In depth: Palestinian citizens of Israel are forced to seek black market loans due to discrimination against them by Israeli banks, leaving them at the mercy of criminal gangs who use deadly force when repaying money. debt is overdue.
Palestinian citizens of Israel are forced to seek high-interest loans on the black market due to discrimination against them by Israeli financial institutions, putting them at the mercy of organized criminal gangs who lend money to exorbitant interest rates and target their property, lives and families in the event of default.
Mohammed Mahmoud, of Ar’ara, was forced to borrow 300,000 ILS ($ 90,000) from a “crime family” (how the Israel Police refer to families with significant criminal histories) to repay debts that ‘he had contracted in 2010 from a series of bad checks.
Mahmoud assumed he would be able to repay the loan within a few months. However, by the end of 2016, the amount he owed had climbed to 9 million ILS ($ 2.7 million), and he found himself trapped in a vicious cycle of ever-increasing debt.
Mahmoud assumed he would be able to repay the loan in a matter of months. However, by the end of 2016, the amount he owed had climbed to 9 million ILS ($ 2.7 million), and he found himself trapped in a vicious cycle of ever-increasing debt “
Mahmoud sees the loan as the turning point in his life, after which everything has deteriorated. He was forced to leave the sewing factory he owned and give up his comfortable lifestyle. The only solution his family could find to the crisis, which almost cost him his life, was to divide the debt among family members, who have made monthly payments to several groups over the past five years, according to his cousin Louay. , which pledged to pay 1.5 million ILS ($ 466,000).
The phenomenon of the “usury trade,” which is prevalent in Palestinian communities in Israel, is referred to by various labels, says Dr Walid Haddad, professor of criminology at Tel Aviv University, in a conversation with The New Arabic Sister publication in Arabic. “In Israel, they are widely referred to as ‘black market’ loans and are one of the main sources of funding for criminal gangs and families, who call them ‘non-bank’ loans.”
The debts are rising sharply: the monthly interest on these loans fluctuates between 10% and 15% of the total amount, explains Dr Wael Kraiem, a former professor of economics at Tel Aviv University. This contrasts with normal bank loans, which bear interest every year.
For example, if someone borrows 1,000 ILS ($ 310) as part of a non-bank loan, they will be required to pay 100 ILS per month, which will add up to an additional 1,200 ILS to be paid over a year. . In addition to this, he must repay the original loan in full at the end of the agreement period. These conditions often prove impossible to meet, plunging borrowers into a relentless spiral of debt, invariably accompanied by blackmail and armed threats.
An individual error, a collective price
In January, armed assailants shot at houses belonging to the Al-Hindi family in Lod. They discovered that their son, who was in an Israeli prison at the time, had borrowed a loan of two million ILS ($ 621,000) from one of Lod’s criminal families in January 2020. This amount has passed. to 10 million ILS in a year, explained a family member. Abu Ali who, along with others, stepped in to try to help.
After the family was violently assaulted, they decided to donate three family properties and a store to settle the debt. However, this was rejected by the lenders, who accepted the shop but demanded the rest of the repayment in cash. This forced the family to take more loans, to accumulate new debts, in order to solve the problem.
Other families will not support their children, as happened with Ibrahim of Nazareth. Forced to borrow 5,000 ILS last year when he developed health problems that prevented him from working, he angered a criminal family after being late with an interest repayment (set at 20% of the initial amount). His family refused to support him, terrified that it would endanger other family members.
Soon after, Ibrahim attempted to kill himself by overdosing on sleeping pills. This case was included in the study “Violence and crime among young Arabs in Israel” by eight researchers from the association of young Arabs “Baladna”, which has not yet been published.
“Only 2% of the total number of mortgages approved in Israel went to Palestinian citizens, even though the percentage of the Palestinian population of Israel is 21.4% of the total population.”
Israeli discrimination fosters a criminal economy
“Non-bank financial transactions are estimated at hundreds of millions of dollars. The lack of proper oversight and regulation of the practice has allowed criminal organizations to exploit this area – by offering loans at much higher interest rates than would be legally permitted, and using threats and violence to force repayments ”.
This is explained in a study published on July 11, 2015 by the Research and Information Center of the Knesset’s Budgetary Control Directorate, entitled “Description and Analysis of the Non-Bank Loan Market”.
Mtanes Shehadeh, secretary general of Balad and former member of the Knesset finance committee, confirmed that the gap between the financial services available to Israelis and Palestinian citizens of Israel is the main reason why so many people have recourse to black market loans.
This was clarified in a 2017 Bank of Israel study, showing that only 2% of the total number of mortgages approved in Israel went to Palestinian citizens, even though the percentage of Israel’s Palestinian population is 21.4% of the total population.
Dr Kraiem says it is difficult for Palestinians to access loans compared to Israelis, because the Israeli banking industry treats Palestinians with suspicion and is cautious about granting their loan requests. This means that even when a loan is granted, the whole process takes longer. Those who need funds quickly will resort to black market loans.
On May 13, 2020, an official report presented to the Knesset Welfare and Labor Committee found that Arab companies in Israel had received only 4% of government loans issued since the start of the coronavirus pandemic. The result was that “families and criminal organizations stepped forward to bridge the gap.”
Another factor pushing Palestinians into the black market, according to Dr. Kraiem, is the lack of banking services offered in Palestinian areas. This is confirmed by a study by economist Naim Butush of the Knesset Information and Oversight Center which showed that the number of bank branches in Israel was 1,046 last November: 60% of them were in neighborhoods. Jews, 30% in mixed neighborhoods, and only 1% in Palestinian areas.
Other aspects of the phenomenon
In addition to Israeli policies, Weaam Baloum, one of Baladna’s violent crime researchers, warns of growing consumerist tendencies among Palestinians in Israel, which push many to try to follow high lifestyles, even though this is achieved by taking out loans.
“The Palestinians have never trusted the Israeli banking system and have grown accustomed to bypassing it and dealing only in cash – creating fertile ground for the black market.”
Baloum believes that an individualistic culture has developed among Palestinians in Israel at the expense of community membership, due to policies promoting the erasure of Palestinian identity. This means that many young people see economic success as the only way to develop their autonomy, even if it involves black market loans.
It should also be pointed out that non-bank loans are not the exclusive territory of crime families, as ordinary people can also become lenders for their personal gain and to provide a public service: the difference is that the crime families will use murderous violence to exert pressure, influence and blackmail.
Dr Kraiem adds that Palestinians have never trusted the Israeli banking system and have grown accustomed to bypassing it and dealing only in cash – this has created fertile ground for the black market, with those who have money. extra money to lend to those in need.
During this investigation, many people questioned withdrew their statements. Baloum stressed that this is understandable: “This problem is extremely dangerous. Ibrahim, who was interviewed by Baladna’s field research team, does not even dare to turn on his lights at home because he is terrified that the crime family will realize that he is the. .
This is a translation of our Arabic edition. To read the original article, click here.
Translated by Rose Chacko