Cairo Can and Should Seize Hamas Funds

By Matthew Levitt

Over the past year Hamas leaders have smuggled cash into Gaza across the Egyptian border on several occasions in an attempt to circumvent the existing sanctions barring financial transactions with Hamas or the Hamas led Palestinian government.

* In May 2006, senior Hamas official Sami Abu Zuhri was caught trying to smuggle $817,000 into the Gaza Strip.

* In June 2006, Hamas’ Mahmoud al-Zahar, the Palestinian Foreign Minister, brought $20 million across the border stuffed into 12 suitcases.

* In November 2006 Mushir al-Masri and Ahmad Bahar reportedly carried suitcases containing over $4 million into Gaza.

* In December 2006, Palestinian Prime Minister and senior Hamas official Ismail Haniyeh tried – unsuccessfully – to carry approximately $35 million from Iran across the border.

Now, in the wake of the agreement Saudi Arabia brokered between Hamas and Fatah in Mecca, Russia and some European countries are already suggesting these sanctions should be lifted, though that position is both premature and shortsighted. In fact, now is the time to better enforce the existing sanctions regime. Egypt could help.

The Mecca Accord may reduce the level of intra-Palestinian fighting now plaguing the Gaza Strip, but it does nothing to moderate Hamas and undercuts efforts to further Palestinian-Israeli peacemaking. Indeed, now is the time to work closely with partners in the region to enforce the existing Hamas sanctions regime and continue providing significant funding to Palestinian institutions untainted by connections to Hamas through mechanisms like the EU’s Temporary International Mechanism (TIM).

To be sure, foreign aid continues to reach needy Palestinians without going through Hamas. In the first 8 months of 2006 the PA received $550 million in aid, a figure that was forecast to reach $760 million by year’s end. The PA received less than half that, some $352 million in 2005 — before the Hamas government came to power. If Saudi Arabia did in fact offer significant funds to a Palestinian unity government, those funds should be funneled through the TIM.

The case of Ismail Haniyeh’s failed attempt to smuggle millions of dollars provided by Iran offers a telling example of how the sanctions regime could be tightened. Stopped at the border, Haniyeh was eventually allowed to enter Gaza but the $35 million was deposited into an Egyptian bank, according to the EU.

At the time, it was unclear if Egypt had the legal authority to seize illicit funds. But this week Egyptian authorities reportedly froze the assets of 34 companies tied to the Muslim Brotherhood. According to an AP article, Egyptian President Hosni Mubarak “also ordered 40 other Brotherhood members — including its top financial figure, Khayrat el-Shater — put on trial before a military court on charges of money laundering and terrorism.” While it is not yet clear if these actions are politically motivated or responses to real security threats, Egyptian authorities have demonstrated they have the ability to freeze funds and to prosecute money launderers. That authority should be brought to bear against radical Palestinian elements smuggling suitcases full of cash across Egypt’s borders. For starters, Cairo should freeze Iran’s $35 million gift to Hamas that is now sitting in an Egyptian bank.

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