It’s no secret that the economic situation in Gaza is not good, to say the least. Decades of crisis, poverty, and unemployment have only worsened with time. And still, this week even Gaza’s old-timers were surprised to discover that the economy had reached new lows.

The problem: There was no money, literally. The banks closed for six days on the orders of the police, who are supposed to operate under the authority of the new government headed by Rami Hamdallah in Ramallah.

But the police shut the banks down on Hamas’s orders, and even prevented residents from reaching the ATMs. More than 700,000 people in Gaza (about half the population) depend on salaries they were supposed to receive from these banks.

They couldn’t get their salaries because, to put it simply, Hamas decided to collectively punish everyone on the PA payrolls.

For years, Hamas has fired missiles and rockets at Israel while complaining to the international community about the awful siege on the Gaza Strip, and about Israel’s collective punishment of Gaza. And here Gaza’s rulers were punishing hundreds of thousands of people over a dispute with Fatah concerning the payment of its people’s salaries.

As part of the reconciliation agreement between Hamas and Fatah — the very same accord Israel has so publicly opposed — it was agreed that a special commission would evaluate the salaries of the 40,000 clerks and security officials of Hamas. This will decide who will continue to be employed by the new government, at which rank they will be paid, by what criteria their salaries will be set (education, training), etc.

But it will take at least a few months until the commission finishes its work. In the meantime, it has not been decided who will continue to pay the salaries: the new unity government, operating under PA President Mahmoud Abbas; or Hamas. In early June, when the time came to receive May’s wages, 40,000 Palestinians, almost all of them affiliated with Hamas, found themselves without salaries in the bank.

Hamas is looking for a way to force Abbas to transfer the money. Its solution was to prevent the 50,000 employees of the old PA government from reaching the banks — workers who have been receiving salaries since June 2007 without actually going to work.

And so, 90,000 past and present government workers from the Palestinian governments — Hamas and Fatah — did not get paid in the last few days. Exacerbating the problem: The rest of the Strip’s residents, who are neither clerks nor in the security forces, were also kept away from the banks and ATMs.

On the fifth day of the bank closures, Gaza police also confiscated credit-card machines from grocery stores to keep residents from buying goods with them.

Abbas and Fatah, for their part, were in no hurry to blink. While thousands of people gathered at bank entrances (during the first couple of days, after which the gatherings dissipated), Abbas’s associates continued to explain that the unity agreement did not include any commitment from Hamdallah’s government to pay the salaries of Hamas employees. One of the individuals closest to Abbas, Azzam al-Ahmad, who was Fatah’s representative at the unity talks, insisted that Hamas was trying to take advantage of the crisis to squeeze money out of the PA.

On Wednesday, Hamas decided to allow the banks to open. The 50,000 or so PA employees were allowed to receive their salaries. But the core issue wasn’t solved: 40,000 Hamas employees were still left without money.

A Gaza City merchant, who doesn’t receive any government salary at all, told The Times of Israel by phone that he misses the days of the split between Hamas and Fatah. “At least then the banks were open.”

This statement embodies the complexity of life in Gaza in the unity-government era. There are a lot of discussions about unity, even an agreement. But there is no change on the ground. The situation remains as it was. The police in Gaza operate under Hamas’s orders, as do the other security services. Even the government offices in Gaza still don’t take orders from Ramallah, but receive their instructions from Hamas. Yet, Hamas government ministers — and even prime minister Ismail Haniyeh — did not hold a goodbye ceremony in front of the cameras, but simply left their offices.

How is the payment of Hamas salaries related to Israel’s security? In less than a week’s time, if the 40,000 salaries aren’t paid, Hamas members are planning to embark on a general strike. That includes the security forces. For Israel, this means that the same members of the “Restraining Force” operating on the Israeli border to prevent rocket fire will leave their posts, and on Hamas’s orders will head home.

This appears to be another attempt to pressure Abbas to agree to pay the salaries. But it may result in Islamic Jihad members and Salafists being tempted to fire rockets into Israel.

