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Monday, July 14, 2025

How the U.S.-run GHF tried to build a local network

 

This is how the U.S.-run GHF tried to build a local network of ‘aid collaborators’ in Gaza

The Gaza Humanitarian Foundation has taken over the aid system in Gaza on behalf of the Israeli army by cultivating a local network of companies and organizations to collaborate in its operations. The organizations that refused have been shut down.

The Israel-backed and U.S.-run Gaza Humanitarian Foundation (GHF) has been weathering one public relations disaster after another as new information continues to expose the organization’s complicity in Israel’s plans to “concentrate” Gaza’s population in camps ahead of their forcible displacement — in keeping with Israel’s stated military goals of conquering the Strip and expelling its people. In service of these goals, the GHF has replaced the UN’s aid distribution system with what Gazans describe as “death traps,” leading Palestinians to accuse the organization of fulfilling Israeli military objectives under the guise of humanitarianism. 

In order to bolster this facade, the GHF has been actively attempting to pressure international humanitarian organizations into cooperating with the GHF and participating in its operations. The GHF has also actively attempted to form a local network of distributors run by companies known to have collaborated with the Israeli army in the past.

Speaking with several individuals and organizations approached by the Israeli army and the GHF’s local agents, Mondoweiss investigations reveal that Israel and the GHF are attempting to coerce local and international actors into cooperating with the U.S.-Israeli aid scheme. In some cases, the GHF has tasked local companies with outreach to the population to advertise its centers and handle distribution and logistics.

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According to sources inside Gaza, the Israeli army is also pursuing a broader strategy of pressuring humanitarian organizations to either operate under the GHF framework or cease their activities altogether. The Israeli military has reportedly attempted to force international organizations to distribute their aid through GHF centers, overriding previous agreements that allowed them to operate independently. In many cases, aid shipments that entered through Israeli-controlled crossings were redirected — without the knowledge or consent of the aid organizations — to the U.S. company’s centers.

An official security source in the Gaza civil government told Mondoweiss in mid-June that Hamas possesses “reliable intelligence” confirming that the GHF has been pressuring local institutions to participate in its operations. These attempts were meant to force organizations to cooperate in a strategy of “engineering starvation and managing chaos,” the official said, which he said was part of “a politically motivated and security-driven project dressed in humanitarian garb.”

“However, these institutions, guided by their national consciousness and ethical commitment, refused to become tools for a party responsible for our people’s suffering,” he added.

But there are some organizations that have cooperated. The GHF and the Israeli army have essentially pursued two paths in dominating the humanitarian landscape in Gaza: forcing international organizations to either work with the GHF or to halt operations, and using local gangs and businesses as part of its “native” network, giving a Palestinian face to an Israeli-U.S. operation with military and political objectives. Here is how it has attempted to achieve the objective of building this network of “aid collaborators.”

The case of the al-Khozandar Company

On the night of June 11, 12 employees working for a local trading company were killed after being publicly detained by groups affiliated with Hamas’s security forces. Locals said they were from the Arrow Force, the Hamas unit tasked with hunting down looters and Israeli-backed gangs in Gaza. After being reportedly beaten and shot in the feet, the security members publicly accused the individuals of working for a company allegedly collaborating with the Israeli military. Eyewitnesses told Mondoweiss that the employees were then lynched by a crowd of people who were allegedly incited by the security members, who reportedly told the crowds that the employees were responsible for the deaths of their loved ones at GHF sites.

It later became clear that the individuals were employees of the al-Khozandar Company, a commercial firm owned by a Palestinian residing in Cairo.

The killing of the employees sparked controversy and outrage, with the victims’ families issuing a statement on June 17 demanding accountability. The statement also denied allegations that their sons were working with the Israeli-backed gang led by Yasser Abu Shabab that loots aid across Gaza, calling the accusations “false and baseless.”  

Palestinians carry food parcels distributed by Gaza Humanitarian Foundation, June 16, 2025. (Photo: Omar Ashtawy/APA Images)
Palestinians carry food parcels distributed by Gaza Humanitarian Foundation, June 16, 2025. (Photo: Omar Ashtawy/APA Images)

The events surrounding the incident, however, reveal a more complex picture. Before the families had issued their statement, the GHF condemned the “murder of 12 of our aid workers.” In contrast, the families stated that their sons were on their first day of work for al-Khozandar, suggesting that the company was working closely with the GHF. 

The security source in the Gaza government who spoke to Mondoweiss in June identified the Mohsen al-Khozandar Trading and Transport corporation, headed by a man named Muhammad al-Khozandar, as a “morally and nationally compromised” company that “coordinates directly with suspicious foreign actors at the expense of our people’s interests.” This company, the source added, “contributes, whether knowingly or not, to the systematic killing and starvation of Palestinians.”

He asserted that “certain measures” have already been taken against the company, and that “more will follow,” including classifying the company as a “complicit entity.” 

The Khozandar company has been operating in Gaza for years. Also known as “Three Brothers,” the company specialized in bringing goods into Gaza in coordination with Israel before the war, which led Hamas to classify the company as “collaborating with the occupation,” according to the security source. The source added that, during the war, the company’s activities expanded noticeably beyond trade, raising suspicions of collaboration with the Israeli army’s military plans.

