that awaits them is a bleak future of loss and hardship.
Abu Udai Abu Sultan, a salaried employee and father of five displaced to the city of Deir al-Balah, said the family home had been destroyed. “It was worth US$200,000 and it’s now been completely crushed,” he said.
Sultan has taken out a loan that he does not have to start repaying until after the war, but he is still anxious. “If we survive the war, I’ll have to pay it back, but my salary will not be enough,” he said. “We’ll have to sleep on the street.”
Private sector employee Om Mazen al-Sheikh, who has also received only half his salary because of the war-shattered economy, complained that the Palestinian Authority should not be offering loans, but helping people with donations. “The least a government could do is offer us food. We’re enduring a war catastrophe and we’re almost in a famine situation.”
She said she had already borrowed money and had no idea how she would pay it back. “Half a salary is not enough even for the basics,” she said. “God willing we’ll all die, which would be more merciful than this life.”
- Additional reporting by Alan Smith.
Written by: Mai Khaled, Heba Saleh, James Shotter and Mehul Srivastava
© Financial Times
Reserve Bank says leaving banks to their own devices hasn't worked.