Cable Weaving

Stories woven out of cables

Cashless in Gaza

See related story line: Still cashless in Gaza

Hover over a circle for cable information, or click for interactive graph

06JERUSALEM1286 (2006-03-29, UNCLASSIFIED//FOR OFFICIAL USE ONLY): "FIL MISH-MISH": PA ISSUES TENDER FOR MOBILE OPERATOR IN PALESTINIAN TELECOM MARKET06JERUSALEM4239 (2006-09-20, CONFIDENTIAL): KUWAITI COMPANY GRANTED SECOND PALESTINIAN MOBILE PHONE LICENSE06JERUSALEM4713 (2006-11-03, CONFIDENTIAL//NOFORN): COMPANY SHORT-LISTED FOR RADIO TRUNKING BID IN WEST BANK/GAZA WANTS TO USE MOTOROLA EQUIPMENT; OFAC LICENSE MAY BE REQUIRED07JERUSALEM1453 (2007-07-13, CONFIDENTIAL): UPDATE ON PALESTINIAN MOBILE TELECOM TENDER - GOI FREQUENCY ALLOCATION WOULD BRING USD 355 M TO PA TREASURY07JERUSALEM1575 (2007-07-30, UNCLASSIFIED//FOR OFFICIAL USE ONLY): OPIC-BACKED LOAN GUARANTEE PROGRAM LAUNCHED07JERUSALEM1921 (2007-09-12, UNCLASSIFIED//FOR OFFICIAL USE ONLY): POST ADVOCATES FOR MOTOROLA IN ADVANCE OF SPECTRUM ALLOCATION FOR SECOND MOBILE PHONE NETWORK07JERUSALEM504 (2007-03-15, CONFIDENTIAL): UPDATE ON PALESTINIAN TELECOMMUNICATIONS TENDERS07TELAVIV3201 (2007-11-02)07TELAVIV3575 (2007-12-19)08JERUSALEM1362 (2008-07-28, UNCLASSIFIED): UPDATE ON OPIC MORTGAGE FINANCE FACILITY08JERUSALEM1372 (2008-07-29, CONFIDENTIAL): WATANIYA'S WAIT IS OVER: MOBILE TELECOM PROVIDER HAS SPECTRUM, LOOKS TO BEGIN OPERATIONS08JERUSALEM1449 (2008-08-07, CONFIDENTIAL): PA BARELY MAKES JULY SALARIES THANKS TO THE UAE AND A LOAN08JERUSALEM169 (2008-01-31, CONFIDENTIAL): UNIONS STRIKE IN REACTION TO PM FAYYAD'S REQUIREMENT THAT WEST BANKERS PAY THEIR UTILITY BILLS08JERUSALEM1795 (2008-09-25, CONFIDENTIAL): UPDATE ON WATANIYA MOBILE LAUNCH IN THE WEST BANK08JERUSALEM1832 (2008-10-03, CONFIDENTIAL): PALESTINIAN TELECOM: PA WANTS WIMAX FREQUENCY08JERUSALEM1840 (2008-10-03, CONFIDENTIAL): PA PAYS SEPTEMBER SALARIES EARLY; GAZA CASH REMAINS LOW08JERUSALEM1849 (2008-10-07, UNCLASSIFIED//FOR OFFICIAL USE ONLY): GAZA FOOD AND FUEL: MORE DIESEL THROUGH THE TUNNELS08JERUSALEM1886 (2008-10-16, CONFIDENTIAL): HAMAS FIRMLY ENTRENCHED IN GAZA; SMUGGLING AND UNEMPLOYMENT NOW THE ECONOMIC NORMS08JERUSALEM1943 (2008-10-23, CONFIDENTIAL): OPIC'S PLAN FOR AFFORDABLE MORTGAGES IN THE WEST BANK08JERUSALEM2084 (2008-11-20, CONFIDENTIAL): FAYYAD RAISES CONCERNS ABOUT CORRESPONDENT BANKING SERVICES08JERUSALEM2230 (2008-12-12, UNCLASSIFIED//FOR OFFICIAL USE ONLY): OPIC PROMOTES POLITICAL RISK INSURANCE TO THE PALESTINIAN MARKET08JERUSALEM2274 (2008-12-19, CONFIDENTIAL): NEW "HAMAS BANK" TO OPEN IN GAZA DECEMBER 2808JERUSALEM235908JERUSALEM350 (2008-02-26, CONFIDENTIAL): ABU MAZEN'S ECONOMIC ADVISOR ON OPIC, TELECOM, HOUSING AND GAS PROJECTS08JERUSALEM468 (2008-03-14, CONFIDENTIAL): PA REPORTS CLEARANCE REVENUES CONTINUE TO BE HELD FOR TWO MONTHS BUT TIMING OF TRANSFERS MORE PREDICTABLE08JERUSALEM490 (2008-03-20, UNCLASSIFIED//FOR OFFICIAL USE ONLY): OPIC'S PROPOSED HOUSING MORTGAGE FACILITY A CRITICAL ELEMENT IN ADVANCING U.S. OBJECTIVES08JERUSALEM511 (2008-03-25, UNCLASSIFIED//FOR OFFICIAL USE ONLY): PA HOLDING THE BUDGET LINE, BUT DECLINE IN DOLLAR INCREASES FISCAL GAP08JERUSALEM586 (2008-04-04, CONFIDENTIAL//NOFORN): SECOND PALESTINIAN MOBILE PHONE PROVIDER STILL WAITING FOR SPECTRUM08JERUSALEM588 (2008-04-04, CONFIDENTIAL): FATAH-LED UNIONS INCREASE EFFORTS TO BRING DOWN FAYYAD'S GOVERNMENT08JERUSALEM615 (2008-04-08, CONFIDENTIAL): PA EMPLOYS REGULATIONS AND THE COURTS AGAINST PUBLIC SECTOR STRIKERS08JERUSALEM628 (2008-04-10, UNCLASSIFIED//FOR OFFICIAL USE ONLY): PA STRIKES CONTINUE DESPITE COURT ORDER08JERUSALEM653 (2008-04-15, CONFIDENTIAL): ABBAS CHAIRS PA'S WEEKLY CABINET MEETING IN PUBLIC SHOW OF SUPPORT FOR FAYYAD08JERUSALEM657 (2008-04-16, CONFIDENTIAL): PA STRIKE ENDS; FAYYAD PLEASED WITH OUTCOME08JERUSALEM725 (2008-04-29, UNCLASSIFIED): PA FISCAL UPDATE: WESTERN DONORS CARRYING THE LOAD, BUT PROBLEMS AHEAD08JERUSALEM916 (2008-05-30, UNCLASSIFIED//FOR OFFICIAL USE ONLY): DEPUTY SECRETARY KIMMITT'S MEETINGS WITH PALESTINIAN PRESIDENT ABBAS AND PM FAYYAD08SECSTATE8313608STATE122043 (2008-11-17, CONFIDENTIAL): DEMARCHE REQUEST: SEEKING HALT TO TERMINATION OF CORRESPONDENT BANKING SERVICES08STATE25604 (2008-03-12)08STATE25706 (2008-03-12)08TELAVIV1075 (2008-05-22, CONFIDENTIAL): GOI STILL UNCERTAIN THAT POSTAL BANK WILL MANAGE ISRAELI-PALESTINIAN CORRESPONDENT RELATIONSHIP08TELAVIV1508 (2008-07-11, CONFIDENTIAL): ISRAELI BANK DETERMINED TO CUT GAZA BANKING TIES08TELAVIV1742 (2008-08-08, SECRET): TERRORISM FINANCE: GOI SAYS NOW IS THE TIME TO ACT AGAINST THE CENTRAL BANK OF IRAN AND INCREASES ITS FINANCIAL ISOLATION OF GAZA08TELAVIV2144 (2008-09-19)08TELAVIV2291 (2008-10-07, CONFIDENTIAL): ISRAELI-PALESTINIAN CORRESPONDENT BANKING RELATIONSHIP AT A CROSSROADS08TELAVIV2447 (2008-11-03, SECRET): CASHLESS IN GAZA?08TELAVIV2452 (2008-11-03, CONFIDENTIAL): NOBODY REALLY WANTS TO BE BANKING CORRESPONDENT TO THE PALESTINIANS: RELATIONSHIP REMAINS IN THE BALANCE08TELAVIV2603 (2008-11-24, CONFIDENTIAL): GAZA CASH CRISIS: CBG FISCHER CALLS FOR USG ASSISTANCE08TELAVIV2713 (2008-12-04, SECRET): GOI CALLS GAZA CASH CRISIS A HAMAS PLOY08TELAVIV2859 (2008-12-19, SECRET): ISRAEL'S NSC SUPPORTS MINIMUM MONTHLY CASH FOR GAZA; WANTS USG HELP