According to the Geneva Council for Rights and Liberties, Palestinian workers employed by Three Brothers have been “forced to work under conditions resembling modern slavery,” and have been forced to sort and load aid boxes under direct Israeli supervision and to “serve American mercenaries.” The workers were subject to degrading searches by Israeli soldiers, and were not paid any wages, only receiving a few cigarettes and a single daily meal as compensation, according to the Geneva Council, based on testimony it says it has verified.

Al-Khozandar began implementing the U.S.-Israeli aid distribution scheme in Rafah after it contracted with Safe Reach Solution (SRS), a military contractor that is also the parent company of the GHF and has reportedly conducted military-intelligence operations in Gaza using Israeli data. According to a Financial Times investigation, the arrangement was for SRS to provide security at the GHF centers, while the Khozandar company would run distribution, specifically at the Tal Sultan center in Rafah. 

According to local reports, al-Khozandar’s role in the aid scheme is to engage local individuals and civil society organizations to cooperate with the GHF, while the FT investigation quoted a source that said Three Brothers would be “the first interface with the population” at the distribution sites, and that the Khozandar team “was well known to the Israeli security establishment and had a long history of working with them.” 

The FT reported that SRS had approached several other prominent businessmen in Gaza to staff the centers, but that they refused to participate in the U.S.-Israeli scheme, “arguing it amounted to forced displacement of people in the enclave.”

Meanwhile, the al-Khozandar family in Gaza issued a statement in May disavowing the Mohsen Khozandar Company and condemning any activities carried out by Muhammad al-Khozandar and his brothers, who manage the firm. The statement was supported by the Contractors Union and business owners in Gaza, who described any cooperation with this scheme as a “betrayal of national unity” and demanded strict accountability for all those involved.

Local testimonies also indicate that the company’s managers from the al-Khozandar family phoned several prominent influencers and content creators in Gaza, urging them to promote the company’s aid centers and claiming they were safe and free from inspections or any violations of people’s dignity.

Palestinians carry food packages distributed by the Gaza Humanitarian Foundation, June 16, 2025. (Photo: Omar Ashtawy/APA Images)
Palestinians carry food packages distributed by the Gaza Humanitarian Foundation, June 16, 2025. (Photo: Omar Ashtawy/APA Images)

Yahya Hilles, a digital creator, told Mondoweiss that a person going by the name of Noor al-Khozandar contacted him and spoke with him for over an hour, trying to convince him to encourage people to go to the GHF centers. Hilles explained that he consulted his family elders, who firmly opposed any involvement in promoting this project.

“Noor al-Khozandar kept insisting, urging me to go, film, and promote the centers, but I repeatedly asked him why he came to me specifically,” Hilles said. “He gave no clear answer. He knew that people trust me and believe what I share on social media, so he wants to drag me into this. He told me there would be no soldiers or Americans, and that I would just carry aid and return home.” 

“I knew that, even if things might go smoothly the first or second time, it might later turn into a disaster,” Hilles added. “In that case, I would be responsible before my people, so I categorically refused. I told him clearly: this issue is bigger than one person, with serious security and political implications. It cannot be handled through a simple call from one person to another.”

Israeli army attempts to strong-arm international organizations

Rahma Worldwide is among the most active humanitarian organizations in Gaza since the war began, although it has been operating in the territory since 2017. During the war, it became notably involved in facilitating the entry of medical delegations and volunteers to Gaza hospitals, where they provided services for a limited time before leaving the territory.

The organization has an extensive history in humanitarian relief. Recently, however, the Israeli military attempted to coerce Rahma Worldwide into operating under the umbrella of the GHF. In late May, the organization’s director, Dr. Shadi Zaza, told Mondoweiss that Rahma Worldwide rejected the collaboration.

Zaza stated that the organization operates in Gaza as part of a group that includes several humanitarian institutions, including some affiliated with the UN. He said that the Israeli army had informed them of the addition of a new institution — the Gaza Humanitarian Foundation — to this group, and later announced changes to the aid distribution plan, including designating new distribution points where each organization would be required to send its staff.

“We are always on standby,” Zaza said. “We’re ready anytime we’re permitted to bring in aid. Our goods are prepared and waiting at the crossings.” He noted that Rahma Worldwide had received permission the previous month to deliver four trucks carrying 4,000 food parcels, only to be surprised by an Israeli army order to transfer the aid to distribution points managed by the GHF, along with a demand that Rahma staff help with distribution there.

“We categorically refused this request,” Zaza stated. “Our agreement with the army was clear — we would distribute our parcels at locations designated for our organization, not those belonging to any other.”

Despite Rahma Worldwide’s request that the parcels be redirected to their own sites, the army insisted on sending them to the GHF-run facilities. The army also declared that GHF was now the sole authority responsible for aid distribution in Gaza.

Accordingly, the 4,000 parcels were transferred to Rafah, and the army contacted Rahma’s team, urging them to assist with distribution. But the team reached out to the organization’s U.S. headquarters, which unequivocally rejected involvement with the GHF.

