Costs of the Closure: Gaza Hard Hit

by Colin MacKinnon

Israel’s nearly airtight closure of Gaza and the West Bank, following four suicide bombings in the early spring of this year that killed 63 persons in Israel, has exacted enormous human costs.

Here’s a story. On the night of March 8 of this year, Palestinian fisherman sailed out from Gaza as usual and dropped deep nets well away from the shore to catch a kind of fish called watwat. Watwat are traditionally caught in the spring and they bring a high price—both Israelis and Arabs like them, especially around the time of religious and national holidays.

During the night of March 8, though, the Israeli authorities, who knew that the Gazan fishermen were putting their nets out, announced a Military Order (MO) which for the usual security reasons forbade fishing beyond a certain limit, well in from where the Israelis knew the nets had been placed. The Israelis enforced the MO for six weeks or so until the end of April.

The result? Not only did the MO cost the fishermen a month and a half of income, but because the fishermen couldn’t go back out to retrieve their nets, most of the nets were badly damaged or destroyed. (Nets are fragile affairs; left in the water, they get ripped.) According to a source at the World Bank, the damages to the nets ran to several hundred thousand dollars.

Another story: Following the peace agreement in 1993 a fair amount of investment came into Gaza to fund the cultivation of flowers. Much of the money went to small entrepreneurs who, in this forlorn economy where people live by their wits, create greenhouses by stretching plastic over reeds. The cultivators grow their flowers, mostly carnations and roses, from about Christmas on, and catch the winter and Easter seasons in Europe. European customers pay good prices for Gazan cut flowers in the late winter and early spring, which is before European producers bring their own flowers to market. But with closure, the market was largely cut off. The Israelis didn’t open the border for flowers until after Easter.

“What we have here is absolutely unrelenting, unremitting economic oppression, which has been going on almost since the peace treaty. Any incident by any terrorist can trigger it and the Israelis can care less,” one recent visitor to Gaza says. The speaker is a conservative fellow, a Western official who has been closely involved in the economic development of the Palestinian territory and who has been willing in the past to give the Israelis the benefit of the doubt. No more.

“They’re following the old Likud policy,” he says, “which was, ‘If you strangle them enough, they’ll either die or get out.’ And I must say, Gaza is beginning to look like a giant ghetto and the international community is beginning to feel it’s becoming an accomplice in making it so.”

A year or so ago, the IMF estimated Gaza’s normal annual Gross Domestic Product at about $1 billion, or $1,200 per capita. (Israel’s GDP this year will be about $97 billion, and the Israeli per capita income will be at least $16,000.) Remittances from workers in Israel and elsewhere lifted the total by about a third, says the IMF, to about $1.3 billion, and there’s a kind of “gray” economy—transactions out of the sight of the tax authorities and other snoops—that must be large. Still, Gaza before closure was a miserable place.

What About Now?

Figures on current GDP are not available, though we can be sure it’s down sharply. We do have some estimates of loss.

First of all, exports. In 1995, total exports were about $75 million, mostly citrus and produce (34 percent) and textiles (38 percent). But in March 1996, total exports were only about $3.3 million.

For Gaza’s produce growers, the first quarter of the year is the peak harvest season. Chief items are strawberries, cut flowers, and tomatoes. It’s also the quarter when Gazan citrus is shipped to European markets.

For growers of these products, the closure couldn’t have come at a worse time. In March Gaza exported nothing except small quantities of produce, citrus, and textiles. Of this, very little was allowed to enter Israeli or West Bank markets. American diplomats report that the textile imports that actually succeeded in reaching Israeli markets did so because Israeli companies counting on Gazan laborers to meet Passover holiday demands pressured the Israeli government to let them through. Some flower cultivators sent cut flowers out through the Rafah crossing point through Egypt and thence to Europe.

The United Nations estimates that losses in agriculture at peak season were between $600,000 and $700,000 a day. Those cultivators of cut flowers were hurt badly—$230,000 a day in the peak season. Five thousand tons of strawberries were lost. At the beginning of May, 500 to 1,000 tons had remained in the fields and were on the verge of rotting.

Tomato producers saw big losses. In the spring, Gazan cultivators, often families working on small plots of ground, would produce 250 tons of tomatoes a day. The main market has been Israel and the West Bank. But with closure, tomato prices simply collapsed. The U.N. puts the per-day cash losses at $50,000.

The people hurt are small farmers, typically families that plant a few hundred square meters, not California-style agribusiness. For them, losses like this are a serious matter.

So Much For Exports. What About Jobs?

“The overwhelming majority of the inhabitants of Gaza today have no income and cannot feed their children,” reports the Harvard scholar Sara Roy, who has studied Gaza and its economy for the last 10 years and who spoke recently at a seminar in Washington sponsored by the Center for Policy Analysis on Palestine. “People are living on a lot less and earning a lot less. Unemployment is 70 percent. People are surviving through the social safety net provided by friends, but the net is growing increasingly frayed. There are social welfare services available but they are greatly inadequate.”

Roy reports that currently some 6,500 to 7,000 Gazans have permits to work in Israel. Of these, 2,000 actually work in the Eretz Industrial Zone, located inside the Strip, and the rest are allowed to look for work in Israel, “although this does not guarantee that people will find work.” In April, according to the Israeli Ministry of Defense, only 12 percent of Palestinians looking for work in Israel actually found it.

Roy reports an increase in child labor, with more and more children peddling trinkets in the streets. In middle-class neighborhoods, people are selling valuables, some going from house to house to sell TVs and VCRs. Some are returning medicine to local pharmacies to get money to buy food.

The Palestinian National Authority government has taken a large hit too. The PNA is losing about $1 million day in tax and customs transfers from the Israelis. In January, the PNA’s 1996 budget deficit was predicted to be about $70 million—a healthy figure and one that gave some encouragement to the international donor community. The deficit now is estimated to be $300 million and climbing. This is important: the shortfall will have to be covered at least in part by donor aid, and that raises a question as to how much money will be left for real development?

The donor community has set up short-term employment projects in Gaza, where workers who get the jobs earn about $12 a day, the Gaza average. But major donor-funded projects cannot go forward under a lock-down like that imposed this spring. And private investment, once promising, is at a standstill.

Gaza’s economy has been impoverished at least since the first refugees poured in in the late 1940s. Its inhabitants, the poorest of them at least, are probably more miserable now than ever. At a guess, average per capita income must be half of what it was last year. That would put it at $600 a person. Not much to live on.