By Tamir Haddad

Recently, an official of the Finance Ministry in the Hamas-controlled Gaza Strip announced that since 2006 the office had not received a single report of corruption. Whether or not this is true, the fact is that Hamas corruption is not only pervasive in Gaza, it has also been detrimental to the greater social and economic good.
 
The principal vehicle of Hamas corruption is excessive taxation. One of Gaza’s biggest revenue cows, tunnel smuggling into Egypt’s Sinai Peninsula, has borne the brunt of this graft. For the over 1,200 tunnels, tariffs of up to 15 percent are imposed on the thousands of tons of goods being brought in daily. Yet most are collected off the books, and of the 2,400 near-millionaires in Gaza, most are Hamas affiliates responsible for monitoring tunnels, according to Palestinian Authority officials. This is why when private tunnels began drawing business away from tunnels run by those close to Hamas, the movement declared them illegal, and implemented a mandatory $3,000 license to continue operation.
 
Excessive levels of taxation and licensing are not unfamiliar to Gazans. The Peace Research Institute Oslo reports that in the last six years municipality taxes in Gaza have quadrupled, reaching up to 60-70 percent. Fees on birth certificates have been instituted, and vocational licenses have become mandatory for all small business owners. Water, electricity, and other basic goods also continue to be taxed.
 
So when Palestinian parliamentarian Jamal Nasser claimed that of the $540 million in spending in Hamas’ 2010 budget, only $60 million would come from taxation, analysts raised red flags. Unfortunately, taxation is only a part of the story of Hamas corruption.
 
Fraud is just as prevalent in Hamas institutions. One of the main avenues for financial assistance to Gazans, personal finance programs offered by banks, is entirely run and regulated by the Palestinian Monetary Authority in Ramallah. In fact, the authority has barred these banks from doing business with Hamas. Nevertheless, Hamas officially takes full credit and responsibility for these important services, according to various intelligence sources.
 
No different is the case of electricity. Since 2007 the Palestinian Authority has footed the bill for creating and distributing power in Gaza, and yet Hamas collectors continued to go door-to-door demanding bill payment from constituents. According to a July 10 U.S. House of Representatives hearing, titled “Chronic Kleptocracy: Corruption within the Palestinian Political Establishment,” this practice has existed for some time. However, Hamas continues to convey the message that electricity is a Hamas-provided service, and it continues to pocket bill payments that Ramallah has already footed.
 
Aside from the excessive taxation and fraud, Hamas is also guilty of large-scale bribery. While more than a third of the Gaza population remains unemployed and below the poverty line, sources report that between 40,000 and 77,000 Hamas loyalists are on the party’s payroll.
 
According to the Washington Institute for Near East Policy, these employees often do not work, but receive paychecks nonetheless. Meanwhile, Hamas continues to sell land exclusively to Hamas members, further alienating any prospects of civilian economic development.
 
So what are the consequences of this rampant graft? For one, the public sector is deteriorating. Since 2007, educators have been on strike as their paychecks were cut (1,500 employees have stopped receiving pay altogether). Experienced and qualified Fatah supporters have been replaced with Hamas loyalists. The United Nations Relief and Works Agency has intervened, offering an annual $200 million for education services that reach one in three Gazans.
 
Health care is not much better off. In 2007, 50 percent of doctors and nurses went on strike, with Palestinian Authority-bankrolled employees primarily holding down the fort. Despite exorbitant taxation and a per-capita budget about equal to that of the Palestinian Authority, Hamas continues to find itself unable to pay its most important employees. The social services that it is purported to provide are meanwhile being bankrolled by outside entities.
 
Perhaps most importantly, as fraud goes unheeded and Hamas continues to take credit for any social successes that foreign parties provide, the party continues to remain in power. Through bribes, Hamas buys Palestinian support through its 77,000-large bureaucratic army and fraudulently takes credit for the good that is provided by outside organizations or the Palestinian Authority. Many continue to believe that public funds are actually being used in their favor, while others find no advantage in speaking otherwise. Hamas has been known to stifle not only business competitors, but those who speak out against it.
 
Three months ago, 57 percent of Gazans reported to the Palestinian Center for Policy and Survey Research that they perceived widespread corruption in their governing institution. So when the Finance Ministry announced that it had no recent corruption reports, maybe it was telling the truth. After all, despite the corruption that has shattered Gaza, the authoritarian state does not leave latent whistle-blowers many options. And Gazans continue to pay the price for it.
 
Tamir Haddad is a recent graduate of the University of Michigan. He wrote this commentary for The Daily Star.