‘We will export missiles’

One of the radio programs broadcast this week in Gaza dealt with unemployment. Since the closing of the tunnels and the freezing of the real estate sector, the unemployment level has risen sharply, and stands today at 41%.

This percentage is alarming, considering the alternatives available to Gaza’s youth. The interviewer spoke to some young Gazans, and one of them was asked for his opinion on ways to help Gaza’s residents deal with the problem. “We’ll build factories and give workers jobs,” he said. “What kind of factories?” asked the host.

“Missile factories,” the young man replied. “And we will export them to the world.”

The head of the research division in IDF Military Intelligence, Brig.-Gen. Itai Brun, dealt with this issue in his talk this week at the annual Herzliya Conference, an elite gathering of Israeli politicians, military officials and security experts weighing in on the central issues facing Israel. He said that Hamas (and Islamic Jihad) now have hundreds of rockets capable of reaching Tel Aviv and the Gush Dan area (80 km away), thousands of rockets with a range of up to 40 km, and thousands more that can reach 20 km.

“The focus of the force structure of the two organizations is the development of self-made rockets with a range of 80 km and the offensive tunnels we saw,” Brun explained.

And yet, in recent months, it has become apparent that the ability of the groups in Gaza to import missiles from abroad, through Sudan or Libya, has been thwarted almost entirely. Much of this comes from Israeli intelligence activities and operations by the Egyptian army in the Sinai.

The sea route, primarily the small boats sailing near the Rafah coast carrying missiles and rockets, has almost dried up. The Egyptian Army even shut down the el-Arish port, declaring it a closed military zone.

These developments did not lead to dwindling rocket supplies in Gaza, but instead caused an intensification of local manufacture. Almost every week, Israeli radar detects rockets flying toward the Mediterranean Sea from Gaza. These are not misfires, but rocket tests that are becoming increasingly common.

The estimate in Israel today is that Hamas and Islamic Jihad have close to 500 rockets that can hit the Tel Aviv area. Then there are the thousands with shorter ranges.

This has dramatic consequences for Israel. In the next round of fighting between Hamas and Israel, Israel will find itself longing for the reality of Operation Pillar of Defense, during which sirens were only occasionally heard in the center of the country.

Haniyeh and the elections

The Hamas employee salary crisis is far from being solved. But assuming it gets resolved in the coming days or weeks, Hamas is already considering its next move. In less than a month, the organization plans to gather all the members of the Palestinian Legislative Council elected in 2006 in order to choose a new speaker. Up till now, Aziz Duwaik, affiliated with Hamas, has held the position. The organization’s intention is to hold a vote to select Haniyeh for the job. Since Hamas enjoys a large majority in the parliament, approving the pick should not be a major problem.

This could be consequential for Israel and the future of the PA. If Haniyeh becomes speaker, he would replace the president for 60 days — until new elections — if Abbas quits or cannot continue. This would not be a major tragedy if the elections are, indeed, held after two months. But given the question marks swirling around the idea of elections in the territories with Hamas participation (Israel will oppose it), it is possible that the temporary appointment, like many in the Middle East, could become permanent.

Abbas and Israel are aware of this possibility. But it’s not clear that the PA can politically allow itself to act against this process. Hamas, on the other hand, knows that Israel will not stand by quietly and watch the process unfold, and it is possible that we will witness a wave of arrests of Hamas parliamentarians in the coming weeks, in order to prevent them from voting in Haniyeh as Abbas’s successor.

Another move Hamas is trying to make is to ride on the wave of anger among the Palestinian public that resulted in hunger strikes by Palestinian prisoners. As of Wednesday, more than 250 prisoners were on a hunger strike, with more than 80 of them striking for almost 50 days. Seventy-five detainees have been hospitalized.

This is a powder keg on Israel’s doorstep. If a prisoner dies as a result of the strike, one can imagine the “festivities” Hamas has planned.