Secret Financial Networks Fuel Gaza Economy Amidst War

Despite the widespread destruction of Gaza's banking infrastructure, with over 98% of bank branches and ATMs out of service, financial activity has shifted to clandestine, multi-dimensional networks. This "networked financial transaction" model has created an "unintended convergence of interests" between warring parties and merchants to manage daily liquidity during the ongoing humanitarian crisis.

A "financial influence triangle" has emerged, comprising Hamas, major merchants and money exchangers, and the Palestinian Authority (through the Palestine Monetary Authority), all operating under direct Israeli pressure and control. This unlikely alliance facilitates money circulation and liquidity provision.

Hamas has adapted its financial management by moving away from its former governmental structure to a flexible, decentralized system. This includes oversight by field commanders and regional councils, the operation of financial cells in each governorate to manage cash reserves and distribute emergency stipends, and the management of external investment assets through a foreign investment council. Profits and donations are funneled through cryptocurrency protocols, specifically USDT on the TRON network, to bypass international sanctions and evade intelligence tracking. Hamas also relies on prominent local money exchangers as financial fronts, who receive crypto assets abroad and deliver physical cash in Gaza via Hawala networks, supplemented by "protection and coordination fees" on non-relief goods entering the Strip.

Israel exerts significant financial control by prohibiting the entry of new Israeli shekel cash into Gaza, aiming to deplete Hamas's resources and causing a severe shortage of usable currency. It also disrupts the banking communication infrastructure and monitors transfers through the Palestine Monetary Authority. Furthermore, Israel controls the type and volume of commercial goods and trucks allowed into Gaza, thereby dictating the market's supply and influencing the shekel's value.

Major merchants and money exchangers have become de facto "field central banks," controlling the most crucial commodity: physical cash. They accumulate cash by selling limited food and commercial goods at inflated prices. Since depositing this cash into closed banks is impossible, it is stored in private, unregulated vaults. The practice of "Takyish" (converting digital funds to cash) has become a lucrative business, with merchants and exchangers charging exorbitant commissions, ranging from 15% to 40%, for this service, creating a black market for liquidity. This cash is then used to fund imports and purchase aid supplies, which are resold at higher prices.

The Palestinian Authority, through the Palestine Monetary Authority, attempts to inject digital liquidity by disbursing salaries and aid electronically. However, frequent communication and power outages have hampered the adoption of digital payment applications and e-wallets, leaving physical cash as the only reliable medium of exchange. The current financial system is described as a parasitic economy that enriches a few merchants and exchangers while depleting the remaining savings of the population, leading to an estimated 80% loss in purchasing power.