Australia/Israel Review

Living off the Aid Bonanza

The ceremony Hamas staged for the release of Israeli hostages Eli Sharabi, Ohad Ben Ami and Or Levy on February 8 will be remembered primarily for the emaciated appearance of the three released captives. But those who looked at the bigger picture could spot many additional details of this and other choreographed and well-funded pre-handover events that should worry and trouble Israel. While Israel set the goal of completely eliminating Hamas, and the IDF invested 16 months of intensive warfare in this mission, these elaborate ceremonies, featuring formations of armed terrorists in crisp uniforms, show that the organisation not only remains dominant in the Gaza Strip but is also well-equipped and capable of staging impressive productions.

This raises a number of questions. How has Hamas managed to maintain its power and continue functioning as a governing body? For months, we have been told that the organisation suffered devastating blows, that all its infrastructure was dismantled, its leadership eliminated, and tens of thousands of operatives killed – how then can it showcase well-armed formations? Where did it obtain the necessary funds? 

An investigation by Israeli news outlet Makor Rishon reveals that, during the war, Hamas managed to get its hands on enormous sums of money, goods, and resources that allow it to remain in power. The main source of funding is provided with the approval of Israel, through the border crossings it established: humanitarian aid. 

The amount of money involved is staggering. According to security establishment estimates, close to one billion US dollars (A$1.57b) have reached Hamas since October 2023, directly or indirectly. This is what enables it to continue paying salaries to its operatives during wartime, and also recruit new operatives to replace those killed. Even Gazans who don’t receive direct salaries from Hamas are forced to purchase basic food products from it – or starve.

Numerous sources were consulted for this story, both within and outside the Israeli military and security establishment. Given the sensitivity of the subject, most chose to remain anonymous. The picture they paint shows that some of Israel’s lenient policies towards humanitarian aid have inadvertently been undermining the goal of eliminating Hamas.

Two-column distribution

All of our sources agree: humanitarian aid is the central factor enabling Hamas to maintain control in Gaza. Food packages, clean water, medical equipment, tents, and fuel – all these serve Hamas operatives, their supporters, and families first. Hamas sells the remaining goods to Strip residents, and the money received is used to pay operatives and maintain its mechanisms.

According to the Coordinator of Government Activities in the Territories (COGAT), before the war, several hundred trucks entered the Strip from Israel daily, no more than 500 trucks at peak. These carried food, fuel, construction materials, raw materials, furniture, clothing, and goods of all types. Additionally, goods entered the Strip from Egypt through the Rafah crossing. As soon as the war broke out, all crossings were closed but, almost immediately, the IDF began preparing to transfer humanitarian aid to Gaza. 

Hamas anticipated the closure of the crossings and prepared supply warehouses in advance. But the quantities were limited, stockpiles dwindled and, as the campaign progressed, Hamas began suffering from shortages of food, medical equipment, and fuel – which was especially necessary for powering the tunnel network. Then, about 50 days after the October 7 attack, the first ceasefire-for-hostages deal was reached. Besides releasing a small number of Palestinian prisoners, the deal included bringing large quantities of equipment and food into the Strip under the banner of “humanitarian aid”. For Hamas, this was oxygen: it refilled warehouses and prepared well for continued fighting.

The flow of supplies to the Strip did not stop at the end of the ceasefire. From the beginning of the war, the American stance supporting Israel came with an unequivocal demand: Israel must bring in humanitarian aid for Gaza residents. Even when Hamas’ deep involvement in supposedly civilian organisations like the United Nations Relief and Works Agency (UNRWA), the UN agency for Palestinian refugee affairs, became clear, and despite knowing that the terror organisation was seizing many aid trucks, this demand remained. 

As the US presidential elections approached, pressure from the Biden Administration to bring more and more aid into the Strip only increased. In a letter then-US Secretary of State Anthony Blinken sent in October 2024, it was stated that Israel needed to change its policy due to “severe humanitarian conditions in Gaza.” The demands on Israel included “flooding” the Strip with aid at a volume of at least 350 trucks per day, humanitarian pauses in fighting, easing restrictions on goods passage, and bringing aid to northern Gaza. If the Israeli government did not do this, the Americans threatened, it would lead to a complete arms embargo. Subsequently, aid volumes stabilised at 200 to 250 trucks per day.

