Economic Crisis

Hamas-Egypt Tensions Take Toll On Gaza

Turmoil in Egypt has resulted in a beleaguered Hamas struggling to come to grips with an economic crisis. Residents of Gaza are paying the price.

Except when they have come under direct Israeli bombardment or attack, the Palestinian residents of Gaza have rarely suffered more from Hamas' mistakes and misrule than they do now. A low-level insurgency by extremists in the Sinai Peninsula, which has been going on for at least two years, erupted with much greater intensity following the ouster of former Egyptian President Mohamed Morsi.

The Egyptian military claims that Morsi was essentially giving "a free hand" to the Sinai extremists and that this may have contributed to his ouster. The army has now launched a massive counteroffensive, without Israeli opposition, in the restive areas of Sinai, including much of its northern section and the border region with Gaza.

The Egyptian military, government and much of its public strongly suspects Hamas has been involved with the Sinai extremists in one capacity or another and regards any porous qualities to the border area as a key strategic asset of the insurgents. This is based on a great deal of highly suggestive evidence of collusion and collaboration, including Egyptian military claims that 34 Hamas members were killed in the initial fighting when they began their new campaign.

Therefore, Hamas is a crucial secondary target of the Egyptian military counteroffensive against the extremists. And it is the economy and people of Gaza that are paying the price. This has meant the shutting down of an estimated 80 percent of all Gaza smuggling tunnels, at least 850 of them in the past two weeks. It's estimated that these closures cost the Gaza economy at least $230 million in June alone, and that number is quickly rising.

Additionally, Egyptian restrictions on the movement of people and goods through the Rafah crossing have never been tighter. The border is now generally closed, and occasionally and temporarily opened to allow stranded Palestinians to return to their homes in Gaza—or for a much smaller group, to leave them and enter Egypt, generally for certified medical or other exceptional reasons.

Reconstruction and new construction in Gaza is at a standstill. Few Gaza businesses remain unaffected by the economic crisis, and Gaza's dependency on Palestinian public sector employee salaries, which are not paid by Hamas but by the Palestinian Authority in Ramallah, has become even greater than ever.

And while the people of Gaza suffer because of its policies, Hamas has entered the greatest political crisis since its founding in 1987. The overthrow of Morsi has created a generalized crisis of credibility, authority and confidence for Sunni Arab Islamists generally, and Muslim Brotherhood parties in particular. Hamas is the hardest hit of them all.

The organization's strategic posture is now totally untenable. In the context of the Syrian conflict it was forced to choose between its alliance with Tehran and Damascus and its affiliation with the regional Muslim Brotherhood movement. Since the Syrian Brotherhood was one of the key groups in the anti-regime uprising in Syria, Hamas could not stay neutral. Under the direction of its political leaders, especially Khaled Mishaal and his deputy Mousa Abu Marzouk, Hamas chose to essentially abandon its relationship with Damascus and flee Syria, and greatly reduce its political ties to Tehran.

Instead, it sought funding from Qatar and Turkey, and political and logistical support from the now-overthrown Muslim Brotherhood government in Cairo. They never got much support from the Morsi government except kind words, tea and sympathy. During his rule, the Egyptian military clamped down on the border area and the smuggling tunnels more harshly than they had during the former dictatorship of Hosni Mubarak.

Nonetheless, Hamas hoped and expected that eventually the Islamist regime in Egypt would create more amenable policies, and that this would be linked to the emergence of Muslim Brotherhood governments in many other Arab states.

Those hopes are now dashed. On the contrary, the new Egyptian government is, if anything, openly hostile to Hamas. They are being investigated not only for colluding and collaborating with Sinai extremists, but for various forms of "interference in internal Egyptian affairs." One example of this is the investigation that has been launched into their alleged participation in a 2011 jailbreak that freed Morsi and a number of other key Islamist prisoners. Hamas angrily denies any "interference" in Egyptian affairs, understanding that this perception is not only exceptionally dangerous in Egypt, but also in the broader Arab world.

Several authorities in the United Arab Emirates, for example, have accused the Muslim Brotherhood movement in general, of plotting to overthrow the governments there and take control of that confederation and its vast oil wealth. The sense that most of the Arab regimes and much of the Arab public that the Muslim Brotherhood as a movement is essentially a predatory and subversive one greatly undermines the prospects for greater regional support for Hamas.

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There are elements in Hamas that were never happy with the break with Iran and have tried to keep ties open in spite of the decisions of the Political Bureau leadership. Gaza firebrand Mahmoud Zahar—who was openly critical of the Politburo on multiple issues—was removed from the leadership group, partly because of his opposition to the decision to radically distance the group from Iran. And behind the scenes Marwan Issa, leader of the paramilitary Qassam Brigades, worked to keep ties open and weapons coming from Iran despite the political differences.

These leaders, and others who questioned the Politburo's massive gamble are now in a position to gloat over being right. But the essential conditions that led Hamas to realign itself with the Sunni Muslim states remain in place. Reviving the alliance with Iran would be not only slow and difficult, it would also alienate the few patrons and options, still has left. Doha is rumored to have significantly reduced aid, but continues to fund Hamas. And now, the beleaguered Turkish Prime Minister Recep Tayyip Erdoğan is in such grave political difficulty at home that he might find positioning himself as the champion of Hamas and Palestinian resistance an attractive prospect.

But these are fairly small comforts and slim hopes. The soft power of Qatari cash and Turkish diplomatic and financial support means little compared to the hard power of the Egyptian army, which controls the only border Hamas can access other than those dominated by Israel. Indeed, in recent months, Egyptian lack of cooperation, even under Morsi, was so great that Hamas had to rely on expanded exports to Europe and other markets through crossings controlled by Israel; essentially asking and receiving Israeli permission for their economy to function. Given Hamas' stated positions regarding Israel, this was embarrassing and humiliating, but necessary.

Now the situation is totally out of control. Hamas is completely at odds with the new Egyptian government, increasingly unpopular with the Egyptian public, and has very few options left. For now its control of Gaza remains unchallenged. But if the situation continues to deteriorate, that could start to change quickly. Hamas has accused Egypt of wanting to resume the direct control of Gaza it had from 1948-1967.

No Egyptian government would possibly want or allow that. But even such a silly accusation reflects the growing sense among Hamas leaders that, like their erstwhile friend Mr. Morsi, their days in power may also be numbered.