According to residents, aid workers and banking sources, a shortage of banknotes is gripping Gaza, fueling criminal gangs and profiteering, after Israel blocked cash imports and after most of the enclave's banks were damaged or destroyed during the war, according to Reuters.
After more than seven months of Israeli bombardment, only a few ATMs remain in operation inside the strip, most of them in the southern city of Rafah, home to some 1,4 million Palestinians. The Israel Defense Forces (IDF) ordered civilians to evacuate parts of the southern city, sparking fears of an imminent offensive. Israeli tanks entered the residential areas there today.
Stocks of essential goods returned to some markets in April and early May for the first time in months after Israel bowed to international pressure to release more aid trucks amid famine warnings.
But residents and aid workers say many people did not have the cash to buy supplies. Now residents say Israel's offensive in Rafah has once again dried up supplies and driven up prices.
Hundreds, sometimes thousands, of desperate people crowd in front of ATMs, often waiting days for their turn. Armed gangs sometimes demand a fee to be granted priority access, taking advantage of the absence of Palestinian police, three Western aid workers and seven residents told Reuters.
Abu Ahmed, 45, a resident of Rafah, said he waited for up to seven days and became so frustrated that he turned to gang members, who are sometimes armed with knives and guns, for help.
"I paid 300 shekels ($80) of my salary to one of them to access the ATM and get money," said Abu Ahmed, who asked that his last name not be used for fear of reprisals. He earns 3.500 shekels a month as a civil servant.
Three Western aid workers described the gangs as makeshift groups that have sprung up across the Belt as desperation mounts.
As of May 13, only five branches and seven ATMs remained operational, primarily in Rafah, according to the Palestine Institute for Economic Policy Research, a non-profit organization based in the West Bank. Before the war, Gaza had 56 bank branches and 91 ATMs.
The Palestinian economy runs on the Israeli shekel. Gaza's financial system is almost entirely dependent on Israel, which has to approve large transfers and the movement of cash into the enclave, bankers say.
Israel has blocked cash imports into Gaza since the start of the war in October 2023, according to the Palestinian Monetary Authority (PMA) and the Association of Banks of Palestine (ABP), a non-profit organization based in the West Bank city of Ramallah.
Adnan Alfalijetu, manager of the Palestinian Islamic Bank in Gaza, which operates the largest Islamic banking network in the Palestinian territories, said his bank has no more money in Gaza.
"We have now reached the point of complete lack of liquidity. It cannot get worse," he said.
Israel's central bank did not respond to questions about whether the transfers were blocked. He states that there are no Israeli banks in Gaza and that in the past shekels circulated there due to trade with Israel and Palestinian workers in Israel.
COGAT, the Israeli Defense Ministry agency responsible for coordinating the delivery of aid to the Palestinian territories, did not respond to questions from Reuters.
Ismail al Tavabta, director of the Hamas-run government media office, said Palestinian police were trying to protect the ATMs, despite coming under fire from Israeli forces.
A Hamas official, who declined to be named, said the police have been keeping a low profile and only carry out surprise raids or patrols in certain locations after officers have been targeted by Israeli attacks.
In February, the top US diplomat involved in humanitarian aid to Gaza said Israeli forces killed Palestinian police protecting a UN convoy.
The IDF did not respond to a request for comment on whether its forces targeted the police officers. Reuters could not determine how many policemen were killed during the war.
Residents say some traders are profiting from the shortage. Some currency exchange owners, who can cash Western Union transfers, and even some pharmacists who have credit card machines, charged high fees to access the money, according to two sources.
Azmi Radwan, a trade union representative for the UN agency for Palestine refugees UNRVA, said some traders charge their staff in Gaza City and the north a 20 or 30 percent commission to cash their wages for them, in the absence of banks.
"This is very dangerous," he said. "A quarter of the salary that should feed someone's children goes to these traders".
UNRVA employs about 13.000 people in Gaza.
Sometimes, after refusing a fee, money changers will say there are no shekels available and make payments in dollars at an unfavorable exchange rate, said resident Abu Muhej, who also asked not to be identified by his full name for security reasons.
Meanwhile, hundreds of millions of shekels are stranded in bank vaults in northern Gaza due to a lack of armored vehicles and fear of looting, according to three UN and bank sources.
Bashar Odeh Yassin, director general of the Association of Banks of Palestine (ABP), said the situation was still too precarious for bank employees or international bodies to transfer money, according to Reuters.
"There is a real problem in moving cash from northern Gaza to the south and in bringing cash out of the Gaza Strip," he said.
Basic necessities such as medicine remain chronically scarce in the enclave, which is also plagued by long power cuts and fuel shortages.
The World Food Program warned in April of the risk of famine in the northern parts of Gaza. Israel opened a third crossing this Sunday to allow more humanitarian aid into the north, but closed two checkpoints in the south, including the vital Rafah crossing into Egypt, halting the delivery of aid there.
Fierce fighting took place in the north and south of Gaza on Monday. Efforts by Egyptian, Qatari and American mediators to secure a ceasefire have so far been unsuccessful.
"There is more food that has been provided, but there is definitely a lack of cash for people to buy it," said Rick Piperkorn, the World Health Organization (WHO) representative for the Palestinian Territory.
Many people traded canned food or other aid for items they lacked or sold them for cash, residents told Reuters.
Aya, a resident of Gaza City who was first displaced to Rafah and then to central Gaza due to Israeli operations, received ten blankets in aid packages. As her family already had something, she sold 8 blankets to buy chocolate and Nescafé for her sisters and brothers, she said.
"Despite the misery, I tried to make them happy," she said.
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