According to Customs and Border Crossings Authority data, during 2024, 42,700 humanitarian aid trucks entered the Strip. The current hostage deal led to a sharp increase in supply flow to the Strip: in the 42 days of Phase A of the current deal, if completed, 600 trucks per day are supposed to enter, totalling 25,200 aid trucks within a month and a half. These are resources transferred directly and indirectly to Hamas – and no one doubts this. 

Under the cover of the hostage deal, trucks are entering the Strip in numbers similar to those before the war, except now they bring only essential equipment and food. Other goods not defined as humanitarian are not permitted to cross the border. This means that the quantities of basic resources entering the Strip are even larger than before the war.

According to estimates, Hamas seizes 25 to 30% of the humanitarian aid entering the Strip – 150 trucks per day. Throughout the war, documentation increased showing how Hamas operatives attack truck drivers, take control of vehicles, and steal the goods on them. The IDF’s Unit 504 intelligence officers [the unit investigating Palestinians captured by the IDF – Ed.] heard from a Strip resident, a chef working for an American NGO, that Hamas systematically steals equipment and food from UNRWA warehouses as well. The IDF Arabic Spokesperson Lt. Col. Avichay Adraee published videos showing how masked Hamas men beat residents and loot food sacks from them. Other documentation showed operatives impersonating UNRWA workers and stealing fuel and medical equipment from the organisation’s warehouses.

Meanwhile, Hamas launched an “enforcement operation” against humanitarian aid thieves, killing more than 20 Gazans suspected of theft. The message to Gazans was clear: only one entity in the Strip is allowed to steal.

Sometimes Hamas takes on the role of the generous uncle passing out aid packages to residents. In one such case, Hamas took over a distribution line operating at a school and clinic, and began distributing food vouchers to residents, including baby food, creating resident dependence on the organisation. In other cases, two columns could be seen at distribution centres – one for Hamas members and one for Gaza residents. Those in the first line received twice the amount of supplies as their neighbours in the parallel line.

Some of the aid Hamas steals, it immediately resells to residents, the victims of the theft. Its revenue from this channel is estimated at US$50 to US$100 million (A$78 to A$157m) per month, totalling nearly a billion dollars since the war began. For comparison, the Qatari cash suitcases that Israel permitted to be transferred to the Strip before the war contained US$30 million (A$47.2m) monthly.

Even when Hamas doesn’t take goods by force, it ensures it profits from them. It collects protection money on every truck entering or moving within the Strip, even for essential aid to hungry residents. This sort of extortion has continued unabated through the current ceasefire. 

“The average payment per truck is about 30,000 shekels [A$13,000], and it can reach 50,000 [A$22,000],” Eyal Ofer, a Hamas economy expert, tells us. “If you multiply that by 70,000 trucks that have entered since the war began, you reach about 2 billion shekels (A$880 million). Add to that the goods that reached them, and those they sold at high prices – and we’re talking about four billion shekels [A$1.765b] accumulated in the past year.”

“There’s a vicious cycle here,” says Dr Ehud (Udi) Levy, former head of the Mossad’s Economic Warfare Unit (“Tziltzal”, Harpoon), and currently a senior researcher at the Jerusalem Institute for Strategy and Security. “The world sends humanitarian aid to Gaza, Hamas seizes it and takes it for free, then sells it for money, with this money it pays salaries, and these salaries return to it because they’re also used to buy humanitarian aid supplies.”

