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are forced to seek high-interest loans on the black marketÌýdue toÌý against them by financial institutions, putting them at the mercy of organised who loan money at extortionate interest rates and target their belongings, lives, andÌýfamilies if they default on payments.

Mohammed Mahmoud, from Ar'ara, was forced to borrow 300,000 ILS ($90,000) from a 'crimeÌýfamily'Ìý(how the Israeli police refer to families with a substantial criminal history)Ìýto pay off debts he had incurred in 2010 from a series of bounced cheques.

Mahmoud assumed he would be able to pay off theÌýloan within a few months. However, by the end of 2016, the amount he owedÌýhad escalated to 9 million ILS ($2.7 million), and he found himself trapped in a vicious circle of ever-mounting debt.

"Mahmoud assumed he would be able to pay off theÌýloan within a few months. However, by the end of 2016, the amount he owedÌýhad escalated to 9 million ILS ($2.7 million), and he found himself trapped in a vicious circle of ever-mounting debt"

Mahmoud considers the loan to be the turning point of his life, after which everything deteriorated. He was forced to step down from the sewing factory he owned and give up his comfortable lifestyle. The only solution his family was able to come up with to the crisis, which nearly cost him his life, was to divide the debt between family members, whoÌýhave made monthly payments to severalÌýgroups for the last five years, according to his cousin Louay, who pledged to pay 1.5 million ILS ($466,000).

The 'usury trade'Ìýphenomenon, which is widespread in Palestinian communitiesÌýin Israel, is referred to with various labels says DrÌýWalid Haddad, a criminology lecturer at Tel Aviv University, in a conversation with °®Âþµº's Arabic-language sister publication. "Within Israel theyÌýare widely referred to as 'black market' loans, and are one of the main sources of finance for criminal gangs and families, who call them 'non-bank' loans".

The debts rise steeply: monthly interest on theseÌýloans fluctuates between 10% and 15% of the total amount, explains DrÌýWael Kraiem, a former economics professor at Tel Aviv University. This contrasts with normal bank loans, which accrue interestÌýannually.

For example, if someone borrows 1,000 ILS ($310) in a non-bank loan he will be forced to pay 100 ILS monthly, adding up to 1,200 ILS extra to be paid over a year. In addition to this, he must pay the original loan off in full by the end of the agreement period. These conditions often prove impossible to meet, plunging the borrowers into a relentless spiral of debt, invariably accompanied by blackmail and armed threats. ÌýÌý

An individual mistake, a collective price

Last January, armed assailants fired on houses belonging to the Al-Hindi family in Lod. They discovered that their son, who was in an Israeli jail at the time, had borrowed a loan of twoÌýmillion ILS ($621,000) from one of Lod's crime families in January 2020. This increased to 10 million ILS within one year, explainedÌýfamily member Abu Ali who, alongside others intervened to try and help.

After the family wasÌýviolently attacked, they decided to offer three family propertiesÌýand a shop to settle the debt. However, this was rejected by the lenders, who acceptedÌýthe shop but demandedÌýthe rest of the repaymentÌýin cash. This forcedÌýthe family to take further loans, amassing further debts,Ìýin order to solve the problem.

Other familiesÌýwill not support their children, as happened with Ibrahim from Nazareth. Forced to borrow 5,000 ILS last year when he developed health problems that stopped him working,Ìýhe angered a crime family after he was late with an interest repaymentÌý(set at 20% of the original amount). His family refused to stand byÌýhim, terrified that this would endanger other family members.

Soon afterwards Ibrahim attempted suicide by overdosing on sleeping pills. This case was included in the study 'Violence and crime among Arab youth in Israel'Ìýby eight researchers from the Arab youth association 'Baladna', which has not yet been published.

"Only 2% of the total number of mortgages approved in Israel went to Palestinian citizens, even thoughÌýthe percentage of Israel's Palestinian population is 21.4% of the overall population"

Israeli discriminationÌýencourages a criminal economy

"Non-bankÌýfinancial transactions are estimated at hundreds of millions of dollars. Lack of appropriate oversight and regulation of the practice has allowed a space for criminal organisations to exploit this area - offering loans with interest rates far higher than would be legally permitted, and using threats andÌýviolence to force repayments".

This was explained in a study published on 11 July 2015 by the Research and Information Centre, in the Knesset's Budgetary Control Department, entitled 'Description and Analysis of the Non-Bank Loans Market'.

Mtanes Shehadeh, general secretary of Balad and formerly a member of the Knesset's finance committee, confirmed that the discrepancy between financial services available to Israelis and Palestinian citizens of Israel is the main reason so many resort to blackÌýmarket loans.

This was clarifiedÌýin a 2017 study by the Bank of Israel, showing that only 2% of the total number of mortgages approved in Israel went to Palestinian citizens, even thoughÌýthe percentage of Israel's Palestinian population is 21.4% of the overall population.

Dr Kraiem says it is difficult for PalestiniansÌýto access loans in comparison to Israelis, because Israel's banking sector treats Palestinians withÌýsuspicion and is cautious about granting their loan requests. This means that even when aÌýloan is agreed the whole process takes longer. Those who need funds fastÌýwill resort to blackÌýmarket loans.

On 13 May 2020, an official report presented to the Knesset's Welfare and Labour Committee revealed that Arab companies in Israel receivedÌýonly 4% of government loans issued since the start of the coronavirus pandemic. The result was that 'criminal families and organisations have stepped forward plug the gap'.

According to Dr Kraiem, another factor pushing Palestinians towards the black market is the lack of banking services offered in Palestinian areas. This was confirmed in a study by the economist Naim Butush from the Knesset Information and Oversight Centre which showed that the number of bank branches in Israel was 1,046 last November: 60% of them were in Jewish areas, 30% in mixed areas, and only 1% in Palestinian areas.

Other aspects of the phenomenon

In addition to Israeli policies,ÌýWeaam Baloum, one of Baladna's violent crime researchers,Ìýwarns against growing consumerist trends among Palestinians in Israel, which push many into trying to keep up with elevated lifestyles, even if this is achieved throughÌýtaking loans.

"PalestiniansÌýhave never trusted the Israeli banking systemÌýand have gotÌýused to bypassing it and dealing in cash only - creatingÌýa fertile ground for the black market"

Baloum believes an individualistic culture has grown among Palestinians in Israel at the expense of community belonging,Ìýdue to policies promotingÌýtheÌýerasure of Palestinian identity. This means that many young people seeÌýeconomic success as the only way to develop their selfhood, even if this is achieved via black market loans.

It should also be pointed out that non-bank loans are not the exclusive territory of crime families, as ordinary peopleÌýmay also become lenders for personal gain and to offer a public service: the difference is that crime families will use lethal violence to apply pressure, influence and blackmail.

Dr Kraiem adds that PalestiniansÌýhave never trusted the Israeli banking systemÌýand have got used to bypassing it and dealing in cash only - this has created a fertile ground for the black market, with those who have extra money lending to those in need.

During this investigation, manyÌýintervieweesÌýwent on to withdraw their statements. Baloum emphasised that this is understandable: "This issue is extremely dangerous. Ibrahim, who was interviewed by Baladna's field research team doesn’t even dare to turn on his lights at home because he is terrified that the crime family will realise he is there".

This is a translation from our Arabic edition. To read the original article click

Translated by Rose Chacko