Both PA and Hamas face financial squeeze/ Mosul and the lessons of Gaza

Nov 18, 2016

Update from AIJAC


Nov. 18, 2016

Update 11/16 #03

This Update features two articles about the serious financial problems of both the Palestinian Authority (PA) in the West Bank and Hamas in Gaza. 

The first piece is a Wall Street Journal report which details not only the increasingly precarious state of PA finances but the considerable efforts the Israeli government is making to try and alleviate the PA’s problems. The PA’s shortfall, the article notes, is caused by falling aid revenue, especially from Persian Gulf states, and by the PA’s need to spend a third of its income to Gaza, even though it lost control of that enclave to Hamas in 2007. The article describes how Israel, recognising the crisis, has been taking measures, such as increasing the transfer of tax revenues, allowing more Palestinians to work in Israel, and restructuring a long-standing debt for electricity. Nonetheless, the article makes clear, it is not enough and further problems apparently lie ahead for the PA. To read this important piece in full, CLICK HERE

Next up is Israeli security writer Yaakov Lappin, who reports that Hamas too appears to be reaching the end of the its financial tether. He notes that the Egyptian closure of Hamas’ smuggling tunnels, and the lack of any reliable outside backer – with relations with traditional patron Iran currently unstable and unreliable – mean Hamas is scrambling to find mechanisms to get funds. This includes not only stealing from charities such as World Vision, but using businessmen as cash smugglers, and stealing apartment buildings paid for by Qatar. For Lappin’s full discussion – including how this is affecting Gaza’s civilian residents – CLICK HERE

Finally, Gen. (ret.) James Thurman and Lt. Gen. (ret.) Richard Natonski, both former senior US army commanders, discuss the implications of reports that ISIS has riddled the Iraqi city of Mosul – now besieged by the Iraqi army and allied forces – with sophisticated tunnel systems miles long. They say the precedent for dealing with this serious military challenge is Israel’s experience with Hamas’ extensive network of tunnels in Gaza during the 2014 war. They note that Hamas exploited the tunnels not only to outflank Israeli forces, and complicate efforts to stop rocket fire, but also to force Israel to cause civilian casualties which they could then exploit to delegitimise Israel’s campaign. For their call for the US military to learn from Israel’s experience in Gaza, CLICK HERE

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Article 1

Israel Comes to the Aid of the Faltering Palestinian Economy


With donor aid to the Palestinian Authority plummeting, Israel takes steps to help stabilize the territories, even if they indirectly assist Hamas.

Rory Jones

Wall Street Journal, Nov. 16, 2016

PA President Mahmoud Abbas is facing a a budget shortfall of roughly $500 million, but the Israeli government  is trying to assist with the financial crisis.


TEL AVIV—Faced with increasingly dire economic conditions in the Palestinian territories, Israel is trying to keep the cash-strapped Palestinian Authority afloat, even if it indirectly helps Hamas, its longtime enemy.

The Authority, based in the West Bank city of Ramallah, lost control of the Gaza Strip to Hamas in 2007, but more than a third of its annual budget still goes to the coastal enclave.

But that arrangement, which helped keep Gaza functioning, is faltering, as the donor aid upon which the Authority depends plummets. That assistance is forecast to fall to $600 million this year, less than half the amount three years ago, according to the World Bank.

Gulf benefactors such as Saudi Arabia, confronted with falling oil revenues and tough choices, are redirecting funds their allies in Iraq, Syria and Yemen. U.S. funding, which goes straight to the Authority’s creditors, has dropped from about $100 million in 2014 to roughly $75 million last year, according to a U.S. official.

With wars and humanitarian crises roiling the region, that figure is expected to tumble even further this year. Worse yet for the Authority, local banks are no longer lending it money and it can no longer borrow from its public pension fund, its previous answer to short-term budget shortfalls.

Adding to the uncertainty is the political transition under way in Washington.


Amid signs the incoming Trump administration won’t force a solution to the Israeli-Palestinian conflict, conservative members of Prime Minister Benjamin Netanyahu’s coalition government have called for a rejection of the two-state solution, which is official Israeli policy, and annexation of parts of the West Bank. Under such a scenario, it isn’t clear the Authority would continue to exist.

