As Israel and Hamas continue their struggle over the Gaza Strip, diverse international forces watch closely. Both sides in this conflict depend on complex webs of diplomatic relationships, both for moral support and, more pressingly, for financial backing.
I spoke with Shashank Joshi, a Middle East and Asia expert at the Royal United Services Institute (RUSI), to get his take on how the current crisis is likely to play out for Hamas's finances, and the fortunes of its backers.
Where does Hamas's funding come from?
Turkey and Qatar are the most prominent backers, but I'm not sure if that's where the majority of their revenue comes from. For many years much of their revenue has come from taxing the movement of goods; notably the goods that go through the smuggling tunnels underneath the Rafah crossing and that area with Egypt. [They also get] a lot of indigenous revenue, it's not just all flown from the outside. But Gaza's economy is so small that it only provides a certain amount.
They also have quite a bit coming in from charities—for example the charity that was connected to the Mavi Marmara ship a few years ago [nine activists were killed during an Israeli raid on the aid ship as it attempted to breach the naval blockade of the Palestinian territory in 2010].
On top of that, you have the state [funding]. You have Qatar, above all, which has provided funds [directly] to Hamas, but also in many indirect ways. For example, it promised to spend hundreds of millions of dollars on reconstruction after the 2012 war. That's not always going straight to Hamas's pockets, but Hamas does control the environment in which it's spent.
How is the current fighting going to affect Hamas's finances?
Hamas is insisting that the blockade has to be eased as part of any ceasefire. They probably will have to get something if you want them to stop firing. But the Israelis are now saying, "Well we want to see demilitarisation of Gaza.” One compromise that may come out of all of this could be tighter controls on border crossings from Egypt, including perhaps, the provision of Palestinian Authority—the rival to Hamas obviously—guards on Egyptian border crossings. The opportunities for smuggling, for skimming revenue off taxation, rent-seeking, all of that may diminish and that may impact Hamas's cash flow, which is already extremely weak.
[Another] element, which has been perhaps most interesting of all, is what all this does to the unity government that Hamas formed with Fatah in April. If the Palestinian Authority (PA) is willing to keep [supporting] that against Israeli pressure, against EU pressure and American pressure, and say "This is the way we think Hamas is best dealt with," that's going to potentially have big [positive] consequences for Hamas's funding. The sticking point there would be whether the PA would pay the salaries of 45,000 public employees in Gaza who Hamas couldn't pay. If the PA does that, that could really boost Hamas's standing. Essentially, you need to tap into the legitimate funds of the PA, which is of course boosted and funded by the EU, the Americans and so on. How will that work? Will the Israelis try and block such moves? The UN has said they would try and deliver salaries if the Israelis wouldn't accept direct payments. The Kerry plan we saw a week ago had provisions for Qatari cash to go to Hamas, or to be more specific to public employees. So if Hamas can play this right, in a way, they may have forced a trade off: financial security, access to the PA's money, in exchange for diluting their control of Gaza. And that's perhaps a big bargain they have to mull over now.
What about revenue from other states?
One [aspect] is [likely to be] a sense of sympathy for Hamas among many parties. Countries like Qatar could really decide that now is the time to push to support Hamas. Qatar had backed off a little bit; it was isolated amongst the Gulf Co-Operation Council (GCC), it faced opposition from Saudi Arabia and the UAE, its foreign policy was seen to be over-reaching. But now it can really think: "Now is the time when Gazans need our support." Support for Hamas could be seen as no more than support for the beleaguered people of Gaza. Hamas could use that quite effectively.
Won't Hamas's role in continuing the conflict, not to mention UN accusations of war crimes, affect the way external parties play this?
Qatar doesn't care about that. Very few people in the Arab world care about that. This issue is seen fundamentally differently in Arab majority states, and therefore they are not coming out of this with any sense of "Hamas brought this on themselves, Hamas shouldn't have broken the ceasefire, Hamas shouldn't have rejected other ceasefires, Hamas shouldn't have used these rockets"—none of that is going to resonate in the Arab world whatsoever.
What about Qatar's relationship with the US? Will that be compromised?
No, I don't think it would be compromised. It hasn't been compromised even as Qatar has funded some rogue actors in Syria, so it's not going to be compromised now. It's a pragmatic relationship. Qatar obviously hosts major US military infrastructure... but it also hosts the Taliban political office [which is important for its occasional role as a go-between for the Taliban and the US]. [Qatar also hosts Hama leader Khaled Meshaal]. The Americans are having a tough time in the Gulf, their relationship with Saudi Arabia is strained, their relationship with the Emirates is strained, with Bahrain, very strained, just kicked out a State Department official, so they sure as hell are not going to cock up a relationship with [Qatar] that they deem to be very very important to their military posture in a very unstable region.
