Why It’s Tough to Send Aid Money to Palestine During the Latest Israel-Hamas Conflict

People around the world looking for ways to send relief funds to Palestinians after 11 straight days of violence are finding that sending money to Gaza can be quite difficult. 

The past week of strife between Israel and Palestine has claimed over 200 lives, a majority of them Palestinians in the Gaza Strip. Those looking to donate funds to local aid groups largely can’t because of long standing restrictions, by the U.S., Israel and other countries, on transferring money to bank accounts in the territories. Israel and Hamas agreed to a ceasefire earlier this week.

“We’re not aware of this phenomenon changing or getting worse in recent weeks or during the military attack on the Strip. It could just be that people are trying now and discovering they can’t make transfers,” said Miriam Marmur, international media coordinator at Israeli human rights organization Gisha, in an email. 

Banks in Israel and around the world are restricting business relationships with what they consider to be risky clients, along with Israel’s ongoing, severe controls on the movement of people and goods to and from Gaza, undermine Palestine’s economy and hinder development, according to Marmur. 

“They also impact humanitarian and human rights organizations working in the region as well as businesses who have employees in Gaza, and block families from sending remittances to the Strip,” Marmur said. 

The use of sanctions as a geopolitical tool can violate human rights and halt entire populations from accessing financial services. Earlier this year, the U.N. called on the U.S. and European Union to ease sanctions on Venezuela as the restrictions – imposed with the goal of removing controversial President Nicolas Maduro from power– were exacerbating a humanitarian crisis. People in sanctioned countries like Venezuela and Iran are increasingly looking to alternatives like cryptocurrencies, that are relatively resistant to government censorship and other restrictions, to be able to conduct day-to-day transactions. 

Venmo 

Gaza is controlled by the militant group Hamas, which is considered a terrorist organization by the U.S. and Israel. Organizations linked to Hamas are flagged on the U.S. Treasury Department Office of Foreign Assets Control’s (OFAC) list of sanctioned entities. 

On Tuesday, tech publication Rest of World reported the U.S. payment service Venmo, a subsidiary of PayPal, was delaying transactions that contained the words “Palestine” or “Palestinian” along with terms including “emergency fund.” 

“In tests conducted by Rest of World, transactions designated for ‘free palestine,’ ‘Free Palestinian,’ ‘Palestinian emergency’ and ‘Palestinian fund,’ were all completed without any issue,” the report said.

A spokesperson for Venmo told the publication the transaction reviews were OFAC-related. OFAC did not respond to a request for comment by press time. 

One Venmo user who goes by Rami for privacy reasons that appeared in the Rest of World report, was attempting to pool money for a donation to the Palestine Children’s Relief Fund (PCRF), an American organization that has provided medical relief in Gaza since 1992. Venmo eventually released the funds to Rami. 

“I sent Venmo an email detailing the fundraiser for the PCRF and asked a pointed question about whether or not the word ‘Palestinian’ was what triggered their system to report the transaction. They ignored the question and released the funds,” Rami told CoinDesk. 

Steve Sosebee, president of PCRF, said Venmo was not blocking funds connected to PCRF but was targeting a different organization.

“This is not related to PCRF. Specifically, it’s related to the inability of Venmo to properly vet organizations,” Sosebee said. 

On May 17, the same day Rami posted about Venmo’s review on Twitter, PCRF’s main office in Gaza was damaged by an Israeli airstrike. After the attack, some users began speculating that PCRF was a front for Hamas.

“How is it that an American organization registered with the U.S. government as a tax-exempt 501(c)(3) organization would be considered a front for a terrorist organization that the U.S. government considers illegal and any support would be an act supporting terrorism? The two don’t go together,” Sosebee said. 

Sosebee added that PCRF had not encountered any problems with receiving funds so far.

PayPal’s flagship service also does not do business in Gaza or West Bank, although in 2016, TechCrunch reported that it “does work for Israelis living in settlements in the West Bank, which are illegal by international law.” 

Bank restrictions and workarounds

According to Marmur, in addition to PayPal and similar payment services, all banks in Israel bar direct transfers to Gaza, while some banks globally have limits on transfers to the area.

In 2006, the U.S. Treasury Department prohibited most financial dealings with the Palestinian Authority (the interim government that exerts partial control over Gaza and some areas of the West Bank) because of suspicions that it was supported by Hamas. In 2015, Al-Monitor reported that banks in Gaza halted incoming international transfers to charitable organizations and, in some cases, froze accounts tied to charities.

In 2019, the Times of Israel reported the U.S. government had asked international banks to stop transfers to the Palestinian Authority to “pressure the Palestinian leaders to accept the Trump administration’s peace plan.”

“Banks around the world sometimes take individual decisions to limit transfers to Gaza based on risk assessment, even if there is no formal advice to do so or a block on transfers by their central bank,” Marmur said. 

Organizations in Gaza sometimes have workarounds, Marmur added. 

According to Marmur, some organizations hold accounts in Ramallah, a city in the West Bank region just north of Jerusalem. Even though no Western Union agents can be found in the Gaza Strip, a number of them are located in Ramallah, giving the impression that international transfers make it into the West Bank in a number of ways. 

“Some [organizations] just have local accounts and hope for the best,” Marmur said. 

Crypto

Although governments of heavily sanctioned states like Iran and North Korea advocate the use of cryptocurrencies to skirt sanctions, it is unclear if that is the case in Palestinian regions. 

However, in 2019, CoinDesk reported local civilians were increasingly using bitcoin for international transfers and “to bypass Israeli control,” totaling millions of dollars worth of transactions, while some Hamas members reportedly used much smaller amounts of bitcoin for their own purposes. 

In the first quarter of 2021, peer-to-peer crypto trading platform LocalBitcoins recorded monthly trade volumes twice as large as those in any of the previous three quarters in Palestine, according to Jukka Blomberg, chief marketing officer at LocalBitcoins. He also said that trading volumes in Palestine and Israel combined are fairly small, roughly $1 million per year. 

“Drawing bigger conclusions from those numbers and trends should be taken with a grain of salt,” Blomberg said. 

A spokesperson for peer-to-peer exchange Paxful also said that it has not seen big enough spikes in its trading volume in Palestine or Israel over the past few weeks to indicate a trend.