Can Gaza’s Stagnant Economy be “Reactivated”?

Amr Hamad, Deputy Director of the Palestinian Federation of Industries, came to Ramallah from the Gaza Strip last week to help assess the damage to the business sector in Gaza as a result of the last war. He told a Gisha representative that the European Union is considering compensating factories, business facilities and other institutions for the damages they sustained, estimated at $45 million (U.S.). EU representatives apparently understand the problematic nature of a situation where European tax-payers are to be sent the bill for damages caused by the Israeli army, and they have decided not to call it compensation, but rather a “business reactivation” plan.

The economy in Gaza, which has been virtually shut down for over two years, sustained a serious blow last January: 1,135 business facilities were damaged, including 324 factories.

Hamad adds that it is unclear how it will be possible to reactivate businesses while a ban on the import into Gaza of raw materials remains in place, and considering that the factories that were most severely damaged were those processing metals and construction materials. Israel is still adamant that construction materials pose a threat to its security and therefore are banned from entering Gaza.

As Israel continues active discussions, in the media and amongst institutional players about whether the claims of war crimes in the Goldstone Report require further investigation, another recommendation made by the Goldstone Commission  has been pushed aside: the recommendation that the closure of the Gaza Strip be immediately lifted and that the free passage of people and goods be allowed.

Despite calls from the EU that the “cycle of destruction and reconstruction” needs to be broken, and the huge amount of money amassed for the reconstruction plan, only 7% of the factories in Gaza are currently operational, Hamad reports. These are the few that are able to acquire raw materials and are not dependent on selling to markets outside the Gaza Strip.

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