Ted Cruz Warns $400M Hamas-Era Provision in Board of Peace Plan Could Undermine Gaza Deal

For years, U.S. officials have warned that Hamas has used funding channels presented as civilian or humanitarian in nature to help sustain its terrorist infrastructure, raising fresh questions about whether money flowing into Gaza can be shielded from the group as a U.S.-backed governing framework moves toward assuming control.

The Treasury Department has repeatedly imposed measures against what it says are Hamas-linked financial networks, citing a covert investment portfolio, fraudulent charities and groups accused of soliciting donations in the name of humanitarian relief while aiding Hamas’ military wing.

Those fears returned to the forefront this week after Israel’s Kan News reported that a clause in the Board of Peace’s Gaza roadmap could permit as much as $400 million to cover unpaid debts built up under Hamas rule, including obligations to public-sector employees, vendors and contractors.

At the center of the debate is whether a future government can honor legitimate commitments left behind after nearly 20 years of Hamas control without inadvertently aiding the terrorist organization. Opponents argue that paying such debts could ease financial pressures tied to Hamas’ governance or give the group openings to divert resources if it maintains influence inside Gaza. Board officials counter that the process is intended to help a successor authority keep basic services running and maintain ties with lawful workers and suppliers, with every claim reviewed individually and any payment that could assist Hamas denied.

Nickolay Mladenov, the Board of Peace’s high representative for Gaza, forcefully pushed back on suggestions that the provision represented any kind of financial arrangement with Hamas.

“The claims that there is a financial agreement between the Board of Peace and Hamas are false,” Mladenov wrote in Hebrew on X Wednesday, adding that no such proposal had been “discussed, negotiated, or considered.” He said the Board’s mission remains the full disarmament of Hamas and the creation of civilian governance supported by an international security presence.

Sen. Ted Cruz, R-Texas, told News Outlet that he remained alarmed by the provision.

“I’m deeply concerned about these reports. Terrorists use money as fungible and they build credibility by having international donors finance their debts, which is why Congress long ago banned money from going to Palestinian governments in the West Bank,” Cruz said.

“We also know that international donors paid for Hamas to build terrorist infrastructure across the Gaza Strip in the first place, and shouldn’t be trusted to direct reimbursement money,” Cruz continued. “Hamas should be utterly eradicated before new resources flow into Gaza.”

A senior Board of Peace official, speaking to News Outlet on background Thursday, pushed back on the premise that the roadmap commits $400 million to paying Hamas’ debts.

“There’s really just a commitment to analyze when we get the data. There’s no commitment to fund anything. We don’t have an obligation to even do $400 million,” the official said.

The official described the provision as a three-year review process, capped at $400 million, under which the successor Gaza administration could determine whether particular unpaid obligations need to be resolved in order to maintain essential services and relationships with legitimate suppliers.

“This notion that there’s a $400 million payoff vehicle, Hamas kind of has a commitment for it — none of that is true,” the official said. “If anybody’s gonna start running with a narrative that a $400 million committed tab is beginning now … that would just be incorrect reporting. That’s not the deal.”

“No one’s picking up a tab right now,” the official added, saying any review would take place only after the new Gaza administration gains access to financial records allowing it to determine who the creditors are, what services they provided and whether those relationships are needed going forward.

“Even the first dollar of the $400 million, we’re going to evaluate that first dollar,” the official said. “It’s not going to be a blank check handed to Hamas. It’s going to be evaluated, rigorously analyzed.”

The official compared the process to a corporate restructuring, arguing that while Hamas is being permanently removed from government, the successor administration cannot necessarily walk away from every legitimate obligation accumulated during the previous government’s rule.

He offered the example of a European pharmaceutical company that supplied medicine to Gaza hospitals but was never paid. If the new administration needs that company to continue supplying medicine, he said, resolving some of its unpaid invoices could be necessary to maintain the relationship.

“The theme here, really, is continuity of services,” the official said.

Disarmament could precede payments area by area

The official did not say that Hamas would have to be fully disarmed across the entire Gaza Strip before the first claim could potentially be paid.

“The reality is that this is going to be community by community,” the official said, explaining that the successor administration is expected to move into individual areas as Hamas disarms there.

Asked whether Hamas would have to be completely removed from Gaza before the new administration could resolve an outstanding liability — for example, involving a hospital in Rafah — the official said a payment could occur even if Hamas had not yet been fully removed elsewhere in the Strip.

“The idea is that where those decisions are made, Hamas is not gonna be there,” he said.

When News Outlet asked specifically whether it was accurate to say money would not be transferred into areas where Hamas remained in control, the official said: “It’s accurate to say.”

The official acknowledged that more complicated cases could arise if the same supplier operates in both Hamas-free and Hamas-controlled portions of Gaza. Officials might then have to determine whether to reimburse only the portion associated with the area controlled by the successor government or negotiate some other arrangement necessary to maintain the service.

Board pushes back on fungibility concern

Cruz’s central criticism is that money is fungible: if international donors satisfy obligations accumulated under Hamas rule, resources that might otherwise have been needed to cover those liabilities could theoretically be used elsewhere.

The Board official rejected that argument, saying Hamas is insolvent and was never going to pay many of the outstanding creditors in the first place.

“It’s not as though we’re alleviating them from their budget that they actually were going actually go pay that $100, and now they get to save it,” the official said.

“They were never paying for it in the first place,” he continued. “We’re making a decision separate and apart from Hamas, whether this fits into our budget and our relationships.”

The official described Hamas as “dead insolvent right now” and “financially, completely, completely in shambles.”

News Outlet also pressed the official on a separate concern: even if money is never transferred directly to Hamas, could the group extract taxes, payments or other benefits from suppliers or employees receiving funds while it remains armed elsewhere?

“If there’s a risk that some of the money is going to still end up in the hands of Hamas, then we’re going to shut it down,” the official said.

He said officials would examine each recipient, the services provided and where the money ultimately would go.

“If Hamas is not fully disarmed … can it end up in their hands? If the answer to that question is yes, then they’re not going to get money,” he said. “That is crystal clear.”

The official also disclosed that the Board intends to try to recover assets it believes Hamas stole and use those assets, where possible, to satisfy legitimate obligations.

“We are going to make a real effort to go and try to recover those assets and use some of those assets, where we have found theft … to satisfy some of these obligations,” he said.

If recovered assets are insufficient, the official said outside funding would come from countries in the region rather than Washington.

“This is coming from regional partners. This is not coming from the United States,” he said.