Financial Setbacks for Hamas

By Matthew Levitt

Over the past few weeks, Hamas's international financial support network suffered a series of setbacks, most notably the U.S. federal court conviction of the Holy Land Foundation for Relief and Development (HLF) and five of its leaders on charges of providing material support to Hamas. Despite these convictions and the broad sanctions in place against Hamas, however, the group remains capable of raising substantial funds, through both traditional and innovative means.

On November 24, a Dallas jury convicted the HLF of all counts in a major terrorist finance case. According to the Justice Department, "HLF intentionally hid its financial support for Hamas behind the guise of charitable donations" amounting to approximately $12.4 million "provided in support to Hamas and its goal of creating an Islamic Palestinian state by eliminating the State of Israel through violent jihad."

Just two weeks before the HLF verdict on November 12, the Treasury Department designated the Union of Good (Etelaf al-Khair, also known as the Charity Coalition), a Saudi-based umbrella organization that began as a fundraising drive and developed into an institution working with more than fifty Islamic foundations worldwide, as a "specially designated global terrorist entity" (SDGT). According to the Palestinian Preventive Security in the Gaza Strip, "The Union [of Good] is considered -- with regard to material support -- one of the biggest Hamas supporters." Noting its ties to Hamas, Israel outlawed the organization in February 2002. According to Treasury, Hamas leaders created the Union of Good in 2002, stating that it "facilitates the transfer of tens of millions of dollars a year to Hamas-managed associations." The Union "acts as a broker for Hamas by facilitating financial transfers between a web of charitable organizations . . . and Hamas-controlled organizations in the West Bank and Gaza."

The SDGT designation appears to already have had an impact on Hamas financing. A few days after Treasury's decision, the British bank Lloyds TSB instructed the Birmingham-based Islamic Bank of Britain to cease dealings with Interpal, a UK-based charity previously designated as a Hamas-financing entity by the U.S. government and highlighted as a central player in the Union of Good's web of Hamas-associated charities.

Despite the recent successes in efforts to disrupt Hamas's financing, the group is still able to raise substantial funds. As the governing party in Gaza, Hamas has access to new sources of funding, including taxes and customs fees.

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