With Gaza families eating wild grass to survive in the continued absence of humanitarian shipments to the beleaguered strip, the banking sector is likely far from the mind of the average Gazan. Still, Hamas made news today with the announcement that it would approve the establishment of the first Gaza-based bank operating under the authority of its government. The move looks to spark yet another factional fight between Hamas and the Fatah-run Palestinian Authority.
Gaza has branches of some of the banks regulated by the Palestinian Monetary Authority (PMA), but months of on-again, off-again blockades have left those branches short on funds and rapidly approaching outright collapse. Tottering competition and an economy forced to rely primarily on smuggling may give this new bank a chance of establishing itself when it opens its doors sometime next year.
Little is known about the new bank at this point, except that Western experts are already condemning it as a “bank in name only.” It will operate under traditional Islamic rules, meaning no interest would be charged or collected, and will operate privately, beyond whatever licensing requirements the Hamas government chooses to impose on it.
The PMA isn’t looking forward to the new competition, and has vowed to “pursue every legal action to prevent it from operating.” Given Hamas already approved the bank, and constitutes what little law the Gaza Strip has, it seems unlikely the PMA will be able to make that stick. Still, without their approval the bank is almost certain to be isolated from other Palestinian banks and by extensions the rest of the world’s financial system. Considering the rate at which banks across the globe are failing, whether being isolated from the international system ends up being a hindrance or a blessing in disguise remains to be seen.
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