“We will not be part of this mechanism. We reject it entirely,” said Zaza, highlighting that the army continues to pressure aid groups, especially those importing goods from Egypt, Jordan, or even the West Bank, insisting that all items be sourced from within Israel.

As a final request, Rahma Worldwide asked for its logos to be removed from the food boxes that were to be distributed at the GHF’s sites to avoid appearing as a participant or collaborator in the distribution scheme. This, Zaza said, reflects the organization’s firm opposition to the scheme.

According to the organization, some of the logos were removed, but boxes bearing the Rahma logo were nonetheless distributed at locations affiliated with the GHF on at least one occasion, which the organization said was beyond its control.

Palestinians aid-seekers carrying Rahma Worldwide aid boxes from an aid distribution site run by the U.S.-backed Gaza Humanitarian Foundation, in Rafah, southern Gaza. May 27, 2025. The boxes were distributed at the GHF site without the knowledge or consent of Rahmah Worldwide, according to the organization's Director, who spoke to Mondoweiss. (Photo: Ahmed Ibrahim/APA Images)
Palestinian aid-seekers carrying Rahma Worldwide aid boxes from an aid distribution site run by the U.S.-backed Gaza Humanitarian Foundation, in Rafah, southern Gaza, May 27, 2025. The boxes were distributed at the GHF site without the knowledge or consent of Rahmah Worldwide, according to the organization’s Director, who spoke to Mondoweiss. (Photo: Ahmed Ibrahim/APA Images)

Rahma identified these Israeli efforts early on as attempts to forcibly integrate them into the GHF’s network. Upon the organization’s refusal, the army imposed even more stringent conditions for aid entry.

“We have over 20,000 food parcels ready in our warehouses,” Zaza added. “But we refuse to deliver them through the American organization’s mechanism. That organization was originally just one of many working here—we had no issue with that. But now that it’s trying to monopolize aid and impose its control, that is completely unacceptable.”

This stance of refusal reflects a broader trend among humanitarian organizations in Gaza, many of which oppose the GHF for its role in facilitating Israeli military objectives. Continued pressure for these organizations to work with the GHF or leave, some warn, could lead to the withdrawal of many aid organizations from Gaza entirely, creating a severe gap in humanitarian assistance.

“If Israel continues imposing this style of control and management, we simply won’t bring in aid,” Zaza said. “Other organizations may follow our lead. This policy — though unofficial — may well be Israel’s way of clearing the field of independent organizations and turning humanitarian work into a fully controlled instrument.”

Some international humanitarian organizations have begun cutting ties with the Boston Consulting Group, the company that helped conceive and launch the GHF and had even modelled the costs of “relocating” Palestinians outside of Gaza. Save the Children recently ended a two-decade partnership with the BCG over its role in the GHF, calling the aid organization’s plan to forcibly displace Gaza’s population “utterly unacceptable.” BCG’s chief executive admitted that its involvement in the GHF was “reputationally damaging” and the result of “deliberate individual misconduct” and “missed warning signs.” 

Palestinians carry food parcels distributed by Gaza Humanitarian Foundation, June 16, 2025. (Photo: Omar Ashtawy/APA Images)
Palestinians carry food parcels distributed by Gaza Humanitarian Foundation, June 16, 2025. (Photo: Omar Ashtawy/APA Images)

The GHF has continued to push organizations to work with it as the humanitarian situation in Gaza continues to worsen. On July 6, the GHF announced that it had met with the Country Director of the UN’s World Food Programme (WFP) to propose a plan to help it “feed the north of Gaza.” 

“Right now, nearly all their trucks are being looted,” the GHF said. “We hope they will put politics aside and accept our proposal soon so we can achieve our shared mission: getting more aid to the people of Gaza.” 

The GHF was responding to a WFP statement that the need for food in Gaza was desperate. “WFP stand ready to assist the entire population,” the WFP said. “We have the food, the capacity and the systems.” The WFP could not be reached for comment regarding whether it had agreed to work with the GHF.

In an abrupt development on Monday, July 7, the GHF announced the closure of its center in central Gaza near the Netzarim Corridor until further notice. This was followed by another announcement on Wednesday, July 9, declaring the closure of its distribution point in Khan Younis. At present, only the GHF’s distribution center in Rafah remains operational. 

These announcements come amid ongoing ceasefire negotiations between Israel and Hamas. One of Hamas’s conditions for the prospective 60-day ceasefire period is that aid distributions be handled exclusively by the United Nations and its agencies operating in Gaza, completely excluding the GHF. This condition was reportedly accepted in the ceasefire talks.

This has led local reporters to speculate that the closure of the GHF’s distribution centers indicates that an agreement regarding the ceasefire’s terms is near, with the GHF complying with Hamas’s demand by halting its operations in the Strip. Local sources say it is expected that the Rafah distribution center may also be closed in the coming days, signaling that the ceasefire might soon go into effect.

Muhammad Eslayeh and Ahmad Jalal contributed reporting to this piece.

Israel’s Crime of Extermination, Acts of Genocide in Gaza


Summary

December 19, 2024  News Release

Israel’s Crime of Extermination, Acts of Genocide in Gaza

People pull plastic water containers down a muddy street amid destroyed buildings

Since October 2023, Israeli authorities have deliberately obstructed Palestinians’ access to the adequate amount of water required for survival in the Gaza Strip.