TO SELL THE IDEA08TELAVIV559 (2008-03-11, CONFIDENTIAL): ISRAEL EXPEDITING CUSTOMS REVENUE TRANSFERS TO PA08TELAVIV624 (2008-03-18, CONFIDENTIAL): ISRAELI-PALESTINIAN CORRESPONDENT RELATIONSHIP IN STABLE BUT CRITICAL CONDITION08TELAVIV661 (2008-03-20, CONFIDENTIAL): BOI GOVERNOR FISCHER "FRUSTRATED" BY ISRAELI-PALESTINIAN BANKING RELATIONS09DOHA31 (2009-01-14, CONFIDENTIAL): QATAR ISLAMIC BANK CEO: NO TIES TO NEW HAMAS BANK09JERUSALEM1265 (2009-07-22, CONFIDENTIAL): RECENT TRENDS IN WEST BANK VIOLENCE09JERUSALEM1282 (2009-07-27, UNCLASSIFIED//FOR OFFICIAL USE ONLY): WEST BANK HOUSING PROJECTS: FINANCING ON TRACK, BUT HURDLES REMAIN09JERUSALEM1323 (2009-07-31, CONFIDENTIAL): WATANIYA LAUNCH IN JEOPARDY09JERUSALEM1463 (2009-08-18, UNCLASSIFIED//FOR OFFICIAL USE ONLY): TRADE DEVELOPMENT AGENCY EXPLORES POTENTIAL FOR STUDIES ON INFRASTRUCTURE PROJECTS09JERUSALEM1497 (2009-08-24, CONFIDENTIAL): WATANIYA BOARD SETS SEPT 15 DEADLINE FOR SPECTRUM ALLOCATION09JERUSALEM1498 (2009-08-24, CONFIDENTIAL): SAUDI SUPPORT PROVIDES BRIEF RESPITE FROM PA BUDGET WOES09JERUSALEM1623 (2009-09-09, SECRET): PM FAYYAD: SETTLEMENTS AND PALESTINIAN ECONOMIC PRIORITIES09JERUSALEM1711 (2009-09-22, CONFIDENTIAL): PALTEL EXECUTIVES ON GAZA OPERATIONS, WATANIYA, AND THE TROUBLED ZAIN MERGER09JERUSALEM1888 (2009-10-16, CONFIDENTIAL//NOFORN): WATANIYA QUIETLY BEGINS OPERATIONS, AIMS TO CREATE "FACTS ON THE GROUND"09JERUSALEM2072 (2009-11-18, UNCLASSIFIED//FOR OFFICIAL USE ONLY): TRADE DEVELOPMENT AGENCY FOCUSES ON INFORMATION TECHNOLOGY, ENERGY SECTOR PROJECTS09JERUSALEM2197 (2009-12-04, CONFIDENTIAL): WATANIYA PALESTINE: ONE MONTH POST-LAUNCH09JERUSALEM259 (2009-02-06, UNCLASSIFIED//FOR OFFICIAL USE ONLY): THE PA 2009 BUDGET, GAZA RECONSTRUCTION, AND CASH09JERUSALEM386 (2009-03-06, CONFIDENTIAL): WATANIYA MOBILE PHONE LAUNCH DELAYED INDEFINITELY09JERUSALEM466 (2009-03-13, CONFIDENTIAL): PA'S HOUSING RECONSTRUCTION PLAN HINGES ON THE CROSSINGS09JERUSALEM618 (2009-04-06, SECRET//NOFORN): FAYYAD INTERVENES IN TELCOM ISSUES09JERUSALEM690 (2009-04-23, CONFIDENTIAL): HAMAS-AFFILIATED "BANK" OPENS IN GAZA; PMA DECLARES IT ILLEGAL09TELAVIV2808 (2009-12-24, CONFIDENTIAL): TREASURY ACTING A/S BAUKOL'S MEETING WITH BOI GOVERNOR STANLEY FISCHER09TELAVIV471 (2009-02-27, CONFIDENTIAL): GOI WILLING TO PASS THE BUCK BUT NOT THE SHEKEL09TELAVIV600 (2009-03-11, SECRET): GOI PROPOSES INTERNATIONAL MECHANISM FOR FUNDS TO GAZA10JERUSALEM134 (2010-01-21, UNCLASSIFIED): TDA GRANT SUPPORTS RENEWABLE ENERGY, PALESTINIAN ENTREPRENEUR10JERUSALEM40 (2010-01-08, CONFIDENTIAL): PALESTINIAN MOBILE OPERATORS ASK FOR HELP IN AREA C12345678910

