Feature: War cripples Gaza's banking system, deepens economic suffering

GAZA, Aug. 7 (Xinhua) -- With the midday sun beating down and war all around him, Abdullah Abed Rabbuh roamed the shattered alleys of western Gaza City -- not in search of shelter or food, but simply to access his own salary. After hours of walking, all he found were commission dealers demanding more than half his pay.

"I went from one place to another, but all of them were taking more than half of the salary in commission," he told Xinhua, wiping sweat from his forehead. "How can someone pay 55 percent just to get their money? I couldn't even buy flour for my children today."

Like tens of thousands of Palestinians in the coastal enclave, Abed Rabbuh has been caught in a financial gridlock caused by the nearly complete collapse of the banking system amid the ongoing Israeli offensive.

Since the start of the Israeli military campaign on Oct. 7, 2023, the Gaza Strip has been subjected to a tightening blockade that includes a ban on the entry of cash, particularly Israeli shekels, which are used in most daily transactions.

The disruption in money transfers has triggered a liquidity crisis, paralyzing financial institutions and forcing residents to turn to unregulated intermediaries.

Banks in Gaza operate only intermittently, with most branches either destroyed or unable to function due to the lack of power, internet, or physical cash. In the absence of formal banking, a growing network of informal commission dealers and unlicensed money changers has stepped in, often charging exorbitant fees in exchange for withdrawing salaries.

"I receive my salary digitally, but I only get 90 to 100 U.S. dollars in cash out of 200 because the rest goes to the commission dealer," Ahmed Al-Daour, an employee of Gaza's education authorities, told Xinhua.

"We're paying the price of the blockade twice, first through Israel's restrictions, and second through internal exploitation," the 45-year-old father of five said.

A UN report showed in mid-June that over 95 percent of households are experiencing severe financial hardship, with widespread cash shortages making it nearly impossible to purchase food.

On the streets of Gaza City, residents struggle with worn-out banknotes that vendors increasingly refuse to accept.

"I went from one stall to another, but no one would accept my money because the paper is too worn," Saleh Faisal, a 40-year-old resident, told Xinhua.

Street vendors like Mohammed al-Hallaq said they are also trapped. "If we accept worn money, we can't use it to buy new stock. It's a vicious cycle," he told Xinhua from a small vegetable stand.

According to economist Samir Abu Modallalah, a professor at Al-Azhar University and a member of the Palestinian Economists Union, the war has led to the collapse of 98 percent of Gaza's banking infrastructure.

"We're talking about more than 48,600 million dollars that were looted during the chaos, direct losses exceeding 14 million dollars, and a loan portfolio that has lost more than 1 billion dollars in value," he told Xinhua.

Inflation, Abu Modallalah said, has surpassed 500 percent in many sectors, while remittances from abroad, once a lifeline for thousands of families, are increasingly moving through informal networks that fuel the black market economy.

The economic crisis has also torn through the social fabric.

"The psychological effects are becoming visible," Mona Shehadeh, a social worker with a local relief organization, told Xinhua, saying, "We're seeing more family disputes, a rise in divorce, and growing cases of depression and even suicide attempts, all linked to economic stress."

She added that petty crime, theft, and fraud have also increased, driven by desperation and the breakdown of social safety nets. ■