a 

. .

..

 

 

 

The Two

anks oi Ierusaem

 

Roger Prz'edland and Richard eclat

nly a few hundred meters separate two Jeru-

salem banks. Located near the center of Mea

She?arim, the residential epicenter of the ultra-
Orthodox community of Jerusalem, both naturally
are Jewish establishments. But the services they offer
differ markedly.

The ?rst has a namea?Bank Discount. Its branch
of?ce, located in a modern of?ce building, is part of a
multinational operation linked to the major capital flows
that ?nance investment in Israel. The second has no
name, and its location in an old stone building can be
found only by word of mouth. Both, however, do a
brisk business. 

At the ?rst bank, the lines move slowly as the tellers
?ll out their forms by hand in triplicate; at the second,
the lines move at a rapid clip?more like buying movie
tickets than making ?nancial transactions. The exchange
rate is also superior at the second bank. At the ?rst bank,
you need a passport to make currency exchanges; at the
second, no identi?cation is required. At the ?rst bank,
clearing a personal check from abroad can take a month.
At the second, a foreign check can be cashed immedi-
ately; only a local telephone number may be requested.
At the ?rst bank, the tellers won?t even look at two-party
checks; at the second, such checks pose no dif?culties.

By all indications, services at the second, nameless
bank are superior to the ?rst.

But there is one other service we neglected to mention.
Banks like. these also launder money for the Palestine
Liberation Organization. For a percentage?some say
ten, others ?fteen?these Orthodox Jewish bankers take
dollar deposits from the PLO and their bankers in Zurich
and Geneva, and disperse them through Jerusalem.

BLACK MARKETS

These pious ultra-Orthodox Jews call themselves
baredim, literally ?those who fear God?s wrath.? They
are the descendants of the old Yishuv, the pre-Zionist
Jews who came to live in the holy cities of the Land of
Israel?Jerusalem, Safed, and Hebron?out of sacred
obligation rather than patriotic duty. They do not simply

 

Roger Friedland and Ric/yard ec/Jt teacb sociology and religious
studies respectively at the University of California, Santa
Barbara. They are completing a book, To Rule Jerusalem, on
the contemporary politics and religion: of that city.

 

put the demands of the Torah above the Jewish state;
they see the secular nationalist state as blasphemous,
with potentially disastrous consequences for the Jewish
people. Over the decades they have resisted incorpor-
ation into the Israeli body politic in every way possible.

The baredim are fragmented among the followers of
rival rabbis and rebbes. Many of these communities
run their own unof?cial, private banks, which perform
services for their members and allow them to go about
their business with a minimum of contact with Zionist
institutions. In one of these small of?ces a door opened
for a few seconds, and we saw what appeared to be at
least a quarter of a million dollars stacked on a table
in the back room. These separate retail operations,
according to one investigative reporter, are connected
to a network of major black-market money dealers who
control the larger ?ow of currencies brought in and out
of Israel by runners.

The several baredi communities of Mea She?arim and
its surrounding neighborhoods constitute a hermetically
sealed social world each with its own schools, system of
transport, system of housing ?nance, food supplies,
and newspapers. When their natural hostility to the
profane Zionist world that surrounds them is combined
with each subcommunity?s distinctive dress, speech, and
even gait, it makes police surveillance, let alone pene-
tration, extraordinarily dif?cult. Indeed it has proved
considerably easier for the Israeli police and military to
in?ltrate Palestinian terror networks than to ?nd in-
formants among the insular communities of the baredim.
Mea She?arim has thus long provided a natural habitat
in which to conduct. black-market operations in mer-
chandise and currency, to import and export without
paying taxes, to circumvent the complex regulations of
a slow Israeli state bureaucracy.

Not all baredi community ?nancial institutions launder
money for the PLO. This particular bank, its ?tellers?
wearing their characteristic white knitted lezppot, is run
by members of the Hungarian Hasidic community, which
is centered around their rebbe, the Reb Arieleh. Reb
Arieleh?s community has been one of those most hostile
to Zionism, seeing in it a profane preemption of the
messianic function. God, not people, they believe, must
return Jewish sovereignty to Jerusalem.

This is a community at war with the world around it,
and particularly with the authority of the State of Israel.

35

 

Young members of anti-Zionist barea?z' communities like
these have repeatedly defaced the graves of Eliezer
Ben-Yehuda, the founder of contemporary Hebrew, and
of Theodor Herzl, the intellectual father, and David
Ben-Gurion, the political father, of the Jewish state.
Sometimes even swastikas have been sprayed on the
stone slabs marking these sacred nationalist graves. In
these communities, Yiddish is the language of daily life.
Hebrew is reserved strictly for prayer and study. The
members of this community have been militant partici-
pants in the struggle to protect the sanctity of Jerusalem
from the contemporary Zionist ?Hellenizers? who have
brought mixed-sex swimming pools, football stadiums,
cinema on Shabbat, bathing-suit advertisements on bus
shelters, and the archaeological disturbance of ancient
Jewish graves. 

