Gaza faces major cash shortage after war destroys banking system

Fares Akram

Heba al-Helou, a Palestinian sheltering with her two daughters in a tent in Rafa, finally managed to access some desperately needed money this week after spending days jostling in queues at a currency exchange.
 

She and many more of the estimated 1.5 million civilians taking refuge in the southern Gazan city have found that provisions such as food are becoming more readily available, especially as an increasing number of aid trucks enter the enclave and Israel starts to withdraw ground forces. But a major cash shortage across the whole of the coastal strip makes accessing them a different story.  
 

“There are no banks, and most of the currency shops are closed and we badly need the cash,” the 28-year-old said.
 

Within weeks of Hamas’s Oct. 7 attack that Israel says killed almost 1,200 people, Heba and her family were forced to flee south from their home in Gaza City to Rafah, by the Egyptian border, as Israel’s military began their retaliatory campaign. Air and ground assaults have left many urban areas in ruins and have so far killed more than 33,000 Palestinians, according to health authorities in the Hamas-run territory. 
 

Much of Gaza’s infrastructure has been rendered dysfunctional by the ongoing six-month war — including the banking system. Israel has yet to embark on an invasion of Rafah itself — an assault firmly opposed by the US — though Prime Minister Benjamin Netanyahu says that’s still the plan if Hamas is to be destroyed entirely.
 

After Israel announced a military withdrawal from Khan Younis, Gaza’s second-largest city, at the weekend, more of the humanitarian aid that’s been languishing at border crossings is being allowed in. Some 419 trucks were inspected by Israel and allowed into the enclave on Monday, the highest single-day number since the start of the war, according to the Israeli military.

Yet demand for supplies is high, and ordinary Gazans can’t buy what they need. The situation is urgent: The United Nations warned weeks ago that tens of thousands of people are on the brink of famine, while at least 27 children have already died from malnutrition and thirst. 
 

Banks Destroyed
 

Rafah’s only functioning ATM, run by the Bank of Palestine, has been the sole source of cash available to Palestinians sheltering in the city, according to people in the area. 
 

Israel’s military has destroyed the vast majority of banks and ATMs across Gaza, according to the Palestinian Monetary Authority, based in Ramallah in the West Bank. None of the lenders in northern Gaza, which Israel has cut off from the rest of the narrow coastal strip, have electricity or internet let alone any manpower, according to officials at the authority.
 

Prior to the war almost 400 individual bank branches and bank offices were licensed and operating across Gaza and the West Bank, according to data on the PMA’s website.  
 

The World Bank and the UN have estimated that the cost of the destruction wrought on Gaza overall is about $18.5 billion, almost equivalent to the total economic output of the West Bank and Gaza in 2022.
 

In the Gazan town of Deir al-Balah, where the only working ATM still frequently malfunctions, thousands of people stand in line each day to use it, residents there say.
 

Profiteering 
 

Taking advantage of this cash crunch is a small industry of currency dealers who charge a 20% fee for giving cash to anyone who can move bank funds online.
 

This is how al-Helou ultimately managed to get her money — she made a transfer using a smartphone wallet to a dealer who then passed on the funds to her in cash, siphoning 20% for himself.
 

“The lines were endless and it was chaotic, with people jostling and even fighting,” she said by phone. 
 

Yousef Emad, who was also displaced from Gaza City and briefly worked at one of the currency shops in Rafah before it ran out of money, said the disorder is deliberately stoked by foreign-exchange dealers who monopolize the ATMs to hoard cash.

He said the dealer he worked for would send groups of employees to ATMs to drain them of cash using multiple debit cards so that ordinary Gazans would be forced into using his service. 

--With assistance from Fadwa Hodali.