Legend

Summary

Work in progress... forks are welcome.
Note that this is the same graph that the "Fil mish-mish" story line comes from, and this demonstrates that there can be several loosely-related stories in a single graph.

Story line

1) 08TELAVIV624 2008-03-18 CONFIDENTIAL

ISRAELI-PALESTINIAN CORRESPONDENT RELATIONSHIP IN STABLE BUT CRITICAL CONDITION

After Gaza was declared a "hostile entity" by the GOI in June of 2007, [Israeli banks] Hapoalim and IDB argued that it was impossible to verify with certainty that standard banking transactions carried out on behalf of Palestinian banks in Gaza were not benefiting a designated terrorist organization (Hamas).

The problem seems to be a legal one

The banks' real concern is their liability and court costs in an ongoing civil suit against Arab Bank in U.S. courts. They hoped to use the correspondent issue and the threat of collapsing the Palestinian financial system to pressure the GOI and USG to intervene and force a settlement.

The history of this legal case is a long chain of "designation by proxy":

  • Hamas [the democratically elected ruling party] gets designated as a terrorist organization
  • IDF suspects that the Ramallah branch of Arab Bank deals with Hamas, and confiscates funds in connection with the investigation.
  • The investigation "designates" Arab Bank as a "Hamas banker" and serves as ground to a US lawsuit against the bank by an Israeli group of hundreds of terror victims and their families. [1]
  • Arab Bank "designates" Israeli banks Hapoalim and IDB as the processors of the "terrorist transfers" through their correspondent accounts. The Israeli banks don't believe such claims would stand in court, but they claim that
    The legal fees and demands on human resources are a serious burden
  • Israeli banks threatened to cut ties with Palestinian banks in order to minimize exposure to similar lawsuits in the future. There's also another reason:
    Instead of fighting in court, [IDB's legal advisor Amnon] Lorch said that IDB would prefer that Arab Bank settle the case. He implied that IDB's threats to cut off correspondent banking with Palestinians were intended to force such a solution.
  • Gazan economy becomes a victim of "collateral designation"

[1] Six years after the raid, the IDF formally admits Arab Bank and/or its employees had no involvement in terror, but the US lawsuit is still ongoing (as of July 2013), running on "designation fume".