In baredz' communities like these, there is no love lost
for the Zionist state. Moreover, the baredz'm of this
community are hostile to the ways in which religious
parties like Agudat Yisrael, Shas, and now Degel ha
Torah have enticed their non~Zionist Orthodox brethren
through the material blandishments of the Israeli state
which funds the ever-growing number of young men
who study Talmud rather than serve in the Israeli army.
More and more, these non-Zionist Orthodox Jews are
being drawn into the electoral politics of the Zionist
city and state because they want to get their hands, as
one baredz' contemptuously put it, ?on the big cake.? It
is not surprising that an enterprise run by one of the
bastions of the Eda Haredit, the grouping of baredz'm
that, unlike the Agudat Yisrael and its offshoots, has
refused to have anything to do with Israel, is not averse,
if the price is right, to helping the PLO funnel money
to support the intzfada.

A highly placed military source con?rmed that this
community and others like it were involved in laundering
PLO money. ?Money has a very interesting nature,? the
Israeli of?cer told us. ?It doesn?t have any smell, nor any
color.? While the barea'z'm who play this role don?t have
a strong political aversion to it, they are not politically
motivated to do it either. ?All these people are involved,?
the Israeli of?cer continued, ?because they want to
make money. They don?t care about Palestinians. If you
come to them, or Muhammad from Nablus comes to
them, they give you the same price.?

Why don?t the Israelis shut operations like these
down? Several years ago, there was a raid on a private
baredz' bank. The banker?s wife ran to the window with
thousands of dollars in bills, which she threw down to
the street below. Haredi women scrambled to pick up
the notes and scurry home with them, while their men
blocked the police?s way below. But such raids are
unusual. Although a runner has been arrested here or
there, not one of the major barea'z' ?nancial operations

36 TIKKUN VOL. 4, No. 3

 

has ever been shut down. The fact is that the black
market for currency performs an important function in
the Israeli economy. The Israelis concede that they
cannot tamper selectively with this market without
endangering the entire ?ow of baredz' cash into the
country. This ?ow of ?innocent? money, as they call it,
is critically important to a stagnant economy whose
foreign currency reserves are often dangerously low.

THE DIVIDED CAPITAL

fter more than a year of the Palestinian intzfada,

Jerusalem is a city starkly divided between Jewish

and Arab territories. The of a united city
has been shattered by regular stoning and ?rebombing
of Israeli buses traveling between the Hebrew University
on Mount Scopus and the Israeli downtown. Unlike
the previous city election in 1983, this year only a few
thousand Palestinians dared to vote, and most who did
so came to the polls after dark. Tour buses no longer
visit the site where King David ?rst uni?ed the twelve
tribes of Israel because it lies in Silwan, a Palestinian
neighborhood where disturbances are routine. Israelis
used to swarm through the twisted alleyways of the Old
City looking for better hummus and Palestinian needle-
work. Now, with the daily afternoon strikes, the hostile
stares and the stabbings, the Old City, even its Jewish
Quarter, is relatively empty. Traf?c is so light that the
city has stopped charging money to park in the huge lots
adjoining the Jaffa Gate. For most Israelis, Jerusalem has
become what it was before 1967?the end of the line.

But the East European black-coated Jewish baredi
money changers on the western side of the city and
their more typically western-suited Palestinian counter-
parts on the east, who have cooperated for a very long
time, have not broken off their relationship. One can
still hear a baredz' money changer having a phone con-
versation in ?uent Arabic. In fact, the z'm?zfada has inten?
si?ed this long-standing cooperative relationship.

For several decades, Israelis? demand for dollars has
tended to be greater than the supply, as indicated by
the greater number of shekels one could get in exchange
for dollars from money changers than from the large
institutional Israeli banks. On the western side of the
city, the primary market was the exchange of Israeli
shekels for dollars that came into the city from the
tourist trade. Israelis bought dollars as a hedge against
in?ation and the recurrent devaluation of their currency,
and also because the dollar was the currency of choice
for capital ?ight. On the eastern side, the Palestinian
money changers exchanged Jordanian dinars for Amer-
ican dollars and Israeli shekels. Many Palestinians
needed shekels to do business with the Israelis, and
they also wanted dollars as a way to get their capital out

 

 

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to European, as opposed to Jordanian, banks. The Jews
of Jerusalem had more Shekels than they wanted while
the Arabs had too few. Because of the large ?ow of
dollars that made its way into Amman from the Gulf oil
economies, the dollar was relatively cheap in Jordan.
The Arabs of Jerusalem had more dollars coming over
the bridges to Jerusalem than they knew what to do
with, while the Israelis had too few. Therefore, coopera~
tion between barea?z' and Palestinian money changers
was only natural.

