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As the Hamas-led government struggles to raise cash after the suspension of Western aid to the Palestinian Authority, it faces a new and unexpected obstacle: banks here are refusing to accept its money transfers from abroad.
The United States Treasury last month barred almost all financial dealings with the Palestinian Authority in response to Hamas's rise to power, under a federal law that makes it a crime to provide funds to terrorist groups.
That has rattled local banks, which are tied to the American banking system. The banks abruptly stopped handling even basic wire transfers needed for the authority to receive money donated by foreign countries.
In recent weeks Arab countries, coordinated by the Arab League in Cairo, have raised more than $70 million. But so far, Palestinian officials say, no bank has been willing to move the money to the West Bank or the Gaza Strip, wary of legal entanglements with the United States.
Ismail Haniya, the Palestinian prime minister and a leader of Hamas, said Wednesday that the government could begin paying overdue salaries, which are now two months late, if the money reached the Palestinian Authority's bank accounts.
"The problem is not with raising money," Mr. Haniya said at a news conference in Gaza City. "The problem is how to transfer this money to the Palestinians."
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You should note that with the United States Treasury's action, even Arab and Muslim countries that want to assist the authority have not been able to deliver their aid.
It is also noted in the article that Molly Millerwise, a spokeswoman for the Treasury in Washington said that "Generally speaking, if an organization or individual is facilitating direct fund-raising for Hamas, they open themselves up to action by the United States, ... ".
According to the times article the United States government lacks legal jurisdiction over financial transactions abroad if no American citizens or institutions are involved. Here is the handle for in personem jurisdiction over the banks. Since many Middle Eastern banks have branches in the United States or have business relationships with American banks to handle international transactions, including but not limited to check clearing, credit card processing, and electronic fund transfer, among other things, they are subject to US Treasury rules and in personem jurisdiction.
ME Banks, according to the article, fear they could jeopardize their ties to the United States (that is, U.S. "correspondent banks") or put themselves at legal risk if they handle money for the Palestinian Authority, regardless of its origin. This is the reported opinion of George Abed, governor of the Palestinian Monetary Authority, which effectively serves as the Palestinian central bank.
You might also look at this Washington Post article,The United States is trying to block Arab and European proposals to pay salaries directly to Palestinian Authority workers to ease the Hamas-led government's funding crisis, Western diplomats said on Monday.
The Authority is $1.3 billion in debt and has no income to pay long overdue salaries to 165,000 government employees.
It has been unable to receive funds from abroad because local, regional and international banks fear sanctions by the United States, which regards Hamas as a terrorist organization.
Diplomats said U.S. pressure on banks could scuttle plans by the Cairo-based Arab League to sidestep U.S. restrictions by making direct deposits into the accounts of Authority workers.
The United States could also use its clout in the Quartet of Middle East mediators to block a proposal by France to set up a trust that would pay salaries and be overseen by the World Bank.
The Washington Post article notes that banks in the region are particularly vulnerable to U.S. pressure because they rely heavily on "correspondent" U.S. financial institutions to conduct their day-to-day business. The rub is that under U.S. law, any foreign bank that refuses to cooperate with the United States in cutting off funding to Hamas could have its U.S. assets frozen and its access to U.S. financial markets denied. Likewise, under US law, that means that U.S. banks that maintain "correspondent" relationships with banned foreign banks could also be found in breach of U.S. law.
The Patriot Act is pretty tight on this, even hitting PayPal , and possibly the Red Crescent http://www.corporatephilanthropy.org/relief/press/CECPnotespakistan.doc.|CECP PAKISTAN DISASTER RELIEF CONFERENCE CALL>.
See also , which reportsWhat impact has it had on the philanthropic community?
Recent stories of nonprofit assets being frozen and their top officials being investigated for connections to terrorist organizations are causing worry in the philanthropic community. As recently as last month, top officers at the Dallas-based Holy Land Foundation were indicted by the U.S. Justice Department due to FBI allegations that the organization funded several welfare groups rumored to be fronts for the terrorist group Hamas. While representatives for Holy Land maintain that the foundation "not only had nothing to do with Hamas, it assiduously avoided Hamas," and that the FBI's information is flawed and incomplete, the matter remains tied up in court. (Washington Post, Muslim Charities, Officials Indicted)
Some vagaries in the law concerning the definition of what constitutes "material support," the expansive breadth of the government's right to search and investigate nonprofits and their employees, and a "gag-order" clause have many in the nonprofit community crying foul. According to OMB Watch, since the Patriot Act was enacted local governments have passed more than 160 anti-Patriot Act resolutions and the House of Representatives has refused to allot more funding to searches authorized by the bill. (Patriot Games: The US Patriot Act and its Impact on Nonprofit Organizations.)
Most recently, a group of nonprofits, including the American Civil Liberties Union, and Amnesty International, withdrew from the Combined Federal Campaign due to new regulations requiring that participating nonprofits certify that their employees do not appear on a lengthy list of individuals suspected of having terrorist ties. They contend that the new requirement is not only an invasion of the privacy of their employees, but will also put undue bureaucratic strain on nonprofits whose only intensions are to do good works.
Individual donors, even through PayPal or a Canadian intermediary, or both, are subject to the same provisions of the Patriot Act.
My credit card has been debited, and I got a receipt from the Palestinian Red Crescent's Canadian intermediary. And, I am still giving - and no DHS cops have come knocking on my door. |
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