Funding Hamas: Who backs the party?

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Waging war is expensive.

Since Hamas is a militant group recognized as a terrorist organization by the United States and the European Union, how does it finance its struggle against Israel, which receives nearly $4 billion a year in military aid from the U.S.? The answer can be found in a complex network of business investments, fake charities, cryptocurrency operations, and international support, making it difficult to determine the exact cost of Hamas. However, experts estimate the militant organization's budget to be in the hundreds of millions. "Hamas has two wings. One is social services, and the other is the military wing, and the social services have been very active in fundraising efforts, but that money definitely goes to military needs," said Victor Asal, director of the Center for Policy Research and professor of political science at the University at Albany, State University of New York, in an interview with Insider.

Historically, charitable organizations

Connected to Hamas, they allegedly provided necessary resources to residents of the Gaza Strip suffering from food or medical shortages and served as a source of funding for the military wing. Although some of the funds may eventually reach the intended recipients, charities based outside the Gaza Strip and sometimes based in Western countries are complex fronts for Hamas's military operations.

In 2003, the U.S. Department of the Treasury designated five different charitable organizations based in the United Kingdom, Switzerland, Austria, Lebanon, and France as terrorist organizations due to their support for Hamas. In 2009, the Department of Justice convicted the leaders of the American charity Holy Land Foundation for Relief and Development for providing financial support to a militant group.

In response to the international struggle

In recent years, the group has increasingly relied less on fundraising through charitable organizations associated with Hamas. However, it still remains a consistent source of income for the militant group, two Insider experts stated.

In addition to charitable fronts, former counter-terrorism intelligence analyst at the FBI Matthew Levitt told Insider that international support, primarily from Iran, has become "one big constant" in funding Hamas, estimating that Iran contributes between $70 to $100 million a year to support the militant group. "This allows them to have a reach beyond their borders to undermine their opponents — and they are set on the destruction of Israel — it also allows them, to put it frankly, to fight to the last Arab," Levitt said. "You won't see real Iranians, Persians, on the front lines in Lebanon or the Gaza Strip. Iran is very comfortable using Arab Muslim activists who, in doing anything, will bear the brunt of the retaliation, not Iran."

For Iran,

According to Levitt, funding for Hamas ultimately provides a financially and politically inexpensive way to undermine Israel's stability and increase pressure on their opponents while maintaining the appearance of not being involved.

Recently, the Biden administration faced criticism for its September decision to release $6 billion in frozen Iranian oil revenues as part of a prisoner swap deal, which critics say created an opportunity for funds to be transferred to Hamas before the attack on Israel.

However, as Hamas's control over the Gaza Strip strengthens with financial support from Iran, the group's ability to generate income in the controlled territory is also increasing. Like many terrorist organizations that control territories or trade routes, Hamas receives funding through taxation, extortion, smuggling, kidnappings, and robberies, said Esal Insider. Levitt, who is currently the director of the Reinhardt Program for Counterterrorism and Intelligence at the Middle East Institute in Washington, stated that Hamas controls "everything that can be controlled" and oversees the region's economic activities.

“When tunnels for smuggling into Egypt were dug, Hamas collected taxes from them. When Qatar— with the consent of Israel and the U.S.— provided funds for salary payments in the Gaza Strip, Hamas could tax that as well,” Levitt said. “Any business. Any humanitarian aid, cargo after cargo that arrived daily from Israel to the Gaza Strip, all of this could be taxed and extorted—so the largest source of income for Hamas recently was not Iran; it was the controlled territory and the ability to make money from it: likely in the range of 300-400 or 450 million dollars.”

The funds collected from taxation and extortion of residents in the Gaza Strip by Hamas officials are largely invested in real estate and construction corporations, as well as in mining and infrastructure companies in the Middle East and North Africa — some of which have been designated as terrorist organizations by the State Department due to their connections with the group.

To move all their money, HAMAS largely relies on cryptocurrency operations and trade-money transactions to avoid simple tracing. "So instead of sending someone $100, you send them $100 worth of wheat or sugar or rice. And since wheat, sugar, and rice need to get into the Gaza Strip, it doesn't attract the same level of attention," Levitt said. "But if you send this to HAMAS, which is easy to do because they are the governing body, they can use it to free up other funds. They can use it to help their constituents and build support locally, or they can sell it and use the proceeds at their discretion."

In connection with Israel's declaration of war against Hamas, the United States has promised to provide $100 million in humanitarian aid to the Palestinians, which, according to The Wall Street Journal, could ultimately end up in the hands of Hamas due to its control over the Gaza Strip. This aid is intended for providing drinking water, food, and medical assistance, "but the money can be used at their discretion," said Alex Zerden, a former senior national security official at the U.S. Department of the Treasury. "And it also allows Hamas to divert funds from supporting its people to bolstering its military machine."

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