Making Smugglers Pay: Underwriting Egyptian Border Security

By Matthew Levitt

Just over a week ago, Egyptian police detained a man who was transporting $2 million dollars to North Sinai to be smuggled to Hamas in the Gaza Strip. This came on the heels of two separate attempts by Hamas to smuggle nearly $10 million dollars from Egypt into the Strip. This was not their first attempt to smuggle a large amount of cash into Gaza, nor will it likely be the last. The United States should encourage the Egyptians to crack down on the organization's bulk cash smuggling more effectively and push Cairo to develop an asset forfeiture regime, using funds seized under this program to finance more-robust law enforcement efforts along the border. European and American programs aimed at combating bulk cash smuggling offer a useful example for a similar Egyptian initiative.

Since the armed takeover of Gaza in 2007, the international community has put in place broad sanctions prohibiting financial support for Hamas. To circumvent these economic sanctions, Hamas has frequently turned to bulk cash smuggling to obtain necessary funds. In February 2009, for example, following the Gaza conflict, Egyptian border police caught Hamas officials attempting to smuggle suitcases holding around $9 million in cash into the Strip. The following month, Hamas officials returning from reconciliation talks in Egypt attempted to smuggle $850,000 in cash hidden in candy tins. Both cases were clearly in violation of Egypt's prohibition on persons leaving its borders carrying more than $10,000 in undeclared cash.

While these efforts were thwarted, Hamas has succeeded on many other occasions. According to Palestinian officials, in June 2006, former Palestinian foreign minister and Hamas member Mahmoud al-Zahar successfully crossed the Egyptian-Gaza border with $20 million in cash stuffed into twelve suitcases. Similarly, in November 2006, two Hamas lawmakers, Mushir al-Masri and Ahmad Bahar, smuggled in more than $4 million.

Egyptian police officers, historically underpaid, have accepted bribes in exchange for turning a blind eye to weapons smuggling through tunnels into Gaza. Several media reports suggest that Egyptian police stationed at border crossings are more than willing to do the same in regard to cash. The recent seizure of these funds, however, represents an opportunity not only to crack down on illicit financial activity but also to boost the meager salaries of Egyptian border guards and finance their underresourced mission of securing the Egyptian border.

The full article, co-authored with Becca Wasser, is available here.