Hamas is grappling with a severe cash shortage in Gaza, as Israel tightens restrictions and intensifies its military campaign against the militant group. The financial crisis has crippled the group’s ability to pay its fighters and government employees, signaling deepening cracks in its organizational structure.
Israel’s offensive hits Hamas’s cash network
According to a report from the Wall Street Journal, in recent weeks, Israeli forces have reportedly targeted key figures involved in Hamas’s internal financial operations. According to Arab, Israeli, and Western intelligence sources, several political operatives and a prominent money changer linked to terrorist financing were eliminated or forced into hiding. These operatives were crucial in distributing funds throughout the Gaza Strip.
As a result, salary payments to many government employees in Gaza have stalled. Senior fighters and officials received only partial payments during the Ramadan holy month. The typical monthly salary for a rank-and-file Hamas fighter, estimated at $200–$300, has now become irregular.
Distribution risks and breakdown of payment systems
Even if Hamas still holds physical cash reserves, distributing money in Gaza has become increasingly dangerous. “Even if they sit on large amounts of cash, their ability to distribute it would be very limited right now,” Wall Street Journal quoted Eyal Ofer, a researcher on Gaza’s economy. Disbursement points or courier-based transfers risk being tracked and attacked by Israeli forces, he added.
File photo of Palestinians watching as Hamas fighters take up a position ahead of handing over four bodies to the Red Cross in Khan Younis on Feb 20. (Pic credit: AP)
This has pushed Hamas to rely on informal, person-to-person cash networks, especially after Israel resumed attacks in March. During the temporary ceasefire earlier this year, the group managed to set up distribution points to pay fighters and workers either in cash or with goods.
From black market sales to foreign funding
Before the war, Hamas received $15 million monthly from Qatar and raised funds internationally, especially in Turkey, South Asia, and Africa. The group reportedly had a stockpile of around $500 million in overseas reserves.
However, once the conflict escalated, Israel sharply restricted physical cash transfers into Gaza. In response, Hamas seized about $180 million from local banks, including the Bank of Palestine, and leveraged humanitarian aid as a source of income. It collected taxes from merchants, imposed customs fees at checkpoints, and resold humanitarian goods to generate cash.
File photo of Palestinians inspecting the remains of a displacement tent hit by an Israeli airstrike overnight. (Pic credit: AP)
These makeshift revenue streams were critical to Hamas’s functioning. “They were mainly dependent on humanitarian aid sold in black markets for cash,” said Moumen Al-Natour, a lawyer from Gaza’s Al-Shati refugee camp.
Humanitarian concerns mount as aid cutoff continues
The March shutdown of humanitarian aid has left Gaza teetering on the brink of further economic collapse. Human rights groups have raised alarms, warning of rising hunger and worsening conditions for the two million residents of the besieged enclave.
Israeli officials argue that blocking aid is essential to weakening Hamas’s grip on power. Defence minister Israel Katz recently said Israel is preparing a new aid distribution plan through civilian partners to ensure humanitarian assistance doesn’t end up funding Hamas.
Currency shortage adds to Gaza’s woes
Gaza’s cash economy is under strain not only from the aid blockade but also from a shortage of physical currency. Israel’s central bank had routinely sent shekels into Gaza before the war, but no new bills have been supplied since the fighting began.
With banks and ATMs damaged or out of service, residents are now resorting to physically cleaning and taping damaged currency to keep it in circulation. Analysts estimate about $3 billion in cash may still be circulating, but it’s rapidly deteriorating and increasingly inaccessible.
Dwindling funds undermine recruitment and control
The financial squeeze is also undermining Hamas’s ability to recruit new fighters and retain loyalty within its ranks. As Israel regains control over swathes of territory and Gazans voice rare public dissent against Hamas’s leadership, the group is struggling to maintain both morale and order.
The economic collapse is adding to the daily hardships of ordinary Gazans, who now face growing uncertainty not just from war but from the simple challenge of affording food, medicine, and shelter.