According to the World Health Organization (WHO), a person needs between 50 and 100 liters of water per day in order to ensure that their “most basic needs are met.” In protracted emergency situations, the minimum amount of water required is 15 liters of water per person per day for drinking and washing. Yet, between October 2023 and September 2024, Israeli authorities’ actions have deprived the majority of the more than 2 million Palestinians living in Gaza of access to even that bare minimum amount of water, which has contributed to death and widespread disease.For many in Gaza, much or all of the water they have had access to is not suitable for drinking.

“If we can't find drinkable water, we drink the sea water,” one father displaced to a school in Rafah told Human Rights Watch in December 2023. “It happened to me many times when I had to drink the sea water. You don’t understand how much we are suffering.”


Saturday, July 05, 2025

BCG modelled plan to ‘relocate’ Palestinians

BCG modelled plan to ‘relocate’ Palestinians from Gaza

BCG modelled plan to ‘relocate’ Palestinians from Gaza Consulting firm had multimillion-dollar role in contentious new aid scheme for shattered enclave © FT montage; AFP/Getty Images

 Stephen Foley in New York FT 04-07-2025

Boston Consulting Group modelled the costs of “relocating” Palestinians from Gaza and entered into a multimillion-dollar contract to help launch an aid scheme for the shattered enclave, a Financial Times investigation has found. 

 The consulting firm helped establish the Israel- and US-backed Gaza Humanitarian Foundation and supported a related security company but then disavowed the project, which has been marred by the deaths of hundreds of Palestinians, and fired two partners last month. 

 BCG’s role was more extensive than it has publicly described, according to people familiar with the project, stretching over seven months, covering more than $4mn of contracted work and involving internal discussion at senior levels of the firm. 

 More than a dozen BCG staff worked directly on the evolving project — codenamed “Aurora” — between October and late May. Senior figures at BCG discussed the initiative, including the firm’s chief risk officer and the head of its social impact practice. 

 The BCG team also built a financial model for the post war reconstruction of Gaza, which included cost estimates for relocating hundreds of thousands of Palestinians from the strip and the economic impact of such a mass displacement. One scenario estimated more than 500,000 Gazans would leave the enclave with “relocation packages” worth $9,000 per person, or around $5bn in total. 

 BCG said the senior figures were repeatedly misled on the scope of the work by the partners running the project. Referring to the work on post war Gaza, BCG said: “The lead partner was categorically told no, and he violated this directive. We disavow this work.” 

GHF operates four distribution sites in Gaza that break with traditional humanitarian models. The militarised system is staffed by US private security contractors and guarded by Israeli forces, which Israel argues is needed to prevent aid from reaching Hamas. The US last week announced $30mn for the effort, whose funding to date has been shrouded in secrecy. 

Palestinians at an aid distribution point set up by the Gaza Humanitarian Foundation near Nuseirat refugee camp © Eyad Baba/AFP/Getty Images 

The UN has described GHF as a “fig leaf” for Israeli war aims and humanitarian groups refused to co-operate with it. Since GHF’s chaotic launch in May, Israeli forces have killed more than 400 Palestinians trying to reach distant distribution sites, according to health officials in Gaza. 

Nine people familiar with BCG’s work described to the FT how one of the world’s most prestigious consulting firms became ever more deeply enmeshed in a scheme championed by the White House but condemned internationally. 

BCG has previously said little about the scale of its involvement. It has described the work as having begun as a pro bono project in October 2024 “to help establish an aid organisation intended to operate alongside other relief efforts”. BCG claimed subsequent work was “unauthorised” and has sought to blame misjudgements by two senior partners from its Washington-based US defence practice. 

It told the FT: “Our ongoing investigation by an external law firm has substantiated the deep disappointment we expressed weeks ago. The full scope of these projects was not disclosed, including to senior leadership.” 

BCG added that the work carried out was “in direct violation of our policies and processes”. “We stopped the work, exited the two partners who led it, took no fees and launched an independent investigation. We are taking steps to ensure this never happens again.” 

BCG was originally engaged by Orbis, a Washington-area security contractor, to help with a feasibility study for a new aid operation, according to people familiar with the early pro bono work. 

 Orbis was preparing the study on behalf of the Tachlith Institute, an Israeli think-tank. BCG was chosen as a consultant, the people said, because of its long-standing relationship with Phil Reilly, an ex-CIA operative who worked for Orbis.

Reilly was also a part-time adviser to BCG’s defence practice where the two fired partners, military veterans Matt Schlueter and Ryan Ordway, worked. 

People injured by Israeli attacks at a GHF food distribution point © Eyad Baba/AFP/Getty Images

 Using a blueprint fleshed out by Schlueter’s team, Reilly in late 2024 founded Safe Reach Solutions, the security provider for the new aid effort. Separately, a foundation, the GHF, was set up to try to raise funding for the operation from sympathetic governments. 

BCG’s team of about half a dozen staff then turned to providing more detailed business planning for SRS and GHF. Reilly, having shifted to being a client of BCG, dropped his advisory role for the firm in December, according to people familiar with the decision and his LinkedIn profile. 