2) 08TELAVIV1508 2008-07-11 CONFIDENTIAL

ISRAELI BANK DETERMINED TO CUT GAZA BANKING TIES

Bank Hapoalim (BH) informed the Bank of Palestine (BOP) in a July 6 letter that it will no longer provide it with cash transfer services. The decision was made independent of any consultation with or approval by the GOI or the Bank of Israel (BOI) and was triggered by a BOP request for a NIS 25 million transfer in early July.

3) 08TELAVIV1742 2008-08-08 SECRET

TERRORISM FINANCE: GOI SAYS NOW IS THE TIME TO ACT AGAINST THE CENTRAL BANK OF IRAN AND INCREASES ITS FINANCIAL ISOLATION OF GAZA

Udi Levi [from Israel's National Security Council (NSC)] ... said that the GOI maintains information to implicate the CBI [Central Bank of Iran] in 1) transferring money without the use of Swift to obfuscate the identities of the parties transmitting and receiving money, 2) planning to purchase undesignated banks using false names through which it could assist Iranian enterprise in circumventing sanctions, and 3) acting on behalf of designated Iranian banks such as Bank Melli and Bank Saderat [2] to execute transactions that would otherwise be prohibited. On the last point, DAS Glaser mentioned that if any of this activity were occurring in London, such information could be key to persuading an otherwise highly cautious UK to take action. The Israelis said that they would look into that question.

[2] This is a good example of the "contagious" effect of designation: Bank Saderat was one of the two Iranian banks released by the EU general court in 2013 (in both cases, CableGate leaked cables were accepted by the court as evidence). At the time, Bank Saderat was designated. This made it possible to accuse CBI of collaborating with it.

Regarding liquidity in Gaza:

econoff learned that the BOI and Israeli Defense Forces (IDF) were operating under a principle of not permitting any additional liquidity into Gaza. ... GOI intelligence agencies generally believe that PA salaries paid in Gaza actually make their way into the hands of Hamas; [3] therefore, the PA argument that the salaries meet the mutually beneficial goal of bolstering Fatah does not impress the Israelis. While Israeli officials frequently express their doubts with regard to PA statistical assessments of the state of the economy in Gaza, whether the PA is able to meet its salary commitments in Gaza appears of little concern to the GOI.

[3] Note: since 2007, PA (at least in the west bank) is Fatah-led, and is considered an ally by both GOI and USG. It's in their interest [at least officially] to strengthen it and weaken Hamas.

4) 08TELAVIV2291 2008-10-07 CONFIDENTIAL

ISRAELI-PALESTINIAN CORRESPONDENT BANKING RELATIONSHIP AT A CROSSROADS

On Sunday, September 29, Bank Hapoalim (BH), one of only two Israeli commercial banks providing correspondent services to Palestinian banks, informed the Bank of Israel (BOI) that it would end its business relationship and cease all services to Palestinian commercial banks on November 30. Esther Deutch, Chief Legal Advisor at [IDB — Israel] Discount Bank, told econoff that while no formal decision has yet been made, Bank Hapoalim's move is likely to inspire Discount to follow suit within the next few weeks.

5) 08TELAVIV2447 2008-11-03 SECRET

CASHLESS IN GAZA?

Israeli officials reject the PA,s argument that denying banks the liquidity to pay PA salaries in full bolsters the Hamas regime. While some acknowledge the gains to Hamas from a weakened formal banking sector in Gaza, they argue that such gains are small relative to the cost of giving Hamas greater access to shekels or the economic benefits they bring to Gazans.

The words "gains" and "cost" are (of course) from GOI's perspective, but what about the impact of cash shortage on the Gazan in the street?

