Hamas leader Ismail Haniyeh in Gaza. 'Background of recent conflict was clearly financial'
Photo: Reuters
Dr. Adam Reuter
Hamas using mafia-like tactics to make money
Op-ed: Gaza economy based on blackmail and protection money received as 'donations' from world's nations after round of violence with Israel.
The history of ancient times and the Middle Ages is filled with examples of empires and kingdoms that "made a living" from blackmail and demanding taxes and "protection fees" from nations they conquered or threatened.
After being threatened itself, the Eastern Roman Empire (Byzantine) was forced to pay taxes and protection money to the Huns, and the Western Roman Empire paid the Vandals (a tribe of German-Danish descent, in which the term "vandalism" originated).
The return for the extortion of protection money could have been gold and silver, goods or even slaves and maids.
Economical reliance on blackmail and protection money was a cross-continent "livelihood," which was popular among the occupying nations and was extremely profitable. The Roman Empire made a very good living from it, as did the Persian Empire, kingdoms in China and even the Aztec and Inca kingdoms in Central and South America.
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In the Early Middle Ages, it was the bloodthirsty Vikings, the forefathers of the Scandinavian people, who based their economy in certain periods on plunder raids as well as blackmail of the English and Franks, among others people.
Later on, the Mongolic people received protection money from the Chinese and the Koreans, as well as from the Persians. The Arabs and Ottomans made a living from it too. Taxes under threat and protection money in different forms were demanded by colonialist empires such as Portugal, France, Holland, Spain and Britain, from different nations under their control up until the modern era.
In fact, there has hardly been a single dominant nation in human history which has not abused its power to threaten and demand taxes and protection money from the people it intimidated. The Islamic State is repeating the exact same practice in a modern version, but that's not the only group doing so.
The Gazans' new livelihood
Hamas, which took over the Gaza Strip in 2006, realized within a short period of time from where it could draw financial resources to fund its rule. In addition to taxes on the public and an "import tax" on goods smuggled through the tunnels, the Gazans enjoy financial resources in the form of international donations from the United Nations, mainly UNRWA, European countries, Arab countries, Japan and the United States.
The funds help with the endless reconstruction of the Strip and provide the Palestinian people with permanent assistance.
The $5.4 billion received from the world's nations to rehabilitate Gaza can be compared to selling 100 startup companies (Photo: Reuters)
Several years ago, Hamas "discovered" what nations used to do in ancient times and in the Middle Ages and what the mafia in the US does in the modern era: Making a living through threats and demanding protection money. The need for funds to rebuild the Strip is renewed every few years after each round of violence with Israel.
The background of the latest round was clearly financial – Hamas had run out of money to pay the salaries of tens of thousands of members of its "security organizations," and that was a good enough reason to provoke Israel.
Hamas assumed that a conflict with Israel would pressure it to allow the Palestinian Authority in Ramallah to transfer funds to Gaza (Hamas was willing to enter a unity government with its bitter rivals, Fatah and Mahmoud Abbas, on these grounds), and in case an overall clash developed, it would be able – for the third time – to obtain grants and donations to rebuild the Strip.
Everyone knows how such a round ends, and the only unknown is the price both sides will pay in casualties, and mainly the Gazan side. So why is entering a round of violence worthwhile for them? We must understand that the Palestinian side makes a living from the conflict, and therefore destruction and a high death toll provide them with many benefits in the cold financial calculation (and of course benefits of propaganda and morale to encourage the national identity).
It's important to remember that as far as they are concerned, there are serious economic interests at the basis of any consideration to launch a new round of conflict with Israel.
How does Hamas' method work?
Hamas' assumptions were verified in this round as well. The threats it hurls into the ether force donor states to pay it "protection money" so that it will not make good on its threats and instead will maintain the calm in our corner of the Middle East. These threats make Israel (and Egypt) agree that once again billions of dollars are handed over to Hamas.
This pattern of action has become akin to that of the Vandals, Huns, Mongols, Aztecs and others. Hamas makes a living from protection money (which is euphemistically called "donations") which it receives from many countries in the world in order to prevent it from unleashing violence.
According to media reports, the Gazans have succeeded in raising the massive sum of $5.4 billion for Gaza's reconstruction, a sum which can be compared, for example, to the sale of 100 good startup companies.
If that is the case, the Gazans have scored big time with their venture capital fund. There is really no need to invent anything, but simply to stick to the ancient idea of threats and demands for protection money ("donations") – and the world will pay up.
Because the economic interest is one-sided – as the Palestinians are the only ones who financially benefit from a new brawl with Israel – the created asymmetry works in their favor. It provides them with an important advantage in their overall view of the desire to start another round.
This may be the main reason why we should have prevented them from receiving funds for "reconstruction" purposes from the world's nations, or at least insisted that some of these funds would be channeled to constructive goals like building them an independent power station, a seawater desalination facility and industrial plants.
Dr. Adam Reuter is the chairman of the Reuter Meydan Investment House and CEO of Financial Immunities Ltd.