“There’s no functioning economic system in Gaza today, but Hamas manages to pay its people,” says Dr Michael Milshtein, head of the Palestinian Studies Forum at the Dayan Centre at Tel Aviv University, and former head of the Palestinian arena in the Research and Analysis Unit in Israel’s Military Intelligence. “Humanitarian aid is deeply exploited by the organisation. The salary from Hamas sometimes comes in the form of a product basket or medicines. Those connected to the organisation get what they need. From everyone else, Hamas collects taxes. Internal taxation was a major source of income for it even before October 7, and all business activity in the Strip involved paying tax. With the start of Israeli ground manoeuvres in Gaza [in late October 2023], it became clear that the entire civilian space is actually scenery for the jihad project. There wasn’t a single kindergarten, mosque, grocery store, or charity organisation that didn’t have something from the military wing’s infrastructure.”

Rafah and the Private Traders

The IDF ground operation into Rafah, which began on May 6 last year, was preceded by a prolonged dispute both within Israel and with international actors. The United States and European countries opposed Israel’s takeover of the city in the southern Strip, as it meant closing the Rafah crossing to humanitarian aid coming from Egypt. In light of the criticism, the defence establishment decided to allow goods into Gaza not only through international aid organisations but also through the private market. Israeli traders were permitted to sell various products and materials to Gazan traders, after they received special approval from the IDF.

COGAT initiated this move ostensibly to create a Hamas-bypassing supply route. But information we received points to another reason: an attempt to encourage other, non-Hamas elements in the Strip to take control. Local clans identified as having potential to push out Hamas received special permits to import goods themselves. These goods arrived through Egypt, underwent inspection at the Nitzana crossing, and from there were transported to Gaza through Rafah, with Israel providing air escort.

In practice, this move led to several problems and yielded Hamas tens of millions more dollars. First, the organisation collects “protection money” on every truck entering the Strip, including those coming through private market traders. The bypass route for transferring goods didn’t prevent it from profiting this way. When clans tried to take control of certain areas and collect protection money themselves, Hamas fought them: it didn’t want competition. 

To tighten its grip on the Strip’s economy, the organisation operated a kind of police force whose duties included supervising market prices. Lists distributed to merchants detailed maximum prices for various goods, and Hamas announced that for anyone exceeding the stated amount, their stock would be confiscated and distributed for free. 

Another problem with opening private routes for goods entry was increased smuggling. Goods originating in Israel pass through fewer control points compared to goods arriving from abroad, and smugglers know how to exploit this in various sophisticated ways. Cash and weapons were likely sent this way to the Gaza Strip as well. 

Third, private trade gave Hamas access to funds from abroad. Since the war began, organisation senior officials in Gaza have struggled to receive money held in investments and various accounts, or amounts that Iran, for example, wanted to transfer to them. The goods passage enabled an offsetting move: Iran purchases goods needed by Hamas, or it purchases them remotely, using funds located abroad; a local merchant fronts the transaction to give it legitimacy; and thus ultimately Hamas manages to transfer monetary value into the Strip, even without bringing in cash.

Cigarettes inside sewage pipes

Humanitarian aid to the Gaza Strip comes from various international organisations – private non-profit organisations like World Central Kitchen, UN agencies, and more. Many countries, including the UAE, Egypt, and Jordan, also send their contributions. COGAT gives approvals to various international entities to transfer goods to the Strip and determines what is permitted and what is prohibited. Qatar, Turkey and Iran cannot transfer aid directly to the Strip, but do so through a back door: they donate money to international NGOs and UN agencies, which then purchase aid products and transfer them to the Strip. 

Until a few weeks ago, UNRWA, the UN agency for Palestinian refugee affairs, held permission to transfer goods to Gaza – although it was clear that within the Strip, Hamas and this organisation were one and the same. This permission was cancelled at the end of January this year, after the “Law to Stop UNRWA Activity in Israeli Territory” was passed by Israel’s Knesset. However, in practice, the UN continues to work in the Strip through UNRWA mechanisms, even when it’s known that goods reaching the workers and agency facilities effectively fall into Hamas’ hands.

Aid arrives from around the world and funnels into Israel through Ashdod port or border crossings with Egypt and Jordan. Then it enters the Strip through four Israeli crossings – up from one before the war. 

