Israel Raids Four Ramallah Bank Branches

Israeli forces burst into Palestinian banks on Wednesday, corralled employees, covered security cameras and seized at least $6.7 million in an unprecedented raid. Israel said Iran, Syria and Lebanese guerrillas sent the funds to Palestinian militants.

Palestinian officials said the raid violated banking agreements and could trigger a run on the banks. "It's like the mafia," Prime Minister Ahmed Qureia (search) said of the operation. "I think it should be dealt with in a very serious way."

"The Occupation's Armed Robbery" was the huge red headline in Al-Hayat Al-Jadida, a newspaper close to the Palestinian Authority, for its Thursday edition. An Israeli official called the operation "legal confiscation."

Israel said the raid was part of the global fight against terror funding.

"This money is the fuel for Palestinian terror, and I am convinced we have to dry up the paths for this fuel," Defense Minister Shaul Mofaz said.

The United States criticized Israel for the bank raid. "We would prefer to see Israeli coordination with the Palestinian financial authorities in order to stem the flow of funds to terrorist groups," States Department spokesman Richard Boucher said.

The Palestinian banking system has remained relatively stable, despite more than three years of Israeli-Palestinian violence that has decimated the Palestinian economy.

Israel said the system has been hijacked to finance Palestinian militant groups — Hamas, Islamic Jihad (search) and the Al Aqsa Martyrs' Brigades (search) — that have killed more than 900 Israelis in bombings and shootings.

Much of the funding comes from Iran, Syria and Lebanese Hezbollah guerrillas, Israeli security sources said Wednesday.

Israel said it took $6.7 million to $8.9 million from the vaults of the three bank branches, and the money would be spent on humanitarian aid to Palestinians.

The raid began Tuesday night, when Israel arrested computer experts from two banks. Wednesday morning, troops in jeeps, trucks and armored personnel carriers sealed off downtown Ramallah as security forces, with the experts in tow, strode into the Cairo Amman Bank (search) and two branches of the Arab Bank (search), Palestinian officials said.

Troops covered the banks' cameras with sacks or disabled them, and herded the employees together, before eventually releasing them, witnesses said. Customers were allowed to leave after identification checks.

The Israelis sifted through several hundred bank accounts — some linked to Hamas and Islamic Jihad, Israeli sources said.

The money taken corresponded to the amounts found in the targeted accounts, the sources said, speaking on condition of anonymity.

During the raids, dozens of Palestinians in the streets threw stones at soldiers, who responded with tear gas, metal-core rubber bullets and live rounds, hospital officials said. Forty-two people were wounded, doctors said.

The raids marked the largest search yet for money transfers to militant groups and the first time forces hauled cash out of Palestinian banks. Last year, troops raided a bank in a West Bank suburb of Jerusalem, and the Palestinian Authority (search) briefly froze the bank accounts of Palestinian charities in the Gaza Strip to check for possible links to Hamas.

Palestinian Finance Minister Salam Fayad said the raids broke a banking agreement between the Palestinians, Israel and the United States. "Such measures will for sure hurt, to a large extent, the Palestinian economy and its institutions," Fayad said.

A security source said Israel was not trying to harm the banks, and those whose money was confiscated can appeal to the army. The raids were aimed instead at deterring militant groups from using the banking system, the source said.

However, Gil Feiler, a senior researcher at Tel Aviv's BESA Center for Strategic Studies, said little of the foreign money sent to militants is funneled through banks. "People are coming with $100,000 in their luggage," he said.

The raids came a day after Palestinian security officials confirmed the Iranian-backed Hezbollah helped fund the last two Jerusalem bus bombings — on Jan. 29 and Sunday — in which 18 Israelis and a foreign worker were killed.

The Al Aqsa Martyrs' Brigades, an armed group with ties to Yasser Arafat's Fatah movement, claimed responsibility for both attacks, though security officials said all three groups were involved.

A senior Al Aqsa member said the group originally was funded largely by Fatah, but has been getting more of its money from Hezbollah. Last year, then-Prime Minister Mahmoud Abbas (search) paid some Al Aqsa militants not to carry out attacks, but some cells rejected the deal and turned to Hezbollah for funding, the militant said, speaking on condition of anonymity.

The Lebanese group had transferred payments of $50,000 to a militant leader in the West Bank city of Nablus every two or three months for distribution to different cells, though the payments have decreased in recent months, according to the militant.

One cell in the Balata refugee camp gets at least $1,000 a month for ammunition and cellular telephone calling cards, the militant said. When the group plans to carry out an attack, Hezbollah gives it $10,000 to $15,000.

Former Justice Minister Yossi Beilin told Israel's Channel One television he doubted the government could prove the money it seized was earmarked for militant groups.

Yuval Steinitz, a lawmaker from the ruling Likud Party, said that did not matter. "We are in a war against the Palestinians and the Palestinian Authority, it is not about proof," he said.