Mass poverty:

Nine out of ten Gazans live in poverty

As the continuing Israeli siege strangles the economy :

Mohammed Omer

According to a September 2009 report from the United Nations Conference on Trade and Development (UNCTAD), living conditions and access to sources of livelihood in Gaza are currently at their worst since 1967, with poverty affecting 90 percent of the population. The World Bank says that Palestinians currently are experiencing the worst economic depression in modern history.

Israel’s excuse for its continuing siege on the citizens of Gaza - which it instituted following the January 2006 free and fair elections in which Palestinians in Gaza and the West Bank elected a Hamas government - is that the small strip of land is a hostile entity and den of terrorism, and that the continued starving and impoverishment of its people is necessary for Israel’s security. Like most military actions, however, the siege of Gaza has little to do with religion or terrorism. Rather, it is primarily economic and political.

Natural resources

Off the coast of Gaza exists a large underground natural gas field - Israel’s prize if Gaza is broken, for Tel Aviv covets the land and natural resources of Gaza, not the human beings who live there. The West Bank also possesses a natural gas reserve. According to more than one country’s intelligence sources, Israel began parallel drilling and siphoning off the West Bank natural gas through Jerusalem in the late 1990s. Under the Geneva Conventions, this is a war crime.

Prior to the 2006 elections, the Fatah-led Palestinian Authority controlled Gaza. That government - its corruption a major factor in its ouster from power - negotiated a deal whereby Israel would be allowed to withdraw the gas from the Gaza fields, keeping the bulk of the profits. The marked-up gas would then be sold back to its rightful owners in Gaza for their use (a practice Israel employs with regard to other basic necessities such as electricity, fuel and water).

The election of Hamas, however, caused the natural gas deal to fall apart, since Hamas contended that the resources of Gaza should benefit Gazans rather than Israelis. Realizing that bribes and theft would not work with the new Palestinian government, Israel decided to isolate and attempt to overthrow it, and imposed its draconian siege on Gaza and its 1.7 million residents - despite the fact that collective punishment also is a war crime under the Geneva Conventions.

Israel’s strategy is transparent: to methodically make life in Gaza impossible by destroying its economy, and thus each family’s ability to survive. Starved and desperate, the theory goes, the people of Gaza will rise up against and overthrow Hamas, thus enabling Israel to assist in reinstating a government it can control. After three and a half years, however, that has yet to occur.

Israel’s December-January military assault on Gaza caused an estimated $4 billion in damage - three times the value of the strip’s entire gross national product (GNP). Despite international pledges at the Sharm el-Sheikh donors’ conference this past March of over $4.5 billion in aid-much of which remains an unfulfilled promise - Gaza’s destroyed economy has not improved. The water, sewage and electricity infrastructure, already severely debilitated by the siege, is now stretched to breaking point.

Prior to Israel’s 1967 occupation of Gaza, the small region was essentially self-sufficient, thanks to its textiles, arts and agricultural products. Now, however, as a result of the siege, Gaza’s farmers have been unable to export most of their crops for the third year in a row, forcing thousands out of work and tens of thousands below the poverty line.

An example

Mohammed Al Telbani’s Al Awda Biscuits Factory in the Gaza Strip is an example that can be multiplied by the thousands. Al Telbani’s factory was a successful business with 400 employees, producing 40 types of chocolates, biscuits and ice-cream. “I never thought the day would come when my 400 workers would be laid off,” he lamented. “It’s something that never entered my mind.”Businesses anywhere in the world need raw materials, human capital and cash flow in order to survive. Of late, Israel allows three types of raw materials into Gaza: “sugar, flour and butter,” enumerated Al Telbani. Among the more than 100 prohibited materials he requires that Israel prohibits from entering Gaza are cartons, paper, plastic covers, chocolate, hygienic materials, and spare parts for machines.

Even if Al Telbani could find the necessary items, however, he would be unable to purchase them, because his finances are controlled by The Bank of Israel - which in January officially cut its ties with all banks in Gaza.

Gaza’s Banking Crisis

Americans who have lost their homes and jobs as a result of the current financial and mortgage meltdown are only too familiar with the economic calamity bankers and financial institutions can cause. Imagine if the banks and corporations inflicting the damage were not even U.S. institutions! Welcome to Gaza, where Israel, rather than Palestinians, controls the banking system. Israeli financial institutions have imposed a series of hidden controls that paralyze cash flow and prevent commerce and employment from functioning effectively.

Even local banks have restricted loans to Gazans because of the risk of nonpayment. “The siege has affected banks’ ability to offer standard facilities to people,” said Thaer Hamaied, head of public relations and marketing at the Bank of Palestine Ltd. “In the West Bank our bank has not been affected as much as Gaza,” he added. “The investment rate in the Gazan bank is much slower than in our branches in West Bank, where there is noticeable improvement.”

