Currently released so far... 3891 / 251,287
Articles
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Amsterdam
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Casablanca
Consulate Cape Town
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kigali
Embassy Khartoum
Embassy Kampala
Embassy Kabul
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lagos
Mission USNATO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Maputo
Embassy Manama
Embassy Managua
Embassy Madrid
Consulate Munich
Consulate Montreal
Consulate Monterrey
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate Shenyang
Consulate Shanghai
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
USUN New York
USEU Brussels
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Browse by tag
AF
ASEC
AE
AR
AG
AJ
AFIN
AU
AM
APER
ABUD
ATRN
AORC
AEMR
AMGT
ACOA
AEC
AO
AX
AMED
ADCO
AODE
AFFAIRS
AC
AS
AL
ASIG
ABLD
AA
AFU
ASUP
AROC
ATFN
AGMT
CJAN
CH
CU
CASC
CVIS
CMGT
CO
CI
CLINTON
CIA
CG
CF
CN
CS
CAN
COUNTER
CIS
CA
CBW
CM
CE
CONDOLEEZZA
COE
CR
CY
CD
CTM
COUNTRY
CLEARANCE
CPAS
CWC
CT
CKGR
CB
CACS
COM
CDG
CJUS
CARSON
COUNTERTERRORISM
CACM
CDB
CV
EU
EFIN
EG
ETTC
EINV
ENRG
EI
ECPS
EINT
ECON
EIND
ETRD
EPET
EUN
EZ
EMIN
ELAB
EAID
EAGR
ET
EC
EAIR
ENVR
ES
ECA
EWWT
ER
ELTN
EFIS
EN
EXTERNAL
ECIN
EINVETC
ENIV
EINN
ENGR
EUR
ESA
ENERG
ELECTIONS
ECUN
EINVEFIN
ECIP
EINDETRD
EUC
EREL
IR
IZ
IS
IT
INRB
IRAJ
IN
INRA
INRO
IO
IC
ID
IIP
IAEA
ITPHUM
IV
IPR
IWC
IQ
ICTY
ISRAELI
IRAQI
ICRC
ICAO
IMO
IF
ILC
IEFIN
INTELSAT
IL
IA
IBRD
IMF
ITALY
ITALIAN
INTERPOL
KE
KTFN
KDEM
KJUS
KNNP
KGHG
KZ
KIPR
KWBG
KIRF
KPAO
KDRG
KHLS
KCRM
KSCA
KPAL
KISL
KG
KACT
KN
KS
KGIC
KRAD
KU
KCOM
KBIO
KMCA
KCOR
KV
KHDP
KTIP
KVPR
KDEV
KWMN
KSPR
KTIA
KHIV
KPRP
KAWC
KOLY
KCIP
KCFE
KOCI
KMDR
KPKO
KTDB
KMRS
KFRD
KLIG
KBCT
KICC
KGIT
KSTC
KUNR
KPAK
KNEI
KSEP
KPOA
KFLU
KNUP
KNNPMNUC
KOMC
KAWK
KO
KTER
KSUM
KHUM
KRFD
KBTR
KDDG
KWWMN
KFLO
KSAF
KBTS
KPRV
KMPI
KNPP
KNAR
KWMM
KERG
KFIN
KTBT
KCRS
KRVC
KR
KPWR
KWAC
KMIG
KSEC
KIFR
KDEMAF
KGCC
KPIN
KNUC
KPLS
KIRC
MARR
MOPS
MU
MASS
MY
MNUC
MCAP
MA
MO
MTCRE
MG
MASC
MX
MCC
MZ
ML
MK
MTRE
MP
MIL
MDC
MTCR
MAR
MEPI
MRCRE
MI
MT
MR
MQADHAFI
MD
MAPS
MUCN
MPOS
MEPP
MOPPS
MAPP
PGOV
PREL
PINR
PO
PINS
PTER
PK
PHUM
PARM
PL
PE
PREF
PHSA
PBTS
PGOF
PROP
PARMS
PA
PM
PMIL
PTERE
POL
PF
PALESTINIAN
PY
PGGV
PNR
POV
PAK
PAO
PFOR
PHALANAGE
PARTY
PNAT
PROV
PEL
POLITICS
PEPR
PSI
PINT
PSOE
PU
POLITICAL
PARTIES
PBIO
PECON
POGOV
PINL
PKFK
SU
SA
SY
SP
SNAR
SENV
SCUL
SW
SOCI
SF
SO
SR
SG
SMIG
SL
SN
SHUM
SZ
SYR
ST
SANC
SC
SAN
SIPRS
SK
SH
SI
STEINBERG
UK
UNSC
UG
US
UZ
UP
UNO
UNMIK
UY
UN
UNGA
UE
UNESCO
UAE
UNEP
USTR
UNHCR
UNDP
UNHRC
USAID
UNCHS
UNAUS
USUN
USEU
UV
Browse by classification
Community resources
courage is contagious
Viewing cable 10TELAVIV413, SHIN BET TALKS GAZA ECONOMICS
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #10TELAVIV413.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
10TELAVIV413 | 2010-02-22 14:02 | 2011-01-28 00:12 | SECRET//NOFORN | Embassy Tel Aviv |
VZCZCXRO9755
PP RUEHROV
DE RUEHTV #0413/01 0531424
ZNY SSSSS ZZH
P 221424Z FEB 10
FM AMEMBASSY TEL AVIV
TO RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 5586
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
S E C R E T SECTION 01 OF 03 TEL AVIV 000413
NOFORN
SIPDIS
STATE FOR NEA/IPA AND SEMEP; NSC FOR KUMAR; TREASURY FOR
MOGER/KNOWLES
E.O. 12958: DECL: 02/22/2020
TAG ECON, PTER, KPAL, KTFN, IS
SUBJECT: SHIN BET TALKS GAZA ECONOMICS
