Israel blocked Palestinian Prime Minister Ismail Haniyeh from returning to Gaza from a trip abroad on Thursday to stop him bringing in money donated by Iran.
An official source at the Rafah crossing between Egypt and Gaza said Haniyeh, a leader of the governing Hamas movement, was carrying $35 million in suitcases.
An Israeli security source said Israel "had indications" that Egypt, which had allowed Hamas officials to pass through the border with funds in the past, had "confiscated" all or some of the cash in Haniyeh's possession.
The Israeli source suggested Haniyeh would be allowed to cross without the cash once the border reopened, possibly on Friday. A source at Rafah said two of Haniyeh's aides would remain behind with the money.
"I don't think we are interested in preventing him from doing anything," the Israeli source said. "We are interested in preventing the money from coming here and being used for undesirable purposes." The Israeli move ratcheted up tensions in the Gaza Strip where a showdown between Hamas and the rival Fatah movement has boiled over into a series of killings.
Israeli security sources said Defence Minister Amir Peretz ordered the closure of the Rafah crossing to stop Haniyeh returning to the coastal Palestinian territory after a two-week fund-raising tour with funds donated by Iran.
Haniyeh has visited countries including Qatar, Iran and Sudan to raise money for his government which has struggled to function due to international sanctions imposed after Hamas's election win in January.
BORDER VIOLENCE: A spokeswoman for the European Border Assistance Mission, which monitors Rafah crossing, said she doubted Haniyeh would be able to cross on Thursday. "The border has been closed for today and our people have been evacuated," she said. Some 2,000 Hamas supporters, including gunmen firing in the air, stormed into the Rafah border terminal after Israel ordered it shut, witnesses said. Other gunmen used explosives to blow a gap in the concrete wall dividing Gaza and Egypt.
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