Story Highlights• NEW: 5 wounded in gunfight between Hamas militants, guards loyal to Abbas
• Israel says Hamas PM Haniya carrying cash for Palestinian militants
• NEW: Haniya eventually crosses without money
• Haniya visited Iran, which pledged $250 million in "development aid"
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RAFAH CROSSING (CNN) -- Gunfire broke out and a border crossing was closed after Israel blocked Palestinian Prime Minister Ismail Haniya from crossing into Gaza from Egypt on Thursday.
Israeli intelligence believed Haniya was carrying "dozens of millions of dollars" of suspected Iranian money to finance militant activity, a senior Israeli security source told CNN.
Sources in Haniya's Hamas party said after Haniya was initially blocked, he planned to try to cross without bringing in money. But the European Union, which has monitors at the crossing, closed it after Hamas militants fired on terminal guards loyal to Palestinian Authority President Mahmoud Abbas. Militants also used explosives to put a hole in the wall at the border crossing.
Later Thursday night, however, Haniya was allowed to cross after an hours-long wait. His supporters fired gunshots in the air.
The senior Israeli security source told CNN that Israel was given a tip that Haniya would try to cross into Gaza with "dozens of millions of dollars," most likely from Iran, that he collected on a recent tour of Middle Eastern countries.
The source said Israel wanted to block the money from reaching Hamas because it was "likely to be used for terrorist purposes."
The source said Israel did not care if Haniya crossed into Gaza without the money.
"It's in the international community's interest to empower Abu Mazen (Abbas), not Hamas," the source said, adding that the border was closed because Hamas' "money (is) likely to be used for terrorist purposes -- that is the legal reason."
In the face of crippling international sanctions, the Hamas-led Palestinian government has collected millions of dollars on fundraising trips to countries in the region to keep the government operating.
The United States and the European Union, which had provided millions each year to keep the Palestinian Authority afloat, cut off money after Hamas won elections in January and took over the government.
Haniya's two-week trip to regional countries included a four-day stop in Iran, where Iranian President Mahmoud Ahmadinejad pledged $250 million in "development aid" to the cash-strapped Palestinian Authority.
Hamas has refused to recognize Israel's right to exist. It has been designated a terrorist organization by the United States and the European Union, which cut off international aid to the Palestinian government after Hamas took control.
Because of the international sanctions blocking bank transfers, Hamas officials have been forced to hand-carry cash back to Gaza. In the past, some Hamas officials have been allowed to cross into Gaza with suitcases filled with cash.
Hamas sources told CNN that Haniya would enter the crossing without the money. The money, the Hamas sources said, would be held in Egypt by other Hamas officials who would attempt to bring it into Gaza on Friday.
After Haniya was blocked from entering Gaza, a European Union spokeswoman, Maria Telleria, said that at around 4 p.m., European monitors were evacuated from the crossing area when shots rang out.
Palestinian security sources said the gunbattle began when Hamas militants from Izzedine al Qassam military brigades and Palestinian civilians stormed into the Rafah terminal, confronting the terminal guards, who are Abbas loyalists.
Later a second gunbattle erupted. Palestinian medical sources said five people were wounded.
In Jabalya, Palestinian security sources said militants from the Popular Resistance Committees were shooting at the Palestinian Intelligence Center. The Popular Resistance Committees is an umbrella group for Palestinian militant groups. No further details were available.
Telleria said the crossing would not reopen until Friday, noting that under existing agreements it is not legal for people to cross the border without the presence of EU monitors at the crossing.
CNN's Kevin Flower and Atika Shubert contributed to this report.