The BCG work was led by the US defence practice and staffed mainly from the Washington office. But the initial phase of work helping establish the GHF and SRS was billed to BCG’s social impact practice under the leadership of Rich Hutchinson, who allocated more than $1mn in several tranches to cover the consultants’ pro bono hours. 

What BCG called “guardrails” were agreed, which declared the project should not use consultants from the Middle East or Israel to avoid accusations of bias, according to people familiar with the decisions. 

In a pivotal decision for BCG that shows how its involvement deepened, by January internal discussions shifted to a new phase of work where the firm would be paid to help establish GHF’s operations on the ground, working out of Tel Aviv.

Hutchinson indicated his openness to budgeting funds to “match” any payments to BCG from the GHF, a common practice that allows consultants in effect to charge half price to charities. 

Palestinian children grieve next to the body of a relative © Eyad Baba/AFP/Getty Images

Rather than GHF, the contract for the paid phase of the operation ultimately came from McNally Capital, the Chicago private equity firm that owns Orbis and took an economic interest in the newly established SRS, according to people familiar with the arrangements. 

Noting the US government’s appeal for “innovative solutions”, the private equity group told the FT it was “pleased to have supported the establishment of SRS as an important step toward meeting the full scope of the humanitarian need in Gaza”. GHF says it has distributed more than 1mn boxes of aid in Gaza to date, providing more than 58mn meals. 

The ultimate sources of funding for GHF and SRS remained opaque, even to members of the BCG team. At one point, as recently as April, funding appeared to dry up and many SRS security contractors returned home from the Middle East. With its fee guaranteed by McNally, BCG stayed in Tel Aviv to continue planning work. 

A person familiar with GHF told the FT in May that it had been pledged $100mn from a nation that the person refused to name. At various points, there was speculation that the UAE or a European country might fund the GHF. 

Schlueter repeatedly told colleagues that he expected multilateral support to be forthcoming. Christoph Schweizer, BCG chief executive, wrote in a message to alumni last month that the fired partners “led us to believe the effort had broad multi-lateral support from several countries and NGOs”. 

Schlueter and Ordway did not reply to FT messages seeking comment.

 The UN has described GHF as a ‘fig leaf’ for Israeli war aims, and humanitarian groups refused to co-operate with it © Eyad Baba/AFP/Getty Images 

The initial contract signed with McNally in early March committed BCG to provide eight weeks of work to help build out SRS’s operations, with a team that included at least two consultants on the ground in Tel Aviv, for a total fee of more than $1mn. 

A new project code was entered for the work in BCG’s internal systems. Travel approvals were given by officials in BCG’s risk management operation, although it remains unclear how high up the organisation those approvals went. 

Schlueter held conversations with BCG’s chief risk officer, Adam Farber, in March, according to people familiar with the meetings. In the middle of that month, Schlueter flew from Tel Aviv to Paris for the social impact practice area meeting to discuss the work, several people said. 

In Tel Aviv, BCG’s consultants were aiding SRS in developing the business side of its operations. 

This included advising on how to move supplies to distribution sites, evaluating bids from potential construction and security contractors and providing other financial guidance. While SRS was far from a typical client, such advice was in line with BCG’s normal commercial work. 

A separate side project taken on by Schlueter’s team in April stood out as more unusual and pursued without the knowledge of senior management and in contravention of their instructions, according to BCG. 

Several Israeli backers of the GHF initiative were also working on an exercise imagining Gaza after the war and how its reconstruction could be achieved. The effort was likened by people involved to other post war blueprints developed by the Egyptian government and the Rand think-tank. 

GHF operates four distribution sites in Gaza that break with traditional humanitarian models. The militarised system is staffed by US private security contractors and guarded by Israeli forces © Eyad Baba/AFP/Getty Images 

The Israeli backers had BCG produce a complex financial model whose assumptions could be used for testing a range of scenarios, including one where large swaths of the Palestinian population were relocated out of Gaza. Two months earlier US President Donald Trump had suggested emptying the shattered strip of its 2.2mn people so it could be rebuilt as the “Riviera of the Middle East” — a plan rights groups and UN officials equated to ethnic cleansing. 

BCG’s model provided assumptions for the costs of voluntary relocations of Gazans, rebuilding civilian housing and using innovative financing models such as “tokenisation” of real estate via blockchain technology. It also allowed calculation of possible GDP outcomes from reconstruction. 

Under the scenario modelled for “voluntary relocation”, Gazans would have been given a package to leave the enclave including $5,000, subsidised rent for four years and subsidised food for a year. It assumed a quarter of Gazans would leave, and that three-quarters of those relocated would never return. 

One person with knowledge of the work said: “There is no coercive element here and the plan is not incentivising people to leave. The 25 per cent is a ‘plug number’. The people of Gaza will decide. It is not a plan to empty Gaza.” 

The model calculated relocation outside Gaza to be $23,000 cheaper, per Palestinian, than the costs of providing support to them in Gaza during reconstruction. 

The BCG team did not design the post war blueprint that it financially modelled, according to several people familiar with the exercise. But the existence of the project caused uproar when it became known internally in late May because of the risks of being associated with a plan to displace Palestinians. 

