(Centredaily) Israel's largest bank said Tuesday it was severing its last remaining ties with Palestinian banks in Gaza, following the Israeli government's declaration of the coastal strip as an "enemy entity."
Bank Hapoalim said in a statement that it would cease activities "with banks and branches located in the Gaza Strip."
The statement did not indicate the extent of the bank's operations in Gaza or say when the decision would go into effect, and a spokeswoman declined to elaborate.
Palestinians have no currency of their own and do most of their local business in Israeli shekels.
A Gaza expert warned the move could cause monetary chaos there.
Sharhabil al- Zaim , legal adviser for six Gaza banks, said since Gaza can work only through corresponding banks, a cutoff of Hapoalim service would cause "partial paralysis of the banks' operations in Gaza" and might lead to a run on Gaza banks.
In a letter to Hapoalim's management, the Israeli human rights group Gisha asked the bank to reconsider its action, saying it would not only further damage the already-battered Gaza economy but would also hurt Israeli firms exporting to Gaza and seeking to collect payment.
It also said the bank was going further than the government itself, which announced last week it would cut utilities to Gaza but has so far taken no operative steps.
A spokeswoman for Bank Discount, the other Israeli bank trading in Gaza, said its activity there was under discussion, but no decision had been made so far about whether to continue.
Al- Zaim warned that if Discount joins Hapoalim in halting services, that would lead to financial disaster in Gaza. "This is the worst kind of collective punishment," he said.
Israel, the United States and the EU designate Hamas as a terrorist organization and have maintained an economic embargo against the group and its institutions since it won a landslide victory in 2006 parliamentary elections.
In June this year, Hamas militiamen drove security forces loyal to Palestinian President Mahmoud Abbas out of Gaza. Abbas dismissed Hamas from the government and formed an administration of Western-leaning moderates in the West Bank.
On Tuesday, Hamas called on Saudi Arabia and other Arab nations not to attend the upcoming U.S.-sponsored Mideast peace conference, tentatively set for November, the first time it has appealed directly to Arab states to stay away.