Monetary transfers

For several months, Israel’s largest bank, Hapoalim, and others, backed by the Israeli central bank, have refused to handle monetary transfers to Gaza, including benefits to disabled workers who have been injured during work-related incidents in Israel (see July 2009 Washington Report). Furthermore, Israel is responsible for reprinting paper money that has become worn out. According to a Gaza bank official, however, “Israel hasn’t been doing this lately, thereby causing a money shortage.” U.N. agencies have made a deal to allow U.S. dollars into the Strip, he added, but only to pay wages to U.N. staff.

The World Bank has warned that “the liquidity crisis could lead to the collapse of the commercial banking system in Gaza.” In the eyes of Gaza economists, the pauperization of Gaza’s economy is not accidental but deliberate.

According to some experts, the economic disaster in Gaza has been a long time coming. A key element of the Oslo agreement between Israel and the PLO was the 1994 Paris Economic Protocol, resulting in Gaza and the West Bank becoming economically dependent on Israel. All Palestinian imports and exports had to pass through Israeli sea- and airports and border crossings.

Moreover, Israel was given responsibility for collecting and transferring taxes on trade to the new Palestinian Authority, thereby making it the “gatekeeper” of Gaza’s and the West Bank’s economy. As part of its attempt to crush Hamas in recent years, Israel has refused to remit to the Palestinian Authority the taxes collected on its behalf.

The basis for some of Israel’s actions appears to be a Sept. 19, 2007 cabinet decision declaring Gaza a “hostile territory.” The Olmert government decided to restrict “the passage of people to and from Gaza” and to further reduce supplies of fuel and electricity. The resulting border closure caused Gaza to lose many potentially lucrative trade contracts, shutting down as it did nearly all avenues of trade.

In 2008, the Palestinian economy lost ground for the ninth year in a row, the UNCTAD report found. The 2% economic growth for that year, which included substantial donor support of US$1.9 billion, represented a one-third drop in per capita gross domestic product (GDP) since 1999, despite extensive reforms implemented by the Palestinian Authority.

The economic decline is rooted in Israel’s closure policy, the erosion of the Palestinian productive base, the loss of some of the West Bank’s most fertile land and natural resources to the Israeli separation wall, and expanding settlement activities, the report contends.

“The net result of four decades of occupation,” it concluded, “is expanded Israeli settlements and controls, combined with diminishing Palestinian economic policy space, reduced physical territory, and reduced access to natural and economic resources.”

The Gaza Ghetto

As were the Jews of Warsaw during World War II, 21st century Gazans find themselves surrounded by walls and an occupying military, and dependent upon tunnels for trade and the most basic of life’s necessities, from fuel to toilet paper. What little money people have exits Gaza through the tunnels into Egypt, where these staples are purchased and smuggled back. No money returns to Gaza - there is nothing for Egyptians or anyone abroad to buy - creating a trade deficit of 100 percent.

Challenge

“Sixty percent of our business used to be exports to the West Bank and Jordan,” said Al Telbani. Today 100 of his 400 former employees are lucky if they can work 12 days a month and supplies manage to make it to Gaza through the tunnels.

Al Telbani used to be able to buy packing cartons from Israel for 2 shekels each. Today tunnel merchants charge him 9 shekels per carton, and availability is erratic. Even if he had access to the raw materials, however, Al Telbani still faces the challenge of who can afford to buy his products. There was a time when Gazans could work in Israel after obtaining the necessary entry permit. Even that option has been taken away, however.

It remains an open question how businessmen such as Al Telbani can be expected to keep their doors open and meet their expenses in the face of a foreign banking system out to crush him, border guards preventing raw materials from getting into Gaza and exports from going out, a bombed infrastructure, a foreign military that might bomb his building at any time, and a market of unemployed people confronting ever-rising prices.

According to international sources, 98% of Gaza’s 3,900 factories have been forced to close; general unemployment has reached 45%, the highest in the world, while in the private sector it stands at 70%; and more than four in five Gazans depend on food aid from the United Nations. A senior UN official said of Gaza’s economic situation: “It was bad before, but it’s worse now, and it’s not getting any better.”Palestinians believe this deadly economic disaster has been as carefully planned by the Israeli government as are its periodic lethal military assaults on the citizens of Gaza.

Poorest place on earth

Nevertheless, despite Israel’s unrelenting efforts to destroy Gaza and Hamas, Gazans continue to survive and pray for the day when they may lead normal lives, raise their crops, feed and educate their children and not feel terror each time a helicopter hovers overhead.

In the aftermath of Israel’s massive winter assault on Gaza, several humanitarian and human rights organizations now describe that small strip of land bordering the Mediterranean as the poorest place on earth. The disaster confronting Gazans is not a natural one, however. The poverty Gazans struggle to endure has been created by man - and is wholly reversible through the simple act of ending Israel’s illegal siege.

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