Palestinian security forces confiscate $817,000 from Hamas official

GAZA CITY, Gaza Strip -- A senior Hamas official on Friday tried to sneak $817,000 into the Gaza Strip in a pouch under his shirt, the first major cash smuggling attempt by an increasingly desperate Hamas government choked by Western sanctions.

Palestinian security forces confiscated the money at the Egypt-Gaza border, and Palestinian President Mahmoud Abbas -- Hamas' main political rival -- ordered a criminal inquiry. Abbas' decision was bound to raise tensions already high after police loyal to Abbas and a new Hamas militia exchanged fire earlier Friday.

Hamas demanded that the money -- all in 500-euro bills -- be returned, saying private donors abroad intended it for Gaza's poor. The alleged smuggler, Hamas spokesman Sami Abu Zuhri, "resorted to this way ... when all other ways were blocked," said government official Ghazi Hamad.

"This money is donated from abroad, it was meant for poor people," Hamad said.

Hamas has been unable to bring in tens of millions in aid from Arab and Muslim countries because Arab banks, afraid to run afoul of U.S. anti-terrorism legislation, refuse to transfer the money. The West froze vital aid to the Palestinian Authority when Hamas, viewed by Washington as a terror organization, 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.

Instead it has launched fundraising drives in mosques, asking worshippers to donate to public coffers. In one Gaza City mosque, about 500 people dropped cash and gold jewelry into collection boxes after Friday prayers.

The campaign appears largely symbolic, however, since the government needs $160 million a month to pay salaries and provide basic services.

Abu Zuhri was returning from Qatar when he was caught with the cash in a white pouch under his shirt and jacket at the Rafah border crossing, said Julio De La Guardia, spokesman for European observers who monitor the crossing.

Travelers must declare any sum over $2,000 and explain where the money came from, said De La Guardia, adding: "He did not declare that money, he tried to smuggle it."

Dozens of Hamas gunmen briefly blocked the crossing after the money was confiscated. Another Hamas official escorted Abu Zuhri out.

"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.

Abbas sent the money to the Palestinian attorney general, with the request to open an investigation, said Saeb Erekat, an Abbas adviser.

Moussa Abu Marzouk, deputy head of Hamas' political bureau based in Damascus, Syria, said the money should be returned. "This money is part of the money supporting the Palestinian people which the (Palestinian) Authority cannot confiscate," he told The Associated Press.

In another area of dispute, Prime Minister Ismail Haniyeh of Hamas said Friday he would not disband the new Hamas security force, made up of militants, and might even expand it. Hamas deployed the 3,000-strong force earlier this week, despite Abbas' vehement opposition.

The deployment has considerably raised tensions in Gaza, with Palestinian police loyal to Abbas increasing their presence in the streets as a counterweight to the heavily armed Hamas force.

Before dawn Friday, two policemen and a Hamas gunman were wounded in a gunfight near the Palestinian parliament building and the police headquarters.

Abbas has ruled out using force to disband the Hamas militia, fearing civil war.