Pressure is building on the Palestinian Hamas-led government with banks fearing legal consequences if seen dealing with those deemed "terrorists", writes Erica Silverman James Wolfensohn, the Quartet's special envoy for the Gaza withdrawal, stepped down last week amidst divisions within the group (the EU, US, United Nations and Russia) over his role after a Hamas-led government was sworn into office just over a month ago. His team, looking defeated, closed down their offices at the American Colony Hotel in East Jerusalem on Sunday, their headquarters for the past 10 months. The departure of the Wolfensohn team is another Palestinian channel to the international community that has closed since Israel, the United States and the European Union instituted a policy of economic and political isolation against the Hamas-led government. President Mahmoud Abbas, the Palestinian Authority (PA), and the Palestinian people, inextricable from a democratically elected legislature, are facing the consequences. "Political and diplomatic contact with the PA is prohibited," according to a spokeswomen for EU Ambassador Marc Otte. The PA Foreign Ministry has been essentially frozen, since PA officials are prohibited from communicating with US, EU and other Western officials. Abbas has received no official offers to date from Western nations to channel funds directly through his office, presidential spokesperson Nabil Abu Rudeineh told Al-Ahram Weekly. Perhaps the most debilitating policy has been the refusal of international banks to deal with the PA. The Office of Foreign Assets Control of the US Treasury Department has barred financial transactions with the PA. The Amman-based Arab Bank closed the PA's "single treasury account," leaving the government without a bank account. International banks operating in the West Bank and Gaza are also refusing to deal with the government, fearing they may become the target of American sanctions. Israel's largest bank, Hapoalim, will phase out dealings with Palestinian banks. Iran and other Arab nations are trying to assist the cash-strapped PA, but how can funds be transferred, employees paid or operating costs handled without a bank? Meanwhile, Stuart Levey, the US Treasury Department's undersecretary for terrorism and financial intelligence, arrived in Israel Monday to coordinate US efforts to isolate Hamas. "What does it mean to 'materially support' a FTO (Foreign Terrorist Organisation, as designated by the US State Department)?" pondered one member of the exiting Wolfensohn team, speaking on condition of anonymity. The official said the team was not sure of their parametres under State Department regulations. "From the time Hamas was sworn in, communication stopped," in an effort to comply with US federal regulations and in fear of personal litigation, said the official. Under current conditions, Wolfensohn will not be replaced, even if unilateral withdrawals continue in the West Bank, said the official. Is personal litigation a threat? In March 2000, the estate and heirs of Yaron Ungar filed suit against the PA and PLO in Rhode Island District Court pursuant to the Anti- Terrorism Act (ATA). In June 1996, Ungar -- an American citizen -- was killed by machine-gun fire from a vehicle allegedly driven by Hamas members. The defendants were charged with engaging in international terrorism and in 2004 a judgment was marked against them. The ATA provides a course of action for any "national of the United States injured in his or her person, property, or business by reason of an act of international terrorism, or his or her estate". The ruling prohibited direct assistance to the PA from the US even before Hamas was elected, explained the Wolfensohn official. Israel never informed Wolfensohn's team as to the nature of the "security concerns" that have sealed Karni, Gaza's only commercial crossing, for over half the year, continued the official, describing the closure as a "policy decision". Meanwhile, World Bank officials are limiting contact with the new government, since it is still unclear whether the Bank, the International Monetary Fund, and United Nations officials are immune from federal regulations and personal litigation. The United States and the European Union suspended assistance to the Palestinian government's cabinet and ministries after the Hamas-led government rejected the Quartet's principles of non-violence, recognition of Israel and respect for previous agreements between parties to Israeli-Palestinian conflict. As punishment for Hamas's electoral victory, Israel decided to withhold $54 million in monthly tax revenue owed to the PA, which barely covers the salaries of nearly 160,000 PA employees, in violation of the Paris Protocol signed in 1994 in conjunction with the Oslo Agreement. Jordan and Egypt are pressuring Hamas to accept the Quartet's principles. The US and the EU have vowed to continue humanitarian assistance, but with 75 per cent of schools and 60 per cent of healthcare facilities operated by the PA, a longer- term resolution is urgent. Abbas met EU Foreign Policy Chief Javier Solana last week to discuss possible ways the EU could channel funds to the Palestinians. France will raise the issue during talks with the Quartet on 9 May, said Jacques Chirac's spokesman Jerôme Bonnafont. "With regard to salaries, we could urgently study the creation of a trust fund managed, for example, by the World Bank and which would be the destination of aid destined for paying salaries," Chirac's spokesman said. So far the World Bank, the EU and Hamas have promised to consider the proposal, although the US has reservations. The Arab League is trying to sidestep US restrictions by making direct deposits into the accounts of PA employees. The monthly wage bill for the PA is approximately $118 million, and about one quarter of the population depends on these paycheques. Salaries for March and April have yet to be paid. Yet according to diplomats, the Arab Bank was reluctant to facilitate the transactions, concerned that transferring funds into individual accounts could prompt US sanctions. Regional banks are vulnerable to US pressure since they depend upon "correspondent" financial institutions to conduct daily transactions. Banks that defy US sanctions could have their US assets frozen and access to US financial markets denied. How is the process of isolation taking shape in Washington? The Palestinian Anti- Terrorism Act currently being considered by Congress, aimed at limiting assistance to the PA and to "promote the development of democratic institutions," seeks the "designation of territory controlled by the Palestinian Authority as terrorist sanctuary," the denial of visas for PA officials and the prohibition of PA representation in the US. Meanwhile, the Washington Institute for Near East Policy, a pro-Israel think tank with influence over US policy in the Middle East, boasts a new book on their Web site by former Institute fellow Matthew Levitt, "which exposes the real Hamas: an organisation that conducts social and political activity in the name of terror." Levitt analyses "recently declassified CIA, FBI and Department of Homeland Security reports" to expose the motivations behind Hamas. No mention of occupation, of course. Will all this pressure have an effect on the ground? In a poll conducted by Birzeit University on 19 April, 63 per cent of respondents said they believe the time is not right for Hamas to recognise Israel and that it should look for alternative sources of financing from Arab and Islamic countries, despite the international embargo. Support for Hamas stood at 38 per cent compared to 30 per cent for Fatah. "Its not about frustration or loyalty, it's Jerusalem," stated Mohamed Mustafa, a young journalist from Gaza City, when asked if he thought Palestinians in Gaza were becoming disenchanted with Hamas. "People will wait, watch and see.