There was one problem, however: those darn dinars.
The Jews were uninterested in exchanging their Shekels
or their dollars for Jordanian dinars, even though at
that time the dinar was a relatively stable and strong
currency. The Palestinian money changers of Jerusalem
needed to convert their Jordanian dinars into dollars in
order to be able to trade with their Israeli counterparts
and work the Shekel trade that their local customers
demanded. While Palestinian conversion of dinars into
dollars took place in Amman, the barea'z' bankers also
helped. The need for that help grew over time. In the
early 19805 the Gulf oil economies faltered and the
Jordanians began to make it more dif?cult for Pales-
tinians in the West Bank to work abroad and thereby
bring monies back over the bridges that cross the Jordan
River. The flow of dollars to the Palestinian money
changers in Jerusalem began to slow.

THE ECONOMICS OF THE INTIEADA

ber 1987, the shortage of dollars, and of money

generally, has reached crisis proportions on the
Palestinian side. The ?ow of dollars into the Palestinian
economy of the West Bank and then into Jerusalem has
been hit from three sides: from Jordan, from the West
Bank, and from Israel.

The intz'fada caughtJordan?s King Hussein by surprise.
Initially, some of the king?s supporters in Jerusalem
went privately to the Israelis to complain that insuf?cient
force was being used to put down a revolt that threatened
Jordanian in?uence as much as it threatened the Israelis.
But after nine months of nationalist uprising, Hussein
formally renounced his claims to the West Bank, over
which Jordan had long asserted its political authority,
even though it had assured its Arab brothers that it
held the West Bank as a ?trustee.? Jordan stopped paying
the salaries of over twenty thousand of its West Bank
employees. More important, it radically reduced the
volume of West Bank Palestinian agricultural produce
allowed across the bridges, which had fed the Jordanian
population or had been shipped to other Arab markets.
As more and more pro-Hashemite ?gures slipped into
the shadows or allied themselves with the uni?ed leader?

ut in the year since the intifada broke in Decem-

ship of the z?tz?faa?a, Hussein also stopped paying
patronage designed to maintain his own network of
clients, supporters, and informants. These moves all
reduced the movement of dinars and dollars into the
West Bank.

Hussein moved for political reasons?to pressure
the PLO to provide responsible leadership, to show the
West Bank Palestinians and the PLO that Jordan would
have to be a player in any eventual negotiations, and to
prevent the upsurge of domestic Palestinian nationalism
from engul?ng his own predominantly Palestinian state.
Demonstrations in Jordan in support of the t'ntz'fada were
ruthlessly suppressed. Over and over again, Hussein?s
troops swept through Palestinian refugee camps in
Jordan, picking them clean of stones. West Bank Pales-
tinian nationalists now frequently receive rougher hand-
ling on the Jordanian side of the bridges than they do
on the Israeli side. Hussein also moved for fear that in its
desperation the Israeli right might topple the Hashemite
monarchy and impose its own Palestinian solution on
Jordan, itself a British colonial construction awarded to
Hussein?s grandfather for his loyalty to the British during
World War I.

But the aging Hashemite monarch did not properly
anticipate the economic whirlwind his political maneuver
would bring in its wake. Jordan is no longer a ?front-
line? state and is thus no longer deemed eligible for the
millions of dollars in Arab, particularly Saudi Arabian,
aid it previously enjoyed. The PLO countered Hussein?s
gambit by taking its own enormous holdings out of
Jordanian banks. The value of the Jordanian dinar
plummeted to nearly one-half its former value in less
than a year, again reducing the ?ow of dollars into the
West Bank. As the dinar depreciated, Hussein forced the
predominantly Palestinian money changers in Amman,
who are connected to their confreres inJerusalem,
to close down. That also cut into the dinar-dollar flow
across the Jordan. Uncertain about the value of the
dinar and the security of assets held in Jordan, West
Bank Palestinians, who are now no longer Jordanian
citizens, are willing to pay a heavy premium to get their
hands on dollars. But those dollars no longer come
across the Jordan River.

