The U.S.-led fund freeze may be squeezing the Palestinian government dry, but its civilian sector is prospering, adding yet another link to the chain of frustrations for the U.S. on Middle East strategy.

The Washington Timesreported:

Foreign donations, often consisting of cash in suitcases smuggled across the border, have permitted Hamas’s vast social-welfare network to thrive, say officials and analysts.”All charitable organizations affiliated with Hamas are still functioning,” said Sheik Yazeeb Khader, an editor of Hamas’s West Bank newspaper. He said the charities in Gaza have especially benefited from money “brought across the border and not checked.”

The charity funds support the Hamas network of hospitals, schools and alms houses, but some accuse the militant group of using the money to protect its supporters. “The problem now is that Hamas is only giving to their own people, or people who are close to the movement,” said Abdel Nasser Najjar, a newspaper columnist for the opposition party Fatah.

While the charity organizations deny any political affiliation, political science professor at Birzeit University Basem Ezbidi says most Islamic charities are linked with Hamas: “To really draw a line between what is considered Hamas and what is not is a difficult thing because Hamas has a broad constituency.”

As the Times reported, Hamas covertly built a following through its Islamic social-welfare network that exceeded anything ever established under Yasser Arafat and gave Hamas needed support in the victorious elections in January.

According to the charities, the funds are coming via foreign donations from the Persian Gulf, Europe and the United States. It would be no surprise if Iran is a large contributor. Iran is the chief terrorist-sponsoring nation in the world, and when Europe and the U.S. proposed cutting off Hamas’s funding if did not renounce violence, Iranian President Mahmoud Ahmadinejad promised to remove funding if it did.

In one sense, the West’s freezing of funds to the Palestinian government is achieving precisely the opposite of what it was intended to do. The financial support Hamas-affiliated charities are receiving is ensuring that, even while tens of thousands of civil workers go without their paychecks, Hamas retains its popularity. In fact, it means the Palestinians are becoming more reliant upon Hamas-funded social services, while blame for the Palestinians’ woes continues to be placed on Israel and the West.

At the same time, foreign donations to Hamas “charities” ensure that this terrorist organization continues to receive the flow of funds to build its armaments stock and plan future terrorist attacks against Israel. For more information, read The King of the South.