UN Aid Cash App in Gaza: Hamas Profits from Assistance Meant for Civilians

UN Aid Cash App in Gaza: Hamas Profits from Assistance Meant for Civilians

Recent insights reveal that the United Nations’ monthly cash transfers to Gaza inadvertently bolster the Hamas terrorist organization. Financial expert Eyal Ofer highlighted that Hamas and its associated traders exert control over the funds directed towards the enclave. This manipulation of aid money poses a significant challenge for the local population who are in desperate need of assistance.

Hamas’s Manipulation of Aid Funds

According to Ofer, Hamas leverages its authority as the de facto ruler of Gaza to extract financial benefits from aid sent by U.N. agencies to civilians through available apps. “The aid system is being manipulated by Hamas and its affliated traders,” he stated. “Hamas operates largely behind the scenes, utilizing their dominance over major merchants and crime rings to establish a shadow banking system within Gaza.” This shadow banking system complicates the distribution of aid funds meant to benefit those in need.

Financial Aid’s Impact on Gaza’s Economy

International organizations contribute significant sums to Gaza’s economy each month. For example, the U.N.’s World Food Programme transfers approximately $18.43 million to around 82,636 families, averaging around $209 per family. UNICEF’s monthly assistance amounts to about $5 million, benefiting at least 20,000 families.

However, recipients often face challenges accessing the funds. Gaza resident Shahab Yousef shared his experience, stating, “I go to the market and meet people whose job it is to provide cash in exchange for a fee. The fee is 20–30%. If I transfer 1,000 shekels, I get back 700 shekels. For large purchases, I use digital methods, but at the market, I rely on cash and end up losing 30 percent every time.” This high cost imposes an additional burden on families struggling to make ends meet.

Financial Strain and Rising Costs

Another resident, Nidal Qawasmeh, expressed frustration with the current cash situation, stating, “These providers charge exorbitant fees just to deliver cash. I simply want to care for my family, but everything costs more now.” The typical amount families receive per month is around $270, reflecting 80% of the Survival Minimum Expenditure Basket, as reported by UNICEF.

Despite substantial financial aid reaching over half of Gaza’s households, the region grapples with severe food insecurity and soaring inflation rates, currently standing at 91% and 118% as of January 2024. Ofer remarked, “Hamas controls much of the cash flowing into Gaza through various channels. Recipients must convert app-based funds into cash for local transactions, which involves steep fees, often charged by money changers connected to Hamas or its allies.” This creates a cycle that further diminishes the intended impact of humanitarian aid.

Challenging Proposals for Economic Reform

Recently, Israel’s Foreign Minister, Gideon Sa’ar, warned about Hamas’s dependence on billions of shekels in cash to sustain its economic strength. He proposed canceling the circulation of 200-shekel bills introduced into Gaza to weaken Hamas’s financial infrastructure. However, the Bank of Israel dismissed the suggestion, citing technical challenges and feasibility issues.

Ofer’s research indicates that recipients are losing between 20% to 35% of their aid simply to access cash. He stated, “In videos from Gaza, traders refuse to accept app funds and insist on cash, knowing customers will lose at least 20% in the process.” This very issue underscores the challenges families face as they try to navigate an already strained financial landscape.

The Economic Reality of Humanitarian Aid

Peter Gallo, an international lawyer and former investigator at the U.N., pointed out, “If investigators can understand what is happening, aid agencies likely either knew or should have been aware of these manipulations. The fees involved are effectively extortion.” He described the situation as a form of a “revolutionary tax,” indicating that while aid agencies may argue they have limited options, transparency could have been more effective from the outset.

A UNICEF spokesperson acknowledged the cash liquidity crisis in Gaza, attributing it to the ongoing conflict’s impact on the banking system. To address these issues, UNICEF introduced fully digital cash payments via e-wallets in May 2024, eliminating the need for physical cash transactions. This approach allows beneficiaries to acquire essential goods without incurring exchange fees.

Innovative Solutions and Ongoing Challenges

The UNICEF spokesperson stated, “Our digital cash program enables recipients to purchase food, hygiene products, and medicine without handling physical money. This program adheres to stringent impartiality standards, ensuring that no outside parties influence its execution.”

Currently, more than 1.8 million people in Gaza are facing extreme food insecurity, with nearly half of them being children. The rise in acute child malnutrition is alarming, emphasizing that UNICEF’s humanitarian cash transfer program is critical for survival. With a monthly budget averaging USD 5 million, some families are supported, but the impact on the local economy remains minimal.

A Call for Accountability

Despite attempts by international organizations to aid Gaza, Gallo asserted that turning a blind eye to Hamas’s exploitation of aid funds is unacceptable. “The U.N. Security Council has addressed terrorist financing since 2001, yet agencies continue to overlook how Hamas profits from this funding,” he lamented.

The ongoing predicament in Gaza highlights the necessity for transparent and innovative humanitarian strategies to ensure that aid reaches those in need without enabling exploitative practices. As the situation continues to evolve, it is crucial for international organizations to seek more effective solutions to deliver assistance where it is most needed.