Schlueter told colleagues the work was encompassed by the existing contract with McNally and did not need new approvals, according to several people familiar with the events. 

While BCG staff continued to be motivated by the goal of providing food into an enclave cut off from aid by an Israeli blockade, opposition from the humanitarian community hardened throughout April. 

Once it became clear that NGOs would not provide aid for distribution, BCG staff began to help SRS in planning the procurement of food supplies themselves. The switch caused one team member to raise concerns that SRS was not equipped to conduct such a complex operation and that the project was deviating from humanitarian principles. 

Friction between the team member and SRS led to her being removed from the project, according to several people. 

The work for those that remained was intense. Members of the BCG team in Tel Aviv were named on BCG’s “Red Zone Report” as staff who worked more than 70 hours a week. The report is circulated widely inside the firm to call out partners who may be overworking their junior employees. 

SRS continued to be reliant enough on BCG’s business advice that McNally extended the contract for two more months in early May as the operation geared up to begin aid distribution. The private equity group’s backing provided for three more US BCG consultants in Tel Aviv and took the total fees BCG had planned to bill to around $4mn, people familiar with the matter said. 

The expansion coincided with GHF’s public launch, following Israeli cabinet approval, and the UN’s condemnation of the effort. Project Aurora quickly began to attract a higher level of scrutiny within BCG. Concerns only grew as US newspapers reported on Israel’s backing for the GHF plan. 

On May 25 the decision was taken to pull the team out of Tel Aviv, shut down the work and not to collect the money that had been invoiced. The same day, on the eve of the first distribution centre opening, GHF’s chief executive Jake Wood resigned, saying the effort was incompatible with humanitarian principles of neutrality. 

At a meeting of BCG’s most senior global partners in Vienna on May 28, Schlueter and Ordway were questioned about the work. By the time the Washington Post reported on June 3 that BCG had quit the effort — the first public disclosure of the firm’s involvement — the decision had been taken to put the two men on administrative leave. 

They were asked to resign on June 4. An external law firm, Wilmer Hale, is now helping BCG’s legal team investigate what Schweizer called the “process failures”.  

“We are acting with urgency and seriousness to learn from this and to ensure it does not happen again,” he told alumni last month. “Our ambition is and has always been to contribute to effective, multilateral and sustainable humanitarian responses. We are committed to living our values with accountability for our failures and humility in how we move forward.”🔺

Tuesday, July 01, 2025

The risks of funding states via casinos

The risks of funding states via casinos

It is easy to imagine conditions in which money simply dries up, perhaps in response to large movements in bond yields

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FT MARTIN WOLF 01-07-2025


© James Ferguson

Invest long, borrow short and leverage up as much as possible. That is the way to make money in finance. It is how banks have always made their living. But we also know very well that this story can end in panic-stricken runs for the exit and financial crises. That is what happened in the great financial crisis (GFC) of 2007-09. Since then, as the Bank for International Settlements explains in its latest Annual Economic Report, the financial system has changed a great deal. But this central characteristic has not.

Moreover, notes Hyun Song Shin, economic adviser to the BIS, “despite the fragmentation of the real economy, the monetary and financial system is now more tightly connected than ever”. If this sounds like an accident waiting to happen, you are quite right. Central banks must be prepared to ride to the rescue.

The story the BIS tells is an intriguing one. Thus, the aftermath of the GFC did not make the system fundamentally different. It just changed who was involved. In the run-up to the crisis, the dominant form of lending was to the private sector, particularly in the form of mortgages. Afterwards, lending to the private sector levelled off, while credit to governments exploded. The pandemic accelerated that tendency.

That was not surprising: if people want to save and lend, someone else has to borrow and spend. That is macroeconomics 101. In addition to the change in direction came a change in intermediaries: in place of the big banks have come global portfolio managers. (See charts.)

As a result, cross-border bond holdings have increased enormously. What matters here are changes in gross, not net, holdings. The latter are relevant to long-term sustainability of macroeconomic patterns of saving and spending. The former are more relevant to financial stability, because they drive (and are driven by) changes in financial leverage, notably cross-border leverage. Moreover, notes Shin, “the largest increases in portfolio holdings have been between advanced economies, especially between the US and Europe”. The emerging economies are relatively less involved in this lending.

How then does this new cross-border financial system work? It has two fundamental characteristics: the leading roles of foreign currency swaps and non-bank financial intermediaries.

The biggest part of this cross-border lending consists of the purchase of dollar bonds, particularly US Treasuries. The foreign institutions buying these bonds, such as pension funds, insurance companies and hedge funds, end up with a dollar asset and a domestic currency liability. Currency hedging is essential. The banking sector plays a key role, by enabling the market for foreign exchange swaps, which provide these hedges. Moreover, a forex swap is a “collateralised borrowing operation”. Yet these do not appear on balance sheets.


According to the BIS, outstanding forex swaps (including forwards and currency swaps) reached $111tn at the end of 2024, with forex swaps and forwards accounting for some two-thirds of that amount. This is vastly more than cross-border bank claims ($40tn) and international bonds ($29tn). Moreover, the market’s largest and fastest-growing part consists of contracts with non-dealer institutions. Finally, some 90 per cent of forex swaps have the dollar on one side of the transaction and over three-quarters have a maturity of less than one year.


