Hostages as Leverage: What Is Hamas' Gamble in Gaza?

Fighters from Hamas in Khan Younis on February 20. (Reuters)
Fighters from Hamas in Khan Younis on February 20. (Reuters)
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Hostages as Leverage: What Is Hamas' Gamble in Gaza?

Fighters from Hamas in Khan Younis on February 20. (Reuters)
Fighters from Hamas in Khan Younis on February 20. (Reuters)

Despite heavy setbacks since the start of Israel's war on Gaza in October 2023, Hamas continues to project defiance and resilience against the Jewish state.

In recent days, the group has pursued a political track despite a surprise Israeli strikes on Gaza early on Tuesday that killed hundreds of Palestinians, including several Hamas leaders and fighters.

The group held back from a military response until the third day of the renewed escalation, launching only three rockets toward Tel Aviv.

Analysts say both sides are using military pressure to gain leverage, particularly after Israel expanded its limited ground operations in key areas, including the Netzarim corridor, which separates northern Gaza from its central and southern regions.

Since the war began, Hamas has relied on its main bargaining chip—the Israeli hostages in its custody.

The group surprised Tel Aviv with the number of living captives, a fact revealed during the first phase of a ceasefire that began on January 19 and lasted 42 days before continuing unofficially.

Tensions escalated again after 58 days, culminating in a series of assassinations targeting senior Hamas figures.

Despite the Israeli attacks, Hamas continues to prioritize the political route, holding firm to its key bargaining chip—the Israeli hostages.

The group remains confident that the hostages represent its strongest leverage, especially as it monitors developments within Israeli society, particularly the pressure from families of the captives on Prime Minister Benjamin Netanyahu's government.

This pressure is mounting for the government to pursue a prisoner swap, alongside Israel's clear intent to use military force to recover the hostages. Hamas sees this as a strategic opportunity.

Sources within Hamas told Asharq Al-Awsat that the group has numerous cards to play and believes these could ultimately force Israel to accept a permanent ceasefire. While the Israeli captives are a pivotal factor, they are not the only leverage Hamas holds.

The sources added that the group has military tactics at its disposal, which could be employed on the ground if negotiations fail and reach a deadlock.

Hamas aims to avoid appearing weak both to Israel and the Palestinian public, insisting on the withdrawal of Israeli forces from all parts of Gaza, including the Salah al-Din, or Philadelphi, corridor.

Sources within Hamas stress that the group has no option but to restore Gaza to its pre-October 7, 2023, status to secure breathing space. Once that is achieved, Hamas would be open to transferring power to the Palestinian Authority or to a government formed through national Palestinian consensus.

Hamas is betting on its ability to retain control over Gaza, despite Israeli strikes, allowing it to claim that it has thwarted efforts to topple its rule.

Over 15 months of military conflict, Israel has failed to completely dismantle Hamas's military and governance capabilities.

While the group was forced to operate in a limited capacity due to Israeli efforts to target its leaders at various levels, it regained strength in areas from which Israeli forces withdrew.

Furthermore, Hamas quickly regained momentum after the ceasefire, as evidenced by the resumption of its government ministries, political bodies, and the military wing: the al-Qassam Brigades. This was particularly evident during the handover of Israeli captives.

Hamas appears to rely on its continued support base in Gaza, despite heavy losses, and remains firm in refusing to compromise on certain demands.

Sources within Hamas told Asharq Al-Awsat that it is natural for the group to rely on its loyalist base in Gaza to continue resisting Israel.

This strategy is not new for Palestinian factions, which have faced significant setbacks over decades but have consistently emerged stronger and more resilient after each blow.

Hamas acknowledges that the situation in Gaza may have changed after the war, but likens it to Israel's Operation Defensive Shield in the West Bank in 2002.

While Israel succeeded in dismantling many Palestinian factions' cells at the time, those groups later re-emerged and became active again. This, the sources say, underscores the failure of Israel's military approach, which has never decisively won any battle.

Recently, Hamas has sought to demonstrate its strength in Gaza's streets. Dozens of its fighters took part in military displays, and members of its police and security forces were seen conducting arrests of suspects involved in both criminal and security-related activities.

The group also reactivated new and partially damaged facilities for its security forces.

