Hamas official is caught trying to smuggle £440,000 into Gaza

A senior Hamas official on Friday tried to sneak 639,000 euros (£434,000) into the Gaza Strip, hiding 500-euro bills in a white pouch tucked under his shirt in the first major cash smuggling attempt by an increasingly desperate Hamas government choked by Western economic sanctions.

Palestinian security forces confiscated the cash at the Egypt-Gaza border and moderate Palestinian President Mahmoud Abbas, Hamas' main political rival, ordered a criminal investigation. Abbas' decision was bound to further heighten tensions, after police loyal to Abbas and a new Hamas militia exchanged fire earlier Friday.

Hamas demanded that the money be returned, saying it was collected among private donors abroad and intended for Gaza's poor. The alleged smuggler, Hamas spokesman Abu Zuhri, "resorted to this way ... when all other ways were blocked," said government official Ghazi Hamad.

Hamas has been unable to bring tens of millions in aid from Arab and Muslim countries into Gaza because Arab banks, afraid to run afoul of U.S. anti-terrorism legislation, refuse to transfer the money. The West froze massive aid to the Palestinian Authority when Hamas came to power in March. The new government has been unable to pay 165,000 civil servants, whose income feeds one-third of the Palestinians.

Hamas has been digging in, rejecting Western demands that it recognize Israel and renounce violence.

Abu Zuhri, the Hamas spokesman, was returning from Qatar on Friday when he was caught with the cash by Palestinian border guards at the Rafah crossing between Egypt and Gaza.

Travelers must declare any sum over $2,000 and explain where the money came from, said Julio De La Guardia, spokesman for European observers at the crossing. Abu Zuhri carried the money in a white pouch under his shirt and jacket. "He did not declare that money, he tried to smuggle it," De La Guardia said.

Dozens of Hamas gunmen briefly blocked the crossing after the money was confiscated. Abu Zuhri was escorted out of the terminal by another Hamas official. "We are upset to be dealt with this way at a time when the Palestinian people are suffering from siege and starvation," Abu Zuhri told the Arab satellite TV station Al-Jazeera.

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