As the BIS notes, this highly non-transparent set of cross-border funding arrangements also affects the transmission of monetary policy. One of the propositions it makes is that the greater role of non-bank financial intermediaries, notably hedge funds “may have contributed to more correlated financial conditions across countries”. Some of this is quite subtle. Given the large-scale foreign ownership of US bonds, for example, conditions in the owners’ home markets can be transmitted to the US. Again, exchange rate movements that affect the dollar value of holdings of emerging market debts can trigger adjustments in their domestic prices.

What are the risks in this new system of finance? As has been noted, banks are active in the market for forex swaps. They also provide much of the repo financing for hedge funds speculating actively in the bond market. Moreover, according to the BIS, over 70 per cent of the bilateral repo financing from banks is at zero haircut. As a result, lenders have very little control over the leverage of the hedge funds active in these markets. Not least, non-US banks are active in providing dollar funding for firms engaged in these markets.

What does all this imply? Well, we now have tightly integrated financial systems, especially among high-income countries, even as the countries are moving apart, politically and in terms of their trade relations. Moreover, much of the funding is in dollars on relatively short maturities. It is easy to imagine conditions in which funding dries up, perhaps in response to large movements in bond yields or some other shock. As happened in the GFC and the pandemic, the Federal Reserve would have to step in as lender of last resort, both directly and via swap lines to other central banks, notably those in Europe. We assume that the Fed would indeed come to the rescue. But can that be taken for granted, especially after Jay Powell is replaced next year?

The system the BIS elucidates has much of the fragility of traditional banking, but even less transparency. We have a vast number of unregulated businesses taking highly leveraged positions, funded on a short-term basis, to invest in long-term assets whose market values may vary substantially even if their capital values are ultimately safe. This system demands an active lender of last resort and a willingness to sustain deep international co-operation in a crisis. It should work. But will it?🔼

Wednesday, June 25, 2025

US strikes on Iran did not destroy nuclear sites-CNN

Exclusive: Early US intel assessment suggests strikes on Iran did not destroy nuclear sites, sources say

By Natasha Bertrand, Katie Bo Lillis and Zachary Cohen, CNN
Updated 12:50 PM EDT, Wed June 25, 2025


CNN-The US military strikes on three of Iran’s nuclear facilities last weekend did not destroy the core components of the country’s nuclear program and likely only set it back by months, according to an early US intelligence assessment that was described by seven people briefed on it.

The assessment, which has not been previously reported, was produced by the Defense Intelligence Agency, the Pentagon’s intelligence arm. It is based on a battle damage assessment conducted by US Central Command in the aftermath of the US strikes, one of the sources said.

The analysis of the damage to the sites and the impact of the strikes on Iran’s nuclear ambitions is ongoing, and could change as more intelligence becomes available. But the early findings are at odds with President Donald Trump’s repeated claims that the strikes “completely and totally obliterated” Iran’s nuclear enrichment facilities. Secretary of Defense Pete Hegseth also said on Sunday that Iran’s nuclear ambitions “have been obliterated.”

Two of the people familiar with the assessment said Iran’s stockpile of enriched uranium was not destroyed. One of the people said the centrifuges are largely “intact.” Another source said that the intelligence assessed enriched uranium was moved out of the sites prior to the US strikes.

“So the (DIA) assessment is that the US set them back maybe a few months, tops,” this person added.

The White House acknowledged the existence of the assessment but said they disagreed with it.

White House press secretary Karoline Leavitt told CNN in a statement: “This alleged assessment is flat-out wrong and was classified as ‘top secret’ but was still leaked to CNN by an anonymous, low-level loser in the intelligence community. The leaking of this alleged assessment is a clear attempt to demean President Trump, and discredit the brave fighter pilots who conducted a perfectly executed mission to obliterate Iran’s nuclear program. Everyone knows what happens when you drop fourteen 30,000 pound bombs perfectly on their targets: total obliteration.”

Trump, who’s in the Netherlands attending this week’s NATO summit, pushed back on CNN’s report in a Truth Social post. “One of the most successful military strikes in history,” Trump wrote in the all-caps post adding, “The nuclear sites in Iran are completely destroyed!”

Hegseth, who is also at the NATO summit, said Wednesday the assessment was “a top secret report; it was preliminary; it was low confidence;” adding that there were political motives behind leaking it and that an FBI investigation was underway to identify the leaker.

The US military has said the operation went as planned and that it was an “overwhelming success.”

It is still early for the US to have a comprehensive picture of the impact of the strikes, and none of the sources described how the DIA assessment compares to the view of other agencies in the intelligence community. The US is continuing to pick up intelligence, including from within Iran as they assess the damage.

Iran has a well-developed nuclear program

Iran has been developing its nuclear infrastructure since the 1960s, often in secret with some facilities buried underground. It is capable of most stages of uranium production from mining to enrichment; it insists its program is peaceful.