If this weren?t pressure enough, the Palestinian up-
rising has intentionally made things worse. The z'ntzfada
is designed to make Israel pay dearly for the occupation,
to force Israelis to learn to live without the West Bank
and Gaza, and to persuade the Palestinians to live inde-
pendently of the Israeli economy. It is a tall order in
which the uprisers have only partially succeeded. Ever
since the PLO was founded, local political activists have
contemplated the possibility of getting Palestinians to
stop working for Israeli employers. But neither Israel,
Jordan, nor the PLO had any interest in the buildup of

Two BANKS or JERUSALEM 37

 

 

Palestinian-owned enterprises?which could provide
domestically controlled capital investment and employ-
ment?because of the political autonomy it might
engender. Without such autonomous Palestinian enter-
prises, Israel could use the' West Bank as a pool of
cheap labor and a captive labor market, whose rapidly
rising educational levels and limited employment oppor-
tunities would propel a continuous stream of emigration
across the bridges. And proud Palestinian nationalists
watched as their cousins literally built even the roads and
the settlements that honeycombed the lands they hoped
might one day constitute the core of a Palestinian state.

he z'ntzfada was intended at last to break the
a ?ow of Palestinian labor to Israeli employers. The
roadblocks marking off ?liberated? zones were de-
signed just as much to keep the Palestinian workers in as
the Israeli troops out. But Palestinian workers continued
to migrate large distances to work in Israel. If the zhtz'fada
could not control the movement of Palestinian workers in
space, it managed to do so in time. Strike days were and
are very successful. Palestinian buses, trucks, and taxis
do not move; Palestinian shops?except for pharmacies,
physicians? of?ces, newspaper stands, and bakeries?
are everywhere shut; and the ?ow of Palestinian workers
to Israel is reduced to a trickle. The frequency and
duration of strikes have gradually increased. Israeli dis-
tributors of car parts and washing machines are afraid
to vend their wares in what they now consider ?Indian?
territory. And in February, with the issuing of leaflet
#35 by the uni?ed Palestinian leadership, the Palestinians
took yet another step toward disengagement. Palestinian
shopkeepers had one month to remove all Israeli prod-
ucts from their shops or face the threat of having their
shops gutted. All of this has reduced the flow of Shekels
into the West Bank economy, already battered by its
own restricted schedule of daily afternoon strikes. It is
dif?cult to be very productive if you work only in the
morning.

Now add the Israeli response, and you have the
makings of a veritable cash crunch. The Israelis have
repeatedly swept through the West Bank, impounding
cash and tangible assets like television sets and auto-
mobiles. The Israelis have also radically restricted the
?ow of money from Jordan into the territories across
the bridges. A limit of approximately $400 per family
per trip has been imposed. The Israelis have also re-
stricted the flow across Egyptian and Lebanese borders.

At the same time, the need to move money
into the West Bank has steadily become more critical
since the War in Lebanon. The PLO is not just a nation-

38 TIKKUN VOL. 4, No. 3

 

alist movement whose members wait patiently for the
liberation of Palestine; it is also a fabulously wealthy
multinational corporation with holdings that stretch
around the world. Ironically, it was Ariel Sharon?s war
in Lebanon, the very war designed to crush the PLO,
that made the PLO the most important organizational
force and hence paymaster in the West Bank. The PLO
was twice pushed out?of Lebanon, ?rst from Beirut by
Israel and then from Tripoli by Syria. The Arab states
did nothing. Indeed, it was ?those good Arabs, the
Greeks,? Mahdi Abdul-Hadi, a Palestinian intellectual,
told us, who provided the ships for the PLO
evacuation from Beirut. The only effective opposition
to Israeli policies in Lebanon came from the domestic
population of Israel itself. There was one front-line left
and one constituency loyal to Arafat: the Palestinians of
the West Bank. Spearheaded by Khalil Wazir, otherwise
known by his nom de guerre, Abu-Jihad, Arafat-led Fatah
began to rebuild the grass-roots organization of the PLO
on the West Bank. All kinds of community organizations
and professional and labor associations were created.
Once the intzfada started, this network became its organi-
zational mechanism. And it was in a desperate bid to
stop the intifada that the Israelis assassinated Abu-Jihad
in Tunis in April 1988. But it was of no use.

With such a strong Palestinian demand for dollars
and such a shortfall of supply, the invisible hands of the
money market have done their work. Palestinians from
Jerusalem cannot smuggle in money because, when they
come into Israel from abroad, they have their luggage
taken apart piece by piece and are routinely strip
searched. The Jewish money changers in Mea She?arim
have naturally picked up the slack. As an Israeli reporter
told us, ?They can?t close Lod, can they? And there?s
the weak link.? For a price, the largest baredz' money
changers bring dollars into Israel for the Palestinians?
for their Palestinian counterparts on the other side of
the city, for cash-starved Palestinians who can?t get
money in across the bridges, and some? just some?for
the networks of individuals and associations that form
the organizational infrastructure of the z'ntz'faa'a. Israel
remains an open society where large amounts of capital
can move across international borders almost instan-
taneously. International organizations, friendly nations,
and sympathetic foreigners and Israelis?Jew and Arab
alike?have picked up some of the slack out of moral
and political concern. But for some of the baredim,
bringing dollars from Switzerland for PLO front-groups
is just the logical extension of a business relationship
that has long been in the making.