Gaza reconstruction draws questions on digital wallets, biometric surveillance

U.S. conservative think tank, the Hudson Institute, has published an analysis on introducing digital wallets in Gaza, noting that careful design is needed to address specific weaknesses in Gaza’s current economic environment as digital systems are adopted.

With digital payment systems gaining traction in an environment with major enforcement gaps and high risk of intimidation, policymakers should consider alternative infrastructure to mitigate the risk of groups infiltrating and undermining these systems, says the Washington-based organization.

As shown by Ukraine’s Diia app, digital wallets could fill that role, providing tangible benefits even amid political disputes. These include easing oversight of financial flows, expanding civilian economic activity to stabilize the economy in the short term, and restricting terror funding.

“In Gaza, shifting economic activity away from cash could limit Hamas and other armed actors’ financial leverage,” says the organization. “These groups derive significant economic power from diverting or seizing aid distribution and taxing informal financial activity. Digital systems will help constrain their ability to do so.”

Hudson notes the U.S. Treasury Department “increasingly emphasizes traceable payment mechanisms as a risk-mitigation tool in jurisdictions prone to financial crime.”

The U.S. government has not officially endorsed any financial frameworks for Gaza. However, the Administration of Donald Trump, which has been overseeing Gaza peace efforts through its Board of Peace, has placed digital identity at the center of its own digital assets strategy. Last August, Treasury requested ideas on four technological pillars: application programming interfaces (APIs), AI, blockchain monitoring, and digital identity verification.

Meanwhile, organizations such as the World Bank are already working on advancing digital wallets in the West Bank and Gaza. The Bank recently presented a conceptual model for integrating digital ID into fast payment systems through a portable Payments Identity Credential. It leverages verifiable credentials (VCs) and is built on a trust framework established among national ID authorities and fast payment systems. The paper, The paper, titled ID Meets Instant, is examined in depth here.

According to UN and World Bank estimates, the financial sector in Gaza has suffered $14.2 million in damages between October 2023, when Israel’s attack stared, and January 2024. Over 90 percent of bank branches in Gaza were destroyed, while only three of the 94 ATMs are currently operational.

The Hudson Institute notes that Palestinians are struggling to pay for simple goods and services, including food and medicines.

UAE to fund building with biometric checks for Palestinians

Among the countries that did not decline to join Trump’s Board of Peace is the United Arab Emirates. The country has offered to fund a housing community that will provide access to basic services, such as running water, healthcare, and education, to Palestinians who undergo biometric security checks.

The “Gaza First Planned Community” is being built to house up to 25,000 Palestinians, according to leaked documents from the U.S.-led Civil-Military Coordination Center (CMCC) in Israel obtained by nonprofit investigative news outlet Drop Site News.

The so-called “Emirati compound” is located at the outskirts of Rafah in the south of Gaza. Palestinians would have to register ID numbers issued by authorities in coordination with an Israeli military branch called COGAT (Coordinator of Government Activities in the Territories).

“Residents will be able to enter and exit the neighborhood freely, subject to security checks to prevent the introduction of weapons and hostile elements,” the documents note. “All entering residents will be registered with biometric documentation to enable identification for movement and civil services.”

The plan is likely to draw scrutiny: Israel’s use of biometric technology has been attracting accusations of human rights abuses against Palestinians.

In 2023, Amnesty International published a report on a facial recognition system called Red Wolf, used to monitor the movements of Palestinians. The research claimed that the system can be linked to a larger military surveillance network.

Article Topics

biometrics  |  digital identity  |  digital payments  |  digital wallets  |  fraud prevention  |  Palestine