Gaza's economic woes pile up, unemployment soars
GAZA
(Reuters) - Voices of construction workers and the noise from their tools used
to ring out in Gaza's streets. Now hulks of unfinished buildings stand in eerie
silence, and the idle builders are left to worry how to make ends
meet.
An Egyptian-Israeli blockade on the Gaza Strip, run by the Hamas Islamist
movement, has left industry and construction gasping for resources, pushing
unemployment to dizzying heights and deepening suffering for impoverished
residents.
The problem intensified after a campaign begun in July by Egypt's
military-backed government to close cross-border smuggling tunnels that used to
provide Gaza with basic goods including food, fuel and building
materials.
Joblessness jumped to 38.5 percent at the end of last year from 32 percent in
the third quarter of 2013, according to the Palestinian Central Bureau of
Statistics.
The downturn has put Hamas, deemed a terrorist organization by many Western
states, in a financial and political bind.
Buoyed by the Arab uprisings which brought its Muslim Brotherhood allies to
power in Cairo, Hamas shunned its old patrons in Iran and Syria. But when the
Egyptian army ousted the Islamist government last July, Hamas was left
isolated.
Determined to cling to the weapons that have made it a pariah in the Western
world, it is being forced to explore economic reforms, including possible
privatizations, hoping to alleviate the woes that are everywhere to be
seen.
Sitting beside a huge apartment building he has been unable to finish because
of the lack of cement, businessman Mohammed Abu Izz sips his tea and smokes a
cigarette.
"Forty families have been waiting for five months to move in. Most them paid
the price of their apartments in full and I could not deliver," he said
glumly.
Gaza is wedged between Israel and Egypt on a 40-km (25-mile) stretch of the
Mediterranean coast. Israel tightened a blockade when Hamas, sworn to its
destruction, seized control of the strip in a brief 2007 civil war, ousting the
forces of the Western-backed Palestinian president, Mahmoud Abbas.
PRIVATISED CROSSINGS?
Goods from Israel used to account for between a third and half of imports to
the enclave, with the rest coming through the tunnels on the border with
Egypt.
Over the past six months, an angry Egypt has caved in many of the underground
passages, once a lifeline to Gaza's 1.8 million people, taking the economy down
with them.
Egypt accuses Hamas of backing al Qaeda-linked militant groups which have
stepped up attacks against Egyptian security forces in the neighboring Sinai
peninsula over the past few months. The violence has spread to Cairo and other
cities.
Hamas leaders deny this, saying their arms are aimed only at arch-foe
Israel.
Looking to lessen friction with both Egypt and Israel, Gaza's deputy prime
minister, Zeyad al-Zaza, told Reuters Hamas had proposed that control of key
crossings with its neighbors should be transferred to Gaza's private
entrepreneurs.
Such a move would need to be coordinated with numerous parties, including
Palestinian President Mahmoud Abbas, and there is no guarantee it will be
approved.
"The issue is now being studied by the businessmen," said Zaza, who is also
finance minister. "We have told them 'Go and have your discussions with Israel
and Egypt'."
Economist Maher al-Tabbaa, who is also director of public relations at the
Gaza Chamber of Commerce, said the suggestion reflected Hamas's appreciation of
how bad the situation had become. But he wondered how it could be
implemented.
"I would say it was more of an attempt to find a solution to (the
government's) crisis rather than a practical exit from the current difficult
situation," Tabbaa said.
Since 2007, Israel has eased some of curbs on exports to Gaza but maintains a
ban on construction materials and a list of items it deems have "dual use" -
both civilian and military.
The list looks set to stay in place for the foreseeable future regardless of
who operates the crossings.
LAYOFFS
Resourceful Gazans had managed partially to offset Israeli restrictions by
sucking in goods via the tunnels, allowing the economy to grow nearly 15 percent
in 2011 and 7 percent in 2012. By the end of last year, growth was put at just 3
percent, Zaza said, with a possible recession looming.
With the population growing at about 3 percent a year, that level of growth
represents effective stagnation.
Many factories in Gaza have stopped, others have lowered their output or laid
off workers to stay in business.
Naeem al-Siksik, owner of the largest plastics plant in the enclave, said the
trade restrictions and tunnel closures were piling pressure on his business,
which he valued at $5 million and which used to produce more than half of Gaza's
plastic.
Total production output had fallen by almost half over the past seven months,
Siksik said.
"We have had to lay off 15 percent of our 150 workers and lower salaries by
20 percent as we try to tackle this crisis, but the situation is becoming worse
all the time," he added.
Gaza industries' problems are not limited to import restrictions - power
shortages that forces residents to live with up to eight hours of blackout a day
means Siksik spends over $100,000 a month on fuel for his own
generators.
In an apparent effort to boost efficiency, finance minister Zaza said Hamas
was also open to privatizing power distribution in Gaza and was in contact with
business leaders, although once again, no quick fix was in sight.
"I do not claim the situation is rosy," he said. "But we are seeking by all
means to give our people a dignified life."
(Editing by Giles
Elgood)