Israel had been carrying out strikes on Iranian nuclear facilities for days leading up to the US military operation but claimed to need the US’ 30,000-pound bunker buster bombs to finish the job. While US B-2 bombers dropped over a dozen of the bombs on two of the nuclear facilities, the Fordow Fuel Enrichment plant and the Natanz Enrichment Complex, the bombs did not fully eliminate the sites’ centrifuges and highly enriched uranium, according to the people familiar with the assessment.

Instead, the impact to all three sites — Fordow, Natanz and Isfahan — was largely restricted to aboveground structures, which were severely damaged, the sources said. That includes the sites’ power infrastructure and some of the aboveground facilities used to turn uranium into metal for bomb-making.

The Israeli assessment of the impact of the US strikes also found less damage on Fordow than expected. However, Israeli officials believe the combination of US and Israeli military action on multiple nuclear sites set back the Iranian nuclear program by two years, assuming they are able to rebuild it unimpeded which Israel would not allow. But Israel had also stated publicly before the US military operation that Iran’s program had been set back by two years.

Hegseth also told CNN, “Based on everything we have seen — and I’ve seen it all — our bombing campaign obliterated Iran’s ability to create nuclear weapons. Our massive bombs hit exactly the right spot at each target and worked perfectly. The impact of those bombs is buried under a mountain of rubble in Iran; so anyone who says the bombs were not devastating is just trying to undermine the President and the successful mission.“

On Tuesday morning, Trump repeated his belief the damage from the strikes was significant.

“I think it’s been completely demolished,” he said, adding, “Those pilots hit their targets. Those targets were obliterated, and the pilots should be given credit.”

On Wednesday, Trump lashed out at the media, including CNN, though he maintained the strikes put Iran’s nuclear ambitions back decades. Still, the US president acknowledged the intelligence was “inconclusive” and preliminary, and suggested Israel would provide a fuller picture shortly with its own findings.

“The intelligence was very inconclusive,” Trump said at the sidelines of the NATO summit in the Hague. “The intelligence says we don’t know. It could have been very severe.”

On Wednesday morning, a senior DIA official said in a statement that “We have still not been able to review the actual physical sites themselves, which will give us the best indication. We are working with the FBI and other authorities to investigate the unauthorized disclosure of classified information.” 
While Trump and Hegseth have been bullish about the success of the strikes, Chairman of the Joint Chiefs of Staff Dan Caine said Sunday that while the damage assessment was still ongoing it would be “way too early” to comment on whether Iran still retains some nuclear capabilities.

Republican Rep. Michael McCaul, the chairman emeritus of the House Foreign Affairs Committee, would not echo Trump’s claims that the Iranian program had been “obliterated” when pressed by CNN on Tuesday.

“I’ve been briefed on this plan in the past, and it was never meant to completely destroy the nuclear facilities, but rather cause significant damage,” McCaul told CNN, referring to the US military plans to strike Iranian nuclear facilities. “But it was always known to be a temporary setback.”

Jeffrey Lewis, a weapons expert and professor at the Middlebury Institute of International Studies who has closely reviewed commercial satellite imagery of the strike sites, agreed with the assessment that the attacks do not appear to have ended Iran’s nuclear program.

“The ceasefire came without either Israel or the United States being able to destroy several key underground nuclear facilities, including near Natanz, Isfahan and Parchin,” Lewis said, referring to the ceasefire between Israel and Iran that Trump announced on Monday. Parchin is a separate nuclear complex near Tehran.

“These facilities could serve as the basis for the rapid reconstitution of Iran’s nuclear program.”

Earlier on Tuesday, classified briefings for both the House and Senate on the operation were canceled.

The all-Senate briefing has been moved to Thursday, according to two sources familiar with the matter.

Two separate sources familiar told CNN the briefing for all House lawmakers has also been postponed. It was not immediately clear why it was delayed or when it would be rescheduled.

Democratic Rep. Pat Ryan of New York said on X on Tuesday that “Trump just cancelled a classified House briefing on the Iran strikes with zero explanation. The real reason? He claims he destroyed ‘all nuclear facilities and capability;’ his team knows they can’t back up his bluster and BS.”

Iran’s Fordow Fuel Enrichment Plant

A satellite image from space imaging company Maxar Technologies, taken on June 22, shows external visible damage to the Fordow plant after US strikes. At least six impact craters are visible along a ridge running over the underground site pointing to the use of bunker-busting bombs.


As CNN has reported, there have long been questions about whether the US’ bunker-buster bombs, known as Massive Ordnance Penetrators, would be able to fully destroy Iran’s highly fortified nuclear sites that are buried deep underground — particularly at Fordow and Isfahan, Iran’s largest nuclear research complex.

Notably, the US struck Isfahan with Tomahawk missiles launched from a submarine instead of a bunker-buster bomb. That is because there was an understanding that the bomb would likely not successfully penetrate Isfahan’s lower levels, which are buried even deeper than Fordow, one of the sources said.

US officials believe Iran also maintains secret nuclear facilities that were not targeted in the strike and remain operational, according to two sources familiar with the matter.🔺

This story has been updated with additional details.

CNN’s Kaitlan Collins, Jim Sciutto, Kevin Liptak, Lauren Fox, Annie Grayer and DJ Judd contributed reporting.


A Weakened Iran remains LETHAL-WSJ

 A Weakened Iran Remains Lethal



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