I spoke with Shashank Joshi, a Middle East and Asia expert at the Royal United Services Institute (RUSI), to get his take on how the current crisis is likely to play out for Hamas's finances, and the fortunes of its backers.
Where does Hamas's funding come from?
Turkey and Qatar are the most prominent backers, but I'm not sure if that's where the majority of their revenue comes from. For many years much of their revenue has come from taxing the movement of goods; notably the goods that go through the smuggling tunnels underneath the Rafah crossing and that area with Egypt. [They also get] a lot of indigenous revenue, it's not just all flown from the outside. But Gaza's economy is so small that it only provides a certain amount.
They also have quite a bit coming in from charities—for example the charity that was connected to the Mavi Marmara ship a few years ago [nine activists were killed during an Israeli raid on the aid ship as it attempted to breach the naval blockade of the Palestinian territory in 2010].
On top of that, you have the state [funding]. You have Qatar, above all, which has provided funds [directly] to Hamas, but also in many indirect ways. For example, it promised to spend hundreds of millions of dollars on reconstruction after the 2012 war. That's not always going straight to Hamas's pockets, but Hamas does control the environment in which it's spent.
How is the current fighting going to affect Hamas's finances?
Hamas is insisting that the blockade has to be eased as part of any ceasefire. They probably will have to get something if you want them to stop firing. But the Israelis are now saying, "Well we want to see demilitarisation of Gaza.” One compromise that may come out of all of this could be tighter controls on border crossings from Egypt, including perhaps, the provision of Palestinian Authority—the rival to Hamas obviously—guards on Egyptian border crossings. The opportunities for smuggling, for skimming revenue off taxation, rent-seeking, all of that may diminish and that may impact Hamas's cash flow, which is already extremely weak.
[Another] element, which has been perhaps most interesting of all, is what all this does to the unity government that Hamas formed with Fatah in April. If the Palestinian Authority (PA) is willing to keep [supporting] that against Israeli pressure, against EU pressure and American pressure, and say "This is the way we think Hamas is best dealt with," that's going to potentially have big [positive] consequences for Hamas's funding. The sticking point there would be whether the PA would pay the salaries of 45,000 public employees in Gaza who Hamas couldn't pay. If the PA does that, that could really boost Hamas's standing. Essentially, you need to tap into the legitimate funds of the PA, which is of course boosted and funded by the EU, the Americans and so on. How will that work? Will the Israelis try and block such moves? The UN has said they would try and deliver salaries if the Israelis wouldn't accept direct payments. The Kerry plan we saw a week ago had provisions for Qatari cash to go to Hamas, or to be more specific to public employees. So if Hamas can play this right, in a way, they may have forced a trade off: financial security, access to the PA's money, in exchange for diluting their control of Gaza. And that's perhaps a big bargain they have to mull over now.
What about revenue from other states?
One [aspect] is [likely to be] a sense of sympathy for Hamas among many parties. Countries like Qatar could really decide that now is the time to push to support Hamas. Qatar had backed off a little bit; it was isolated amongst the Gulf Co-Operation Council (GCC), it faced opposition from Saudi Arabia and the UAE, its foreign policy was seen to be over-reaching. But now it can really think: "Now is the time when Gazans need our support." Support for Hamas could be seen as no more than support for the beleaguered people of Gaza. Hamas could use that quite effectively.
Won't Hamas's role in continuing the conflict, not to mention UN accusations of war crimes, affect the way external parties play this?
Qatar doesn't care about that. Very few people in the Arab world care about that. This issue is seen fundamentally differently in Arab majority states, and therefore they are not coming out of this with any sense of "Hamas brought this on themselves, Hamas shouldn't have broken the ceasefire, Hamas shouldn't have rejected other ceasefires, Hamas shouldn't have used these rockets"—none of that is going to resonate in the Arab world whatsoever.
What about Qatar's relationship with the US? Will that be compromised?
No, I don't think it would be compromised. It hasn't been compromised even as Qatar has funded some rogue actors in Syria, so it's not going to be compromised now. It's a pragmatic relationship. Qatar obviously hosts major US military infrastructure... but it also hosts the Taliban political office [which is important for its occasional role as a go-between for the Taliban and the US]. [Qatar also hosts Hama leader Khaled Meshaal]. The Americans are having a tough time in the Gulf, their relationship with Saudi Arabia is strained, their relationship with the Emirates is strained, with Bahrain, very strained, just kicked out a State Department official, so they sure as hell are not going to cock up a relationship with [Qatar] that they deem to be very very important to their military posture in a very unstable region.
