Exactly six months ago, on August 26, 2014, Operation Protective Edge came to end in a mutual cease-fire agreement. The operation, which took the lives of more than 2,200 Palestinians and 72 Israelis, wreaked havoc on the Gaza Strip. Even prior to last summer’s fighting, the results of previous military operations could still be seen in Gaza’s towns and villages, and the combination of the Israeli imposed closure, frequent closures of Rafah Crossing and the elimination of most of the trade tunnels on the Egyptian border were already taking a heavy toll on Gaza’s residents. The situation in Gaza prior to Operation Protective Edge was so dire that Israeli officials have admitted (Hebrew) that “we have to think about whether we didn’t strangle Hamas too much, to the point where it had no choice but to drag us into a large scale military operation, out of desperation”. Before the operation, Gaza’s unemployment rate stood at 45%, and more than 70% of its residents relied on humanitarian aid.
Now, six months after the end of the military operation and four months after the summit in Cairo, where 50 countries pledged to channel billions into Gaza’s reconstruction, the situation there is that much worse. The physical rebuilding of structures and infrastructure is moving at a snail’s pace; the unemployment rate is still higher than 40%. About 560 businesses and factories were damaged in the operation, 210 of them severely damaged or completely destroyed. In other words, the productive sector of Gaza’s economy, which had been in a precarious state to begin with, took a severe blow. The destruction added 17,000 residential units to the tens of thousands that were needed even before Operation Protective Edge.
As part of the cease-fire agreement, Israel has eased a few of the access restrictions imposed on Gaza’s residents, but most remain in effect, making daily life in Gaza extremely difficult and undermining the prospects for the recovery of the Palestinian economy in general, and Gaza’s economy in particular.
In the spring of 2014, before Operation Protective Edge, we began working on a new position paper which would present data and analysis regarding the state of Gaza’s economy, in order to gauge the impact of access restrictions between Gaza and the West Bank, and the potential that goes unfulfilled because of Israel’s separation policy. This policy, the details of which have never been officially published, is reflected in a slew of decisions aimed at institutionalizing the split between the two parts of the Palestinian territory.
Even today, after Operation Protective Edge, and after senior political and security figures have spoken in favor of Gaza’s reconstruction, the separation policy remains. Israel has lifted a few restrictions, and some of these moves have been quite promising, particularly the removal of the sweeping ban on the sale of goods from Gaza in the West Bank. However, the process is advancing at an agonizingly slow pace and the people in charge of implementing the changes have been interpreting them very narrowly. All this is particularly glaring given Gaza’s acute need right now, with most of the restrictions remaining in place and continuing to cast a dark shadow over the lives of Gaza’s residents.
The rhetoric that has been heard recently seems to indicate that more and more Israeli decision-makers understand the need to reconnect Gaza and the West Bank and abandon the separation policy. In the position paper we published today, we strive to demonstrate the urgent need for a connection between Gaza and the West Bank and the potential this connection has for the recovery of the Palestinian economy. Chapter 7 of the position paper, authored by economist Shir Hever, plugs in figures relating to the Palestinian economy to an economic model that examines the significance of the economy’s size. His unsurprising conclusion is that connecting the two parts of the Palestinian territory could give the entire economy a serious boost, and more importantly, that it is a condition for true recovery. For example, the position paper looks at the textile industry. Until the closure was tightened in 2007, the sector employed 25,000 workers, mostly women. After the closure was tightened, the market share for Gaza-produced textiles in the West Bank collapsed. Yet even today, with the stiff competition from East Asian manufacturers, Gaza products are expected to be in demand due to enduring brand value.
We are currently reviewing supplementary research we conducted, the result of focus group discussions in Gaza with leading professionals in the following sectors – furniture, food processing, textile, agriculture and information and communications technology (ICT). The results of this research will be released soon. Focus group participants mainly spoke about their businesses’ potential and how freedom of movement would enable them to reach growth benchmarks, along with everything this entails. The owner of a textile factory, which has been working at 10% capacity since the closure was imposed, said: “The day after the crossings are opened, I’d take our samples to the West Bank to test out the market. We still have good connections there”.