Econoff called Udi Levi, Counterterrorism Finance Bureau Director at the [Israeli] National Security Council (NSC) and a senior intelligence officer on December 2 to press for release of NIS 250 million to the Gaza banking system, as requested by the Palestinian Monetary Authority. Levi said continued rocket and mortar attacks from Gaza, stalemate in negotions on release of Hamas-held Israeli Defense Force soldier Gilad Shalit, and new information on Hamas access to the Palestinian Authority salary payments funded by the requested transfer all made it unlikely that the GOI would honor the request.A cable from November gives some background:
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. The exact amount is still under discussion, said Levi, but the Israeli security services have agreed that monthly transfers of some amount of shekels to Gaza are necessary to avoid collapse of the banking system there.
However, Levi noted GOI intelligence has indications that Gaza banks are being forced by Hamas to underreport their true reserve holdings, so it is difficult for the GOI to assess the current state of the banking system in Gaza. He said that the banks have had no choice but to follow Hamas instructions and conduct business as if they were operating on insufficient reserves. 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. Regarding the PA,s payroll, Levi told econoff that it included Hamas members and many other questionable individuals that the GOI did not believe to be working as civil servants for the Fatah-controlled PA. He offered to share all GOI information on the topicin a meeting with relevant USG officials at their earliest convenience. We will take him up on that offer and report septel.
The PA contends that Hamas, ability to pay its workers, salaries each month combined with the inability of the PA to do so causes further deterioration in support for PA/Fatah relative to Hamas (reftel &I8). The GOI, on the other hand, believes that many of the estimated 77,000 wage earners on the PAs payroll may actually be Hamas members or affiliates. Israeli security analysts argue that a considerable portion of the civil service salaries that the PA attempts to pay each month to its Gazan employees actually find their way to Hamas or Hamas supporters (see reftel "D"). They have therefore determined that full coverage of the payroll is contrary to Israel,s security interests, even if Hamas gains some political advantage from being able to pay its salaries in full.
Furthermore, GOI officials, while often praising the credentials of PA technocrats, doubt the effectiveness and authority of the Palestinian Monetary Authority (PMA) to regulate and police Palestinian, and especially Gazan banks.