REF: A. JERUSALEM 276
¶B. TEL AVIV 2446
Classified By: Economic Counselor David R. Burnett; reasons 1.4 b/d
¶1. (S/NF) Summary: In February 16-17 meetings, Senior Shin
Bet officials outlined for Emboffs their views on recent
trends in the Gaza Strip's economy, including the paradoxical
effect of "clean" Palestinian Monetary Authority
(PMA)-regulated banks serving Hamas interests, the operating
dynamics of a market split between legitimate and illicit
activity, and the growing economic division between Gaza and
the West Bank. The legitimate market sector, anchored by the
PMA-regulated private banking system is mirrored by an
alternative Hamas financial system, both of which are linked
by currency flows and trade. End Summary.
- - - - - - - - - - - - - - - - - - - - -
The PMA-regulated private banking system
- - - - - - - - - - - - - - - - - - - - -
¶2. (S/NF) The PMA-regulated private banking network provides
the backbone for the legitimate sector of Gaza's market.
Salaries paid by the Palestinian Authority, international
aid, and legitimate trade finance all flow through these
banks. New Israeli Shekels (NIS) and U.S. Dollars (USD)
comprise the majority of hard currency transfers. The
private banks that operate under PMA-supervision are
well-regulated according to PMA-prescribed Anti-Money
Laundering legislation. According to Shin Bet, suspicious
activity is usually reported, and Hamas has been unable to
make any significant inroads in bank activities. The banks
have maintained their independence from the Hamas regime with
the threat that they will close if Hamas attempts
infiltration. The banks will not let Hamas operatives open
bank accounts or have their salaries deposited in any
existing accounts. Shin Bet has not seen any attacks on the
banks by Hamas-affiliated groups or individuals.
¶3. (S/NF) However, Shin Bet officials assess that Hamas is
significantly benefiting from the PMA-regulated banks, even
though they do not directly utilize them for commercial
activity. These well-operated banks, which are "clean" of
money-laundering or terror finance, provide the non-Hamas
population of the Gaza Strip with a key financial service
that improves their quality of life. Shin Bet believes that
due to a lack of successful strategic messaging by the PA and
PMA that makes clear how they--and not Hamas--are providing
these private banks as a public service, Hamas has been able
to take full credit. Hamas has led the Gaza population to
believe that it is their leadership which has enabled these
banks to function relatively effectively and without
corruption. As such, even though they are not under Hamas
control, the PMA-regulated private banks support Hamas
because they provide a necessary financial service at no cost
to the Hamas regime. Shin Bet argues that this is why the
banks' threats of closure have proven effective against Hamas
encroachment.
¶4. (S/NF) Shin Bet also believes that the private Palestinian
banks operating branches in Gaza would prefer to close them
due to low profitability relative to risk. Political
considerations and pressure from the PA, PMA, and others, are
the primary reason why they remain in operation. While Shin
Bet faults the PA for not getting more street credit for the
Gaza banking system, they agree that a pull-out by the banks
would be a political and psychological blow to the PA.
