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Israel warned against halting cash flow to Gaza

(Agencies)
Updated: 2008-12-15 19:15

RAMALLAH, West Bank -- Israeli restrictions on cash shipments to Gaza banks, meant to weaken the territory's Hamas rulers, are largely counterproductive and ultimately harm Palestinian moderates, top international aid officials warned in a letter to Israel's prime minister.

Palestinian youths ride on bicycles during sunset in the West Bank city of Ramallah, Sunday, Dec. 14, 2008. Israeli restrictions on cash shipments to Gaza banks, meant to weaken the territory's Hamas rulers, are largely counterproductive and ultimately harm Palestinian moderates, top international aid officials warned in a letter to Israel's prime minister. [Agencies]

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The letter, obtained by The Associated Press, was signed by World Bank President Robert B. Zoellick, International Monetary Fund Managing Director Dominique Strauss-Kahn and international Mideast envoy Tony Blair. It marked the highest-level intervention on the issue yet, following a growing cash crunch in Gaza.

The three also expressed concern about a decision by two Israeli banks to sever correspondent relationships with Palestinian counterparts.

The two developments "may have a considerable impact on the Palestinian economy and its institutions, and ultimately on Israel's longer-term relationship with the Palestinians," the letter said.

In Israel, Foreign Minister Tzipi Livni held consultations with senior advisers Sunday. She asked the director general of her ministry to come up with an action plan, both concerning the cash shipments and the banks' decision to cut ties with Palestinian counterparts.

Officials in her office said the matter is considered urgent, but no deadline was set for a decision.

Israel imposed restrictions on Gaza after the Islamic militant Hamas seized the territory in June 2007, ousting the forces of moderate Palestinian President Mahmoud Abbas. Israel declared Gaza a "hostile entity" and largely sealed its borders, allowing in only humanitarian supplies and a trickle of commercial goods, while banning exports from Gaza.

The long-term objective is to weaken and eventually topple Hamas, Israeli politicians have said. In the short run, the restrictions are used to pressure Gaza militants to halt rocket fire on Israeli border towns.

Despite the closures, Israel continued to send trucks carrying Israeli shekels into Gaza from time to time, in line with interim peace deal of the 1990s that made the shekel the currency in the Palestinian areas.

The cash shipments to Gaza banks are needed mainly to enable Abbas' West Bank-based prime minister, Salam Fayyad, to pay 77,000 government employees in Gaza who remain loyal to Abbas.

These payments help shore up support for Abbas in Gaza, sustain one-third of Gaza's 1.4 million people and prevent the collapse of the blockade-battered Gaza economy.

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