With evidence already accumulating months ago that the Authority was facing economic collapse, however, Israel didn’t wait for the outcome of U.S. elections. To stave off fresh unrest and violence in Gaza—and the growth of even more radical Palestinian political factions on its doorstep—it entered the breach.

Under the internationally backed Oslo Accords reached in the 1990s, Israel levies taxes on goods and services imported into the territories. It collects health, social security and other benefits from firms in Israel that employ Palestinians, and then transfers these taxes and revenues to the Palestinian Authority each month, taking a fee for doing so.

Using that mechanism, Israel so far this year has transferred about one billion shekels ($262 million)—or nearly 8% of Palestinian total Palestinian revenues—in one-off payments to the Authority, according to the World Bank, the International Monetary Fund and a person familiar with the transfers.

The two sides also agreed in September to restructure $500 million in debts that the Authority owed to the state-owned Israel Electric Corporation for power supplied to the West Bank, another indication of their deeply intertwined economies.

Meanwhile, to boost the Authority’s tax revenue, Israel has issued work permits to Palestinians to work in Israel.

Israeli authorities say the prospect of the Authority’s economic breakdown and even more tumult in Gaza is worse than the risk of indirectly sustaining Hamas, the Islamist military and political movement that has vowed for Israel’s destruction and fought Israel in three wars in the past eight years.

“A stable Palestinian Authority economy is in Israel’s interests economically, politically, and in terms of security,” Finance Minister Moshe Kahlon said at the signing of electricity deal in September.

Even with the one-off money transfers from Israel, however, the Authority and its president, Mahmoud Abbas, still have to plug a budget shortfall of roughly $500 million, according to the IMF, and traditional sources for meeting deficits are now running thin.

To reduce the deficit this year, it will likely be forced to cut the salaries and benefits of civil servants at a time of weak economic growth and high unemployment, the World Bank and IMF have predicted.

“The PA’s coping strategy is thus reaching its limits,” the World Bank said in a report in September, referring to the Authority.

Any cuts to wages or social welfare programs would come at a tense time in Gaza. Unemployment is hovering at 40% and half of territory’s 1.7 million inhabitants receive some form of humanitarian aid, the World Bank says.

Employees of the Authority, which operates a bureaucracy alongside Hamas’s, fear salary cuts and job losses. Also in jeopardy, they say, are salaries for teachers and doctors, and the hundreds of millions of dollars in cash and food assistance the Authority provides. Hamas has recently arrested journalists for attacking its policies.

Nerves are also fraying in the West Bank. In recent weeks, students, security forces and members of Mr. Abbas’s own Fatah faction have been arrested or questioned for allegedly criticizing the Authority in posts on social media and in public.

Fueling Palestinians criticism of their leaders is the absence of any prospect of a peace deal, as well as failed reconciliation attempts by Fatah and Hamas, according to Ahmad Harb, commissioner of the Ramallah-based Independent Commission for Human Rights.

“People are expressing their views very aggressively,” he said. “We’re in very dangerous stagnation.”

At the Al Shifa Hospital in Gaza, MaherAbu Elwan, a cardiologist, said he was worried the Authority would have to trim his wages and cut costs in a hospital where the waiting list for procedures for some life-threatening conditions is already four months. Delays in paying salaries or cutting them might deepen public anger and lead to further conflict with Israel, he said.

“Every month, waiting for my salary, I’m afraid to have some bad news,” he said. “The future looks dark.”


Article 2


Article 3

Battle for Mosul goes underground


James Thurman and Richard Natonski

USA Today, November 17, 2016


ISIL has had two years to dig intricate tunnels

The fight against the Islamic State terror group is heading underground. As Iraqi forces, with U.S. support, close in on Mosul, the toughest fighting likely will not be in the streets or door-to-door, but in sophisticated miles-long tunnel networks ISIL has constructed under the city. Fighting in this subterranean domain presents unique tactical, operational, technological and even legal challenges, for which the U.S. military must be better prepared. This is far from the first time tunnels have been used by asymmetric and conventional adversaries, and it is unlikely to be the last.

