Recently, it was announced that Israel will allow limited marketing of Gaza’s goods outside of the Strip – an encouraging step. It has also been suggested, that the closure has had a limited impact on the level of poverty in the Gaza Strip (article in Hebrew). Yet a closer look at the reality behind the numbers reveals a picture of limited economic activity, mostly fueled by external aid.
Since the closure was imposed, aid dependence in Gaza has increased from 63% to 80% because of the paralysis of the private sector, reports OCHA. The International Monetary Fund reported three months ago that the Gross National Product in Gaza is still 40% less than it was in 1994 and has yet to recover to 2007 levels.
Why is there so little economic activity and so much dependence on international aid? There is a very simple explanation: the closure of the Gaza Strip. The closure of Gaza is not just about shortages of products – coriander became the star-of-the-moment when it was discovered that its transfer into Gaza was banned by Israel – it is also about restrictions on selling of Gaza’s goods outside of the Strip, about bringing in construction materials, and about movement of people.
Before 2007, some 70 truckloads of consumer and agricultural products left Gaza for marketing outside Gaza each day. Since the Cabinet decision declaring an easing of the closure and until December 23rd, 70 trucks left the Gaza Strip, in other words, 2/3 of a truck per day.
Another reason for the low economic activity is the ban on construction materials. Before the ban, residents of Gaza brought in 5,000 truckloads of gravel, cement and steel per month, compared to an average of 149 trucks per month since Israel declared the easing of the closure. As a result, there was a drastic decrease in the number of people employed in construction.
It is therefore no wonder that those who do have jobs in Gaza are more often than not working in the public sector. According to a recent report by the British think-tank The Portland Trust, jobs in the private sector shrunk from 100,000 to 30,000 over the years 2006-2010 – while in 2006 only 28% of those employed worked in the public sector, today 70% of those employed work in the public sector. Those who lost their jobs found work mainly in the public sector: in local government offices, international organizations and non-governmental organizations. Whereas the population of Gaza grew from 1.41 to 1.54 million between the end of 2007 and mid-2010, the number of jobs remained static. There has also been a shift from employment in factories, agriculture and construction towards employment in the Palestinian Authority, the Hamas government and international organizations. Work in the public sector is vital for sustaining a society – the public sector includes teachers, doctors, aid workers – but the private sector is the engine for development.
The question that should be asked, therefore, is not whether there is a humanitarian crisis in Gaza, but whether deliberate harm is being done to the economy and by extension to the well-being of residents of the Strip, and whom this serves. What is the likelihood that the percentage of residents living beneath the poverty line will decrease and that Gaza’s economy will enter a period of significant growth, without marketing Gaza’s goods outside of the Strip, without movement of people, and without construction?