During the first phase of the ceasefire, which lasted 42 days and extended for an additional 16 days due to efforts to prolong the agreement, Asharq Al-Awsat observed an increase in Gaza residents visiting police stations to file complaints, including some related to criminal cases.

Civilian staff from various ministries also carried out tasks, such as monitoring market prices.

After recent assassinations and the resumption of fighting by Israel, the future actions of Hamas remain uncertain, particularly if the current wave of violence continues.

Hamas leaders from various political, military, and governmental levels have once again gone into hiding, and the group has struggled to control rising market prices, which has significantly impacted ordinary Gazans.

Sources within Hamas told Asharq Al-Awsat that the assassinated leaders—such as Issam al-Daalis, Yasser Harb, and Mohamed al-Jamasi—were crucial in restructuring the group's organizational and governmental operations.

This suggests that Israel has dealt a significant blow to Hamas by targeting key leaders who were tasked with revitalizing the movement and regaining full control over Gaza once the war ends.

Many believe that Hamas's popularity has waned, even among some of its supporters, due to the devastating impact of the war on Palestinians and Israel's threats of further displacement. Additionally, there is increasing public criticism of Hamas' October 7, 2023, attack, with some questioning the disastrous consequences it has had for the Palestinian people.

Despite a decline in both its popularity and legitimacy, some view Hamas's potential willingness to cede power not as a sign of weakness but as an effort to avoid a larger, more prolonged conflict that could decimate the remaining leadership and active members of the group.

Hamas sources maintain that the group's leadership is united in its readiness to relinquish control, but only if there is a national consensus.

This decision, they insist, will not be made in response to Israeli or US pressure to remove the group from the Palestinian political landscape.

The group remains focused on preventing further conflict for Gaza's residents, emphasizing that their primary concern is not just their own survival but the well-being of the population, according to Hamas sources.

Some analysts believe that Hamas will remain a key player in Palestinian politics for many years to come, whether publicly or in the shadows—even if it steps down from governing Gaza after the current war.



Cash Shortage Squeezes Gaza Residents

Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)
Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)
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Cash Shortage Squeezes Gaza Residents

Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)
Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)

Even when food is available, many in Gaza cannot afford to buy it, as the enclave suffers from a severe cash shortage. Israel has blocked the entry of new currency into the territory since October 7, 2023, leaving residents at the mercy of money changers who have hiked exchange rates on remittances to exorbitant levels.

Palestinians in Gaza primarily rely on the Israeli shekel for daily transactions, which used to enter the strip through banks operating under the Palestinian Monetary Authority, supplied by the Bank of Israel.

Banking operations in Gaza have ground to a halt since the start of the war, and no fresh banknotes have entered the enclave, worsening an already dire humanitarian situation. Residents say they have been left at the mercy of traders who exploit the cash shortage to impose arbitrary rules on currency use.

'The Traders’ Game'

Dubbed “the traders’ game” by many in Gaza, the practice began with merchants refusing to accept worn-out banknotes and certain coins, such as the 10-shekel piece (worth about $3), which have all but vanished from local markets. Some vendors now reject older versions of bills - like the brown-hued 100-shekel note (around $28) - insisting instead on the newer yellow ones. The same rules apply to various denominations.

Speaking to Asharq Al-Awsat, Hani Jahjouh, a resident of al-Shati Camp west of Gaza City, said vendors selling vegetables and essential goods - when available - often refuse worn banknotes or specific coins, claiming they are counterfeit or easily faked.

“This just adds to the burden of people already crushed by impossible living conditions,” said Jahjouh, 59. “We don’t have solutions. We don’t even know where to get the money they’re asking for.”

Only a very small number of traders accept digital payments, and even then, residents say, they impose tough conditions - such as inflated prices or demands for partial payment in cash.

Displaced Gazan Duaa Ismail, originally from Beit Hanoun in the north of the enclave, says even when goods are available, she cannot afford them due to a lack of cash.

“We’re suffering badly from a shortage of money, and that makes it even harder to get basic items like flour and sugar - when they’re even in stock,” she told Asharq Al-Awsat from a shelter in Gaza City’s Sheikh Radwan neighborhood.