- - - - - - - - - - - - - - - - - - - -
The Hamas Alternative Financial System
- - - - - - - - - - - - - - - - - - - -
¶5. (S/NF) A Hamas alternative financial system exists
parallel to the PMA-regulated banking system. Hamas smuggles
in large quantities of foreign currencies (primarily USD and
Euros) in order to fund its operating expenses. According to
Shin Bet, their budget consists of three major parts: 1) USD
200 million annually for government operating expenses; 2)
USD 50 million each year to support the Hamas movement's
civilian side and organization; and, 3) USD 40 million
annually for its military wing and security apparatus. Over
the past several months, shortages of cash for Hamas salary
payments (usually made in USD) have been reported (see REFs A
and B). Shin Bet now believes that this was due primarily to
Israeli efforts to thwart terror funds and Egyptian
counter-smuggling operations, not a lack of actual funding
from abroad. Recently, however, Hamas has adapted to this
TEL AVIV 00000413 002 OF 003
crackdown and re-rerouted its smuggling operations, bypassing
Cairo and heading directly through Sinai, thereby more easily
evading detection. They have also reduced the size of
amounts smuggled into Gaza at one time to avoid large losses
after any one interdiction. Shin Bet also notes dwindling
levels of support from the Egyptians in stemming this flow of
funds. Additionally, Hamas has increased tax collection, as
detailed in REF A.
¶6. (S/NF) With these modifications, the parallel economy has
been flourishing, and the delayed salary payments are not
symptomatic of a more endemic problem. Hamas has also
established a second branch of its own National Islamic Bank
in Khan Yunis, and is attempting to initiate correspondent
relations abroad. Shin Bet reiterated the importance of a
timely U.S. designation of the Hamas "bank" to prevent this
from happening, given that it would significantly increase
the ease by which Hamas could receive and transfer funds.
Hamas also continues to receive funding from Iran.
- - - - - - - - - - - - - - -
Overall Gaza Market Dynamics
- - - - - - - - - - - - - - -
¶7. (S/NF) These parallel dynamics lead to an overall Gaza
economy based on imports from Egypt through the smuggling
tunnels, paid for in foreign currency--not Israeli shekels.
There has been a steady influx of shekels -- mostly from PA
salary payments into Gaza -- with limited outbound
circulation. Instead, these shekels are used predominately
for internal exchange. Under the PMA-regulated private
banking system, individuals are paid in NIS from the
Palestinian Authority. Local merchants conduct their business
with the average Gazan in NIS, who in turn use NIS for most
of their daily purchases. However, in order to procure
non-Israeli imports (through the smuggling tunnels), the
local merchants are required to convert these NIS into USD,
since the exporters from Egypt and elsewhere operate
primarily in USD. This results in a large amount of outgoing
foreign currency for imported goods, while an insignificant
amount of shekels leave the Gaza market due to the near
complete lack of trade with Israel (and, to a lesser degree,
the West Bank). When combined with Israel's restrictions on
the transfer of hard currency both into and out of Gaza, this
has led to a surplus of shekels and deficit in foreign
currencies (including USD and Jordanian Dinars), which has
allowed speculators (including Hamas, merchants and banks) to
exploit the system and profit from arbitrage.
¶8. (S/NF) In the long run, Shin Bet assesses that these
currency imbalances destabilize Gaza's economy and will lead
to pendulating NIS/USD exchange rates, the result of
intermittent incremental changes in currencies permitted in
and out by Israel, variation in the quantities and types of
currencies smuggled into Gaza, and incentives to exploit
systemic changes through arbitrage. They are concerned that
there will be an eventual shift from the current mixed
currency system, dominated by NIS, to sole use of foreign
currency (likely USD). Local merchants have already
attempted to require that Gazans pay for goods in USD or
other foreign currencies, to minimize exchange-rate losses
when they are forced to exchange the shekels for dollars or
other foreign currencies, whether through the banking system
or through the Hawala (money-changers), to purchase restock
imported inventories. Because of the current shortage of USD
in the banking system, Gazans have been unable to oblige and
the local merchants have relented, according to Shin Bet
analysts. Israel's policy, per the Paris Protocol, is to
maintain use of shekels in the Palestinian territories, and
the GOI worries that if the shift to a non-shekel economy in
Gaza takes place, it will further solidify the separation of
Gaza from the West Bank.
¶9. (S/NF) From a counter-terrorism perspective, Shin Bet sees
less of a security threat from a shekel-based Gaza economy
than a foreign-currency-based Gaza. It sees no direct
security threat from excess shekels in Gaza. Shin Bet
analysts have not seen any attempts to rob banks vaults, nor
are they concerned that Hamas or others could use shekels to
purchase any materials from abroad that could be used for
terrorism (given that they would have to be exchanged first
for currently lacking foreign currencies). Given the
separation between Hamas and the PMA-regulated private banks,
Shin Bet assesses there to be little connection between these
banks' stability and Israel's counter-terrorism goals. In
the short-term, security concerns from a decrease in
confidence in these banks by average Gazans is negligible for
TEL AVIV 00000413 003 OF 003
Israel. However, in the long-run, Shin Bet officials
conceded that it is important to preserve these institutions
as one of the few alternatives to Hamas in the Gaza Strip,
and as a foundation for economic stability in Gaza.
Cunningham