Gov't to rethink cash transfers to Gaza

Foreign Affairs Minister Tzipi Livni is scheduled to hold a meeting on Sunday afternoon on the subject of transferring Israeli currency to the Gaza Strip. This in response to the harsh public criticism that arose in the wake of Israel's to transfer of NIS 100 million to the cash-strapped Strip, still under Hamas rule.

The discussion, which will be held after the weekly cabinet session, is expected to include the

participation of defense establishment officials, Treasury representatives, Foreign Ministry personnel and representatives from the Bank of Israel.

In the initial phase of the meeting Livni will demand an explanation for why Israel is maintaining these humanitarian ties, which obligate it to systematically transfer banknotes and coins to the very Hamas government it seeks to topple.

The foreign minister will then ask those present to draft a recommendation on whether the controversial ties ought to be severed. The recommendation is due to be presented before the narrow forum comprised of Prime Minister Ehud Olmert, Defense Minister Ehud Barak and Livni herself, or possibly the cabinet or government as well.

Last Wednesday the Olmert-Barak-Livni triumvirate authorized the transfer of the millions to Gaza as part of Israel's agreements with the Palestinian Authority pertaining to the matter. PM Olmert said he was adamant that the agreement be upheld, despite the public's outcry and despite concerns the cash would be used by Hamas.

Oslo-Era Repercussions

The cash dilemma stems from Israel's interest in ensuring the shekel remain the official currency in Gaza, as in the West Bank. The agreement on the matter is anchored in the international accords.

Ynet has learned that Israel had made a commitment following the Oslo Accords to provide the Strip with Israeli shekels. Israel was unwilling to allow a foreign entity to print the currency and therefore promised to deliver it on dates determined by the PA.

Since then the Palestinians have been demanding the cash every month, in return for funds transferred to the Bank of Israel. The shekels are used to replace worn-out banknotes and to pay the salaries of the 70,000 PA employees in the Strip.

The meeting convened by the foreign minister on Sunday will reexamine the need to continue operating

according to the agreements of the past.

The World Bank has demanded that Israel continue the transfer, though it had previously advised that the Strip adopt the Egyptian pound.

The prime minister stated that Israel has been transferring money to Gaza for 15 years. "This is not our money, but theirs," he said, adding that it was not aid or a grant. He said commitments should be honored, but that the government would investigate whether it was in Israel's best interest to introduce the Egyptian pound to the Strip.