Ismail said that during a brief ceasefire, some traders had accepted digital payments through mobile apps. “But once the war resumed, things worsened, and they stopped taking them altogether,” she said.

Salaries They Can’t Spend

The crisis has also hit public-sector employees, private workers, and international aid staff, many of whom receive salaries through bank transfers or mobile wallets but have no way of accessing their funds with banks shuttered. They are forced to rely on currency dealers or traders with access to physical cash.

Amjad Hasballah, an employee with the Palestinian Authority, said he has been cashing his monthly salary through mobile banking apps for over a year and a half, paying a steep commission to money traders in return.

“When I received my last salary in early April, the commission had reached 30%,” he said.

Speaking to Asharq Al-Awsat, Hasballah explained that at the start of the war, commissions hovered around 5%, but they spiked during Ramadan, peaking at 35% around Eid al-Fitr, before dipping slightly to 30%.

“My salary is just 2,800 shekels. When I pay a 30% fee, there’s barely anything left,” he said bitterly. “At this point, the traders might as well take the whole salary and just give us pocket money.”

Caught in a Trap

Jamal Al-Mashal, a father of six who lost two children in an Israeli airstrike, said he lives off 1,000 shekels (about $280) in monthly international aid. But even that amount is slashed by up to 30% when he exchanges it through local traders.

“People in Gaza have become a cash trap for currency dealers and big traders,” he said. “They’re exploiting our desperation, and it’s like a harvest season for them - raking in profits while we suffer.”

The poorest and most vulnerable are hit hardest. Many international agencies rely on electronic payment platforms to distribute aid to these groups, who often have no access to physical currency.

No Oversight, No Restraint

The Hamas-run government has made attempts to cap commission rates at 5%, but those efforts have largely failed. Officials blame ongoing Israeli targeting of personnel involved in regulating the process.

Money changers defend the high fees, arguing that the lack of currency entering Gaza leaves them with limited options.

“We raise commission rates because there’s simply no new cash coming in,” one trader told Asharq Al-Awsat. “Once money is distributed to the public, we have no way of getting it back. What goes out doesn’t return.”

He added that while ministries and law enforcement have tried to impose limits, traders view the rules as unfair. “There have been attempts to regulate us, but we haven’t complied - they’re asking too much from us under impossible conditions,” he said.

Some municipal leaders and community elders in Gaza have recently appealed to the Palestinian Monetary Authority in Ramallah to intervene in what they describe as unchecked profiteering by traders controlling access to scarce cash.

They have called for greater oversight, including monitoring and freezing the traders’ bank accounts.

The authority has repeatedly warned against exploitation of civilians and threatened to take action. But in practice, traders continue to charge hefty commissions on money transfers with little deterrence.

The Authority has urged residents to use its Instant Payment System available through mobile banking apps, which it says offers a practical alternative to cash, promotes digital payments, and enables real-time transactions.

Cash Squeeze Tightens Further

Despite the hardship, Israel is considering new measures that could further tighten the financial stranglehold on Gaza. One proposal involves withdrawing the 200-shekel banknote (worth about $55) from circulation, on the grounds that Hamas allegedly uses it to pay salaries to its fighters.

The suggestion was reportedly made by Israeli Foreign Minister Gideon Sa’ar to Bank of Israel Governor Amir Yaron, who rejected the move. Other proposals include voiding the serial numbers of banknotes believed to be inside Gaza, effectively rendering them worthless, a step that could deliver a significant financial blow to Hamas.

According to a report published Tuesday by the Israeli daily Maariv, the proposal has backing from several ministers and economists both within and outside the central bank.

The report estimated that around 10 billion shekels in high-denomination bills - 100 and 200 shekels - remain in circulation within Gaza. These notes entered the enclave over the years through official banking channels supplied by the Bank of Israel.

Economists told Maariv that Gaza residents receive an estimated 150 to 200 million shekels each month through digital transfers from aid organizations and the Palestinian Authority. That money is then converted into cash within markets dominated by Hamas and supported by a network of money changers.

Israeli security sources estimate that Hamas has accumulated up to five billion shekels since the war began and has spent nearly one billion shekels on salaries for fighters and new recruits. The sources claim Hamas has profited significantly by reselling aid and fuel at inflated prices during the conflict.