Israeli officials have confirmed to econoffs on multiple occasions that they intend to keep the Gazan economy on the brink of collapse without quite pushing it over the edge

Another example of this approach can be found at 10TELAVIV413 (not on this graph):

Given the separation between Hamas and the PMA-regulated private banks, Shin Bet [Israeli security agency] assesses there to be little connection between these banks' stability and Israel's counter-terrorism goals. In the short-term, security concerns from a decrease in confidence in these banks by average Gazans is negligible for Israel.

as in: "I can stand on your neck for quite a while without losing balance" :)

6) 08STATE122043 2008-11-17 CONFIDENTIAL

DEMARCHE REQUEST: SEEKING HALT TO TERMINATION OF CORRESPONDENT BANKING SERVICES

The Department requests that Embassy Tel Aviv demarche Stanley Fischer, Chairman of the Bank of Israel (BOI), as soon as possible prior to November 30 and attempt to forestall the threatened termination of correspondent banking services for Gazan branches of Palestinian banks.

7) 08TELAVIV2713 2008-12-04 SECRET

GOI CALLS GAZA CASH CRISIS A HAMAS PLOY

[Counterterrorism Finance Bureau Director at the National Security Council (NSC) Udi] Levi did say that the GOI is considering a policy to permit about NIS 40 million in new liquidity to enter the Gaza Strip banks on a monthly basis. ... However, Levi noted GOI intelligence has indications that Gaza banks are being forced by Hamas to underreport their true reserve holdings ... He posited that the present pre-Eid crisis might be an attempt by Hamas to further consolidate its power in Gaza though he was vague on how the crisis would forward the Hamas agenda. ... Of greater concern is Levi's claim to have new evidence that the PA's current Gaza salaries list is tainted by Hamas sympathizers.

8) 08JERUSALEM2274 2008-12-19 CONFIDENTIAL

NEW "HAMAS BANK" TO OPEN IN GAZA DECEMBER 28

Hamas has announced the "licensing" of a new bank, the Islamic National Bank (INB), in the Gaza Strip. Palestine Monetary Authority (PMA) Governor Jihad al-Wazir considers the bank an illegal entity, and said the PMA will launch a public campaign against it. He said Hamas is capitalizing on GOI restrictions on cash shipments to Gaza

At last — GOI's efforts to choke Gaza's economy are "fruitful" :)

9) 08TELAVIV2859 2008-12-19 SECRET

ISRAEL'S NSC SUPPORTS MINIMUM MONTHLY CASH FOR GAZA; WANTS USG HELP TO SELL THE IDEA

Note: This cable was sent less than 4 hours after 08JERUSALEM2274. The cable doesn't discuss the new "Hamas bank". It stands to reason that the TELAVIV post wasn't aware of its announcement at the time.

Israeli NSC Counterterrorism Finance Director Udi Levi on December 17 to discuss GOI efforts to establish a minimum monthly cash transfer to Gaza banks. Levi agreed that a complete collapse of the banking system would not serve Israel's security interests, but warned that shekels entering Gaza were being funneled to Hamas in large quantities through various methods.

However

[Foreign minister]Tzipi Livni, who opposes any cash transfers to Gaza, has asked the DG at the MFA to determine if the GOI has a legal means of revoking its recognition of the PMA as it applies to Gaza.

Operation "Cast Lead"

2008-12-27 to 2009-01-18

10) 09TELAVIV471 2009-02-27 CONFIDENTIAL

GOI WILLING TO PASS THE BUCK BUT NOT THE SHEKEL

econoff contacted David Zaken, Assistant Supervisor of Banks and Head of Off-Site Examination and Licensing at the Bank of Israel (BOI), to lobby for GOI approval of a transfer of funds to Gaza banks in March. Zaken told econoff on February 27 that he expects the Prime Minister's office (PMO) to approve transfer of approximately 50 million shekels (NIS) to Gaza in response to the Palestinian Monetary Authority's request for an NIS 254 million transfer to cover March salary and other obligations.

However

One possible turn of events that may effect the ability of the GOI to approve the PMA's request is a High Court decision on whether to hear a case brought by the Land of Israel Foundation (LIF) against the GOI after the last transfer of cash to Gaza. The LIF case claims that the GOI acted in a manner contrary to its own Anti-Money Laundering/Counter Finance of Terrorism (AML/CFT) legislation.