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February 25, 2006

Handicapping Hamas


by Loretta Napoleoni

Hamas' history is deeply intertwined with the last stretch of Arafat's life and his sudden death. It was the disappearance of Arafat's secret treasury (estimated between $700 million and $2 billion) that paved the way to Hamas' recent victory in the Palestinian elections. Everybody remembers the Fatah leadership's desperate, and eventually unsuccessful, attempt to gain access to its chairman's hidden millions while he lay dying in Paris. Arafat either took the Swiss bank account numbers to his grave or, perhaps, revealed them to his wife; whatever happened will remain one of the many mysteries of recent history. Fatah, without Arafat's millions to buy loyalties in the occupied territories, could not compete with Hamas.

Emerging during the Intifada in the 1980s, Hamas came into being to counter the PLO's politics with a mixture of Islamic fundamentalism and democratic principles. Since the group took inspiration from the Muslim Brotherhood and the Islamic Jihad in Egypt and Jordan, it developed strong links with these and other Islamic fundamentalist armed groups, such as the Lebanese Hezbollah. Its political agenda was in sharp contrast with that of the PLO. For instance, Hamas did not recognize the right of the PLO to create a secular state and therefore did not accept its role in peace negotiations with Israel. Because of its opposition to the PLO, Israel initially welcomed Hamas; it believed it could manipulate its leadership against Arafat. "Hamas is a creature of Israel," affirmed Arafat, "which at the time of Prime Minister [Yitzhak] Shamir gave it money and more than 700 institutions among them schools, universities, and mosques." Israel's initial support could not have been granted if Hamas was a terrorist organization. On the contrary, it was perceived as a political entity and not as a serious threat. In fact, there is no mention of the destruction of Israel in the original Hamas manifesto, as Ed McMillan Scott, the head of the EU election observers, clearly stated recently on the BBC's Today program.

When, at the onset of the Gulf War, Arafat supported Saddam Hussein, Saudi Arabia retaliated by terminating all financial assistance to the PLO. Instead, money sent to the occupied territories went to fund Hamas. The Hamas leadership used the unexpected income to strengthen its self-financing capability and to challenge Arafat's leadership in the Gaza Strip and the West Bank. When Arafat's support for Saddam caused the expulsion of thousands of PLO workers from various Arab countries, Palestinians began looking to Hamas as their new leader. As money flowed in, Hamas offered socio-economic protection to its members and followers. It provided bewildered Palestinians, inside and outside the occupied territories, with an alternative socioeconomic infrastructure.

Hamas used the money to set roots in the political milieu of Gaza and the West Bank. It poured funds into an extensive social services network that supported schools, orphanages, mosques, health care clinics, soup kitchens, and sports leagues in the poorest areas. As a result, its popularity is particularly high in the shanty towns of the Gaza Strip, where its followers number in the tens of thousands. It also gained support from trade unions and agricultural cooperatives, within hospitals, and among student unions. Its main activities have always been in the sectors of education and social welfare. According to Martin Kramer, an Israeli specialist on Islamic fundamentalism, Hamas takes care of Palestinians from birth to death.

In 2002, Hamas' budget in the occupied territories was estimated at several hundred million dollars, of which about 85 percent came from abroad; the rest was raised from among Palestinians in the occupied territories. However, these figures represent only a small fraction of Hamas' wealth. Though it still receives about $20-30 million a year from Iran and various ad hoc donations from Saudi Arabia (in April 2002, a telethon in Saudi Arabia raised $150 million for the Palestinians under siege in the occupied territories), more and more money is raised through Palestinian expatriates, private donors in Saudi Arabia and other oil-rich Gulf states. In 1998, after being freed by the Israelis, Sheik Ahmed Yassin, the spiritual leader of Hamas, set off on a four-month tour of Arab capitals. He was welcomed as a hero and collected donations totaling over $300 million.

Over the years, Hamas has been very careful to keep its political and militant wings separate. This distinction applies also to its financing. Donations from established charities are generally not used for military activities. Funds for the latter are provided by other sources: offerings from businessmen and donations gathered during conferences held in the U.S. These fundraising activities used to generate large revenues. In 1994, for example, at a meeting of the Muslim Arab Youth Association in Los Angeles, addressed by Sukri Abu Baker, chief executive of the Holy Land Foundation, $207,000 was collected for the families of Hamas warriors. During Thanksgiving 2000, the Islamic Association for Palestine the voice of Hamas in the U.S. organized a conference to raise $200,000 for the Palestinian martyrs. Anti-terrorist legislation in the West has now dried up this river of cash; however, Hamas continues to benefit from donations from sympathizers all over the world that reach the occupied territories via underground networks. The channels are several, ranging from suitcases full of cash to store value cards to Internet vouchers that are loaded with money electronically and then shipped to the occupied territories where they can be used on the net.

Though financially Hamas is more sound than the corrupted Fatah, it will be unable to provide the occupied territories with sustenance; in order to rule, Hamas will need the monthly $50 million in tax revenues collected at the border by Israel as well as the $235 million in aid from the U.S. and the $1 billion received annually from the EU and Western governments. With a budget of $1.9 billion, 25 percent unemployment, high inflation, and no growth, the population of the occupied territories will starve without financial aid. However, in the short term, Hamas is able to survive and to counteract America's and Israel economic ostracism. The Arab League will replace the $50 million per month in tax revenues Israel is refusing to hand over; donations from Arab and Muslim countries will circumvent Israeli banks by reaching the occupied territories via Lebanese and Jordanian banks; euros instead of dollars will be sent to avoid the restrictions imposed by the United States, which, thanks to the PATRIOT Act, monitors and has the potential to block any dollar transaction in the world. Even charities will be able to avoid the new anti-Hamas campaign in the West by entering swaps with fellow charities in the Muslim world; e.g., a New York-based charity sends money collected for Hamas to the victims of the Pakistani earthquake and its equivalent in Malaysia sends to Hamas the funds gathered for the Pakistani earthquake.

The longer Hamas governs against America's opposition and Israel's economic ostracism, the stronger its claim to power will be. Financially, it can last for at least six months, if not longer. The eyes of the entire world are focused on the next move, and Hamas' leadership knows it, which is why it has chosen Ismail Haniya, a moderate, pragmatic politician, as its prime minister. The message it is sending to the world is clear and simple: democracy brought us here, and it is with the ballot not the bullet that we shall rule. For once, the West should stop shouting and listen instead.

 

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Born and raised in Rome, Loretta Napoleoni was a Fulbright scholar at Johns Hopkins University's Paul H. Nitze School of Advanced International Studies (SAIS) in Washington, D.C., and a Rotary Scholar at the London School of Economics (LSE). She has an M.Phil. in terrorism from LSE, a master's in international relations from SAIS, and a Ph.D. in economics from the University of Rome.

Napoleoni is an expert on the financing of terrorism and is well known internationally for having calculated the size of the terror economy. She is the author of the best-selling book Terror, Incorporated (Seven Stories Press), which was translated into 12 languages.

Visit her Web site.

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