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Tuesday, November 14, 2006

Arab League cannot find way to break embargo on Hamas-led PA

On Sunday, I reported that the Arab League had decided to try to break the embargo on the Hamas-led PA in response to the US veto on Saturday of a UN Security Council resolution condemning Israel's actions in Gaza. In that post, I alluded to what I would have thought was an obvious problem when I said, "I wonder which bank is going to take the risk of doing busines with a terror organization."

The reason that no one is doing business with the PA is that the United States classifies Hamas as a terror organization and any bank that does business with a terror organization cannot do business in or with the United States. Nearly every bank in the world at least has a branch in the United States. Hence, I wondered which bank was going to risk losing its business. According to al-Reuters, as of now, the answer is none.
Arab governments have yet to find a way to transfer money to the Palestinian Authority without running into U.S. and other reprisals against the banks they use, a senior Arab diplomat said on Monday.

Asked if the ministers had adopted any practical mechanism to transfer funds and help banks escape possible sanctions, the diplomat said: "No ... We will have to work further on this issue."

"The issue is not limited to the transfer of funds, there are all kinds of difficulties ... The government of Israel has all kinds of controls over the licensing (of banks). It is a difficult one," he told Reuters on condition of anonymity.

An Arab political source said Arab banks can at least transfer the money in Jordanian dinars through Jordanian banks to avoid sanctions.

"The Jordanian dinar is widely used in the Palestinian territories and banks would not need to go through New York to transfer money in this currency."

"But this needs a bold political decision away from any affiliations with U.S. policy," he said.


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