If figures ever speak for themselves, they certainly do so in the case of the Gaza Strip. Every self-respecting UN agency in recent moths has issued a report with the most alarming figures and warned of a devastating economic and humanitarian crisis, yet no one seems to hear. To achieve certain political goals, i.e. the downfall of the Hamas government, it appears Isreal has carte blanche to do what it must, even if it brings the entire population to its knees.
On September 19, the Israeli government announced it is henceforth regarding Gaza as a “hostile entity,” which would allow for cutting off water, fuel and electricity supplies. This is only the latest in a series of measures that have virtually isolated Gaza from the world. While international aid is allowed in, borders have been sealed and essentially. The economic and humanitarian consequences are overwhelming.
The United Nations Relief and Works Agency (UNRWA), the UN body concerned with the plight of Palestinian refugees, reported that 850,000 Gazans currently survive on emergency food hand-outs, while 87% of the 1.5 million population live below the poverty line set at a humble $2.4 a day.
The World Bank, too, has joined the chorus of alarm. “The pillars of Gaza’s economy have weakened over the years,” stated to Gaza Faris Hadad-Zervos, country director for the West Bank and Gaza. “Now, with a sustained closure on this current scale, they would be at risk of virtually irreversible collapse. A solution must be reached very soon, if not immediately. Otherwise, Gaza’s dependence on humanitarian assistance could become a long-term and comprehensive situation.”
Complete isolation
Yet another UN agency, the Office for the Coordination of Humanitarian Affairs (OCHA), issued a similar warning in August. It pointed, among other examples, at the fact that some 600 Gaza-based garment factories have closed down, laying off 25,000 employees, due to a shortage of raw materials. Likewise, as no construction materials are allowed to enter, nearly all of the 250 cement, tiles and bricks factories are no longer operating. The Palestinian Federation of Industries estimates that over 75% of Gaza’s of 3,900 factories have closed.
It is worth recalling that the 1994 Paris Protocol on Economic Relations between Israel and the Palestinian Authority stipulates “there will be free movement of industrial goods free of any restrictions including customs and import taxes between the two sides” and “the Palestinians will have the right to export their industrial produce to external markets without restrictions.”
Although the Paris Protocol also demands there be free movement of agricultural produce, free of customs and import taxes, OCHA has forecasted that Gaza’s farmers are likely to cultivate less than 50 hectares in 2007, due to shortages in raw materials and the unlikelihood of exporting any goods. During the 2006 season, more than 300 hectares of various crops were cultivated.
Finally, the UN Conference on Trade and Development (UNCTAD) estimates that the Palestinian economy has lost one-third of its production capacity since 1998. According to UNCTAD’s Mahmoud Elkhafif, the restriction of movement for people and goods from, to and even within the West Bank and Gaza over the past seven years “have effectively isolated the Palestinian economy from the rest of the world.”
The West’s problem with Hamas
The acute economic malaise of “the gateway between Asia and Africa,” as Napoleon once called it, is first of all caused by the Israeli reaction to the coming to power of Hamas in 2005, yet has its roots in Israel’s overall failure to implement the 1993 Oslo Agreement and 1994 Paris Protocol.
Israel, and most of the western world, will only recognize a Hamas government if the latter recognizes Israel’s right to exist, renounces all violence, and acknowledges all previous agreements, including the guiding principles of the Road Map. Hamas is willing to agree to a cease-fire, but refuses to recognize Israel in its current shape and form, while it refuses to lay down its arms as it has a “right to resist” the occupation.
gaza is like a schoolboy who receives his weekly pocket money from his father but, when he doesn’t behave, receives nothing”
In an attempt to force Hamas to accept the above conditions, or force the population to oust Hamas, Israel has not only closed down borders, but also refuses to hand over some $600 million worth of custom duties it collected on behalf of the Palestinian Authority. The West condones the policy, while it cut down on aid to the beleaguered Gaza Strip.
Custom duties and foreign aid are Gaza’s main sources of income. According to UNCTAD, international donor support between 2000 and 2005 averaged $1.2 billion annually, which was reduced to $900 million in 2006. According to Usama Hamdan, Hamas’ representative to Lebanon, one cannot really speak of economics in Gaza.
“Gaza is like a schoolboy who receives his weekly pocket money from his father but, when he doesn’t behave, receives nothing.” According to Hamdan, the problem of foreign aid is not only that the government is not free in deciding how to spend it, but also that Israel, for security reasons, has to grant permission for any major investments. “In 1996, Israel prevented the establishment of a Japanese factory to produce car parts,” Hamdan said. “That was an investment of some $300 million and would’ve provided some 6,800 jobs.”
According to the Oslo Accord, Israel has the right to control all in- and outgoing products from the Palestinian Territories, as well as its water household, while it should grant permission for any investments made in Gaza or the West Bank. The reality is that anything that could be a threat to Israel’s domestic production is not allowed. As a consequence, Palestinian industrial output has stayed virtually unchanged since the 1960s, representing some 8% of GDP.
The Paris Protocol formalizes the customs union with Israel that has officially been in effect since 1967, and calls for free trade. Already in 2001, Claude Astrup and Sebastian Dessus concluded in a World Bank study that the Palestinian economy since 1994 had only slowed down “due to poor implementation (…) as restrictions on the movement of goods continue.”
“All trade in and out of the Palestinian Territories must go through Israel,” Hamdan explained. “Gaza can still import through Egypt and profit from tax exemptions there. Yet no goods are allowed to enter through the Rafah crossing. All goods must go through Israel, where custom duties are due, before entering Gaza, where again duties are due. Not only does this practice make goods unnecessary expensive, it is Israel that collects custom duties on behalf of the PA, which it refuses to transfer.”
To illustrate the fact that the current crisis in Gaza, though aggravated by recent Israeli measures, has existed for many years, it is useful to return to 2003, when Raji Sourani, director of the Palestinian Human Rights Center (PHCR) in Gaza, warned me not to focus on the Second Intifada as the problem to solve, but on the situation that caused the 2000 popular uprising.
Restrictive policies by Israel
“The Israeli reaction has always been disproportional and excessive,” he said. “But the Intifada didn’t fundamentally change anything. By the end of the interim agreement on May 4, 1999, the Palestinian territories were suffering from total economic suffocation and de facto apartheid, as neither the Oslo Peace Agreement or the Paris Protocol was implemented.”
Sara Roy, Professor at the Center for Middle Eastern Studies at Harvard University, could not agree more. “The pauperization of Gaza’s economy is not accidental but deliberate, the result of continuous restrictive Israeli policies (primarily closure), particularly since the start of the current uprising, and more recently of the international aid embargo imposed on the Palestinians after the installation of the democratically elected Hamas-led government,” Roy wrote in her paper The Economy of Gaza.
“One only need to look at the economy of Gaza on the eve of the uprising,” she continued, “to realize that the devastation is not recent. By the time the second Intifada broke out, Israel’s closure policy had been in force for seven years, leading to by then unprecedented levels of unemployment and poverty.”
And all the while, the world has been watching in silence. As it is watching today how half the population would starve to death if there were not any food hand-outs, while some 86% of the population makes less than $2.4 a day. On top of it all, the population of Gaza is due to increase from 1.4. million today to some 2 million by 2012. Every UN agency, and even the World Bank, have warned the consequences will be disastrous if the Israeli restriction on movements of goods and people are not eased.