Currently, only five types of goods are allowed into the Strip: food, water, medical equipment, medicines, and shelter (tents and the like). Yet in practice, aid trucks also smuggle large quantities of prohibited goods to Hamas. These are sold in the Strip at high prices, further enriching the terror organisation’s coffers.

Many of the smuggling operations involve tobacco and cigarettes. In one humanitarian aid shipment, a thousand packs of Karelia cigarettes were caught on six UNICEF trucks. The trucks’ official cargo was sewage pipes, but inspection of the wooden pallets on which the pipes were loaded revealed the smuggling attempt. 

Recently, drug smuggling into the Strip was also discovered, including hashish and Captagon – the drug used by Hamas Nukhba operatives who invaded on October 7, and popular among ISIS terrorists. Sources familiar with the matter told us that cash and weapons were also smuggled into the Strip throughout the war.

Bombing Banks

Another Hamas revenue source was revealed to Gaza residents in the form of a powerful explosion that rocked the Rimal neighbourhood on April 17, 2024. This wasn’t an air bomb, nor a shell fired from an Israeli tank: the noise source was inside the Bank of Palestine. As a result of the blast, banknotes were seen flying in the air, and when the smoke and paper pieces settled, what happened became clear. Not long before the explosion, concerns arose at the bank that economic distress in the Strip would lead to theft attempts, so it was decided to pour another concrete shell around the central vault. This didn’t help. Hamas operatives blew up the vault with its surrounding concrete and fled with about 100 million shekels [A$44 million]. The next day, several armed men came to the bank and forced employees to open other vaults. Thus, the Bank of Palestine lost another 100 million shekels.

These cases, and another series of vault and ATM robberies of smaller amounts, were revealed in a Financial Times investigation. According to estimates, Hamas enriched its wallet this way by about 400 million shekels [A$176 million] in cash, within just two months. The IDF Arabic Spokesman has publicised a Hamas document showing that the robberies were planned and executed by organisation operatives. 

Meanwhile, other entities continue to stream money into the Strip through bank transfers. Ofer says the Palestinian Authority transfers salaries to its employees still operating there and support to residents. Additionally, tens of thousands of people in the Strip receive grants from various international organisations through PalPay, a payment application operating in Gaza.

Another money route is fundraising through charity organisations and crowdfunding campaigns. Thousands of such campaigns went up on social networks throughout the war, successfully raising huge sums from private individuals in the US, Europe, and East Asia. Most donate innocently out of desire to help displaced persons and those in need, without knowing that some money goes directly to Hamas. Israel’s Bureau of Counter Terror Financing works with the intelligence community to monitor fundraising, and when a specific campaign is identified as Hamas-linked, it issues sanctions against it. Financial bodies usually honour this, disconnecting the campaign from payment channels and internet servers. So far, about 60 fundraising operations have been blocked this way. But even in this arena, the fight against terror financing is a Sisyphean task: for every campaign closed, a new one opens.

Humanitarian aid’s Catch 22

The Israeli security establishment is well aware that some humanitarian aid reaches Hamas, but claims it has no effective way to monitor what happens with truck contents after the trucks enter the Strip. The truck drivers are Gazans who have received IDF and Shin Bet approval, but when Hamas gunmen want to take over the vehicle and shipment, none of these drivers resist.

The IDF aspires to find an alternative to Hamas as the Strip’s controlling entity, but after 16 months of fighting, it’s already clear that no civilian entity will want to take this role before Hamas is removed. Israel imprisons itself in a catch-22, because Hamas cannot be destroyed while continuing to stream resources and equipment that keep it alive. As long as Israel continues to facilitate massive aid into enemy-controlled territory, it feeds the beast and prevents its elimination. This aid has long since stopped being a humanitarian tool and become an instrument for maintaining Hamas rule. 

Reprinted from the Israeli Hebrew-language daily Makor Rishon, translated and edited for length by AIJAC staff. © Makor Rishon (www.makorrishon.co.il), reprinted by permission, all rights reserved.