To keep the Palestinian leadership of Gaza and the West Bank rivals and prevent them from joining forces in their quest for a separate and unified Palestinian state.
head up and locked
They also had little choice. They have agreements to remit money to the Palestinian self rule government. Any time they tried to hold it back they got pressure to release it. They provide nearly all public utilities to Gaza too, including managing tax revenues. Palestinians use the Israeli currency in commerce they dont have their own central bank. So to the extent Hamas has to pay civil servants and import goods and medicine for the people, Israel has been obliged by Oslo to provide it.