Tunnel warfare was a crucial part of the Vietnam War, with North Vietnamese forces burrowing underground to transport supplies and launch surprise attacks. Since then, tunneling has become more high tech. The tactics and tools to counter a subterranean foe must also evolve from the “tunnel rats” employed by the U.S. military in Vietnam.

As former commanders of U.S. forces in Iraq and South Korea, we saw modern tunneling firsthand. The North Koreans have dug thousands of storage facilities to evade U.S. and South Korean surveillance. In the past, the North Koreans have also burrowed under the Demilitarized Zone in an attempt to enable surprise attacks on South Korean and U.S. forces stationed there.

Just how effectively tunnels can be used in combat, and how difficult they can be to defeat, became clear in the 2014 conflict between Hamas and Israel. Our appreciation for the threat was heightened by separate trips organized by the Jewish Institute for National Security of America, in which we visited some of these tunnels and the commanders whose units fought in and around them.

Hamas dug numerous “terror tunnels” beneath Gaza and under the border into Israel. These were incredibly sophisticated engineering feats, reinforced with concrete and outfitted with power and communications systems. Some were used for command, control and storing large amounts of weapons and munitions underground, allowing for rapid and undetected movement of launch sites. Some were used to flank Israeli forces, redefining the concept of the front line. Still others were used in attempts to kidnap Israeli civilians, hence “terror” tunnels.

These tunnels undoubtedly posed a challenge for Israel. They complicated efforts to target and destroy Hamas’ rocket and mortar arsenals that threatened Israeli civilians. They also distracted Israeli commanders by substantially increasing the risk of surprise attacks on troops or raids against civilians.

Israel struggled to counter these threats. Aerial reconnaissance and airstrikes were ineffective without technology to map the tunnels’ many branches and exit points. Debris from these airstrikes often made identifying tunnel routes even more difficult. Moreover, many were built directly under heavily populated areas, with entrances in hospitals and other civilian infrastructure. By complicating Israel’s concerted efforts to minimize collateral damage when targeting the tunnels, Hamas adroitly exploited civilian casualties to delegitimize Israel’s campaign. This was both tragic and ironic. Under the law of armed conflict, Hamas was culpable for any injuries befalling civilians it intentionally placed in harm’s way.

Israel’s experiences will provide crucial guidance as America supports Iraqi forces in liberating Mosul. ISIL has controlled the city for more than two years — ample time to prepare for this battle. Coalition forces have already found tunnels in many villages they have cleared on the road to Mosul and elsewhere in Iraq. Similar to Hamas, ISIL has also been attempting to hide behind civilians to further neutralize the coalition’s ability to target the terrorists from the air.

Given the importance of not just defeating ISIL but also winning the hearts and minds of Mosul’s Sunni majority — convincing them they will be kept safe by Iraq’s Shiite-led central government — U.S. military planners almost certainly will exercise caution in using air power against suspected tunnels. That places the onus on intelligence and surveillance capabilities, whether human or technological, to find the tunnels, and it means an even bigger burden on the troops who will have to clear and destroy them.

Taking the fight to ISIL beneath Mosul will not be the job of the U.S. advisers supporting Iraqi troops. But this task very well could fall to U.S. forces in future possible conflicts against conventional or asymmetric opponents. Two Army reports in the past two years have warned that U.S. forces are unprepared to operate in the complex sprawl of modern megacities.

Therefore, it is critical to incorporate lessons from subterranean campaigns such as Gaza and Mosul into our own military planning and combat training centers. Cooperating with allies facing similar threats, like Israel, should be an important part in determining the best tactics, techniques and procedures now and in the future. We must also invest in new technologies to detect, defeat and destroy tunnels.

Our Air Force owns the skies, our Navy, the seas. Our Army and Marine Corps must be prepared to own not just the ground, but also the tunnels beneath it.

Retired general James Thurman is former commander of the United Nations Command, ROK-U.S. Combined Forces Command and U.S. Forces Korea. Retired lieutenant general Richard Natonski is former commander of the Marine Corps Forces Command. Both are members of the Jewish Institute for National Security of America.




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