Palestine Pulse

Ongoing blockade will cause Gaza to explode in the face of Israel, Hamas warns

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Article Summary
Employees are being laid off and shops are closing down in the cash-strapped Gaza Strip, while the World Bank warns that the economy is collapsing after a decadelong blockade.

GAZA CITY, Gaza Strip — Abo Iskandar Bakery, a well-known bakery in the Gaza Strip, posted Oct. 1 on its Facebook page a job for a full-time baker. In less than 24 hours, about 3,000 applicants replied, including university graduates.

This came a few days after the World Bank report published Sept. 27 on the economic situation in the Gaza Strip, which warned against an economic catastrophe in the cash-strapped coastal enclave because of the ongoing Israeli blockade since 2007.

The report said, “The economy in Gaza is collapsing, suffering from a decade-long blockade and a recent drying up of liquidity, with aid flows no longer enough to stimulate growth. The result is an alarming situation with every second person living in poverty and the unemployment rate for its overwhelmingly young population at over 70 percent.”

It continued, “Gaza’s economy is in free fall, marking minus 6 percent growth in the first quarter of 2018 with indications of further deterioration since then. While the decade-long blockade is the core issue, a combination of factors has more recently impacted the situation in Gaza; including the winding down of US$50-60 million per year of the US Government aid program, and the cuts to the United Nations Relief and Works Agency program.”

Mouath al-Sahhar was laid off at the end of September, along with other employees, by Siksik Company, the largest provider of infrastructure materials in the Gaza Strip, according to the company’s website.

Sahhar, 23, was a sales manager and accountant with the company for the past three years. He is getting married next week, but has no means to pay for the wedding.

“All I want now is to leave Gaza for good. I can barely make ends meet and pay for the wedding ceremony next week. I don’t think I will be able to repay what I borrowed from friends,” he told Al-Monitor.

“It is difficult to find a full-time or a temporary job here, not in the private or public sector. Before I graduated with a degree in business administration, I spent almost two years looking for work until I landed a job at Siksik. Now I have to start all over again. And the volatile situation in the Gaza Strip does not encourage personal investments in any business,” he said.

Head of the information office at Siksik, Mohammad al-Ghalayini, told Al-Monitor, “In light of the dire economic conditions gripping the Gaza Strip, the company was forced to lay off 54 of its 400 workers. Other employees were offered part-time jobs. Some of the company’s branches and points of sale in different parts of the coastal strip stopped operating altogether.”

“The decline in sales volume due to the lack of liquidity among Palestinian citizens has taken its toll on our company,” he added, noting that many other Palestinian companies in Gaza are facing the same dim reality.

Jamal al-Khudari, head of the Popular Committee against the Siege, said in an Oct.1 statement that some 2,500 workshops and stores closed down in Gaza because of the blockade and that the numbers are increasing, especially in the past year.

“Direct and indirect monthly losses in both the industrial and commercial sectors in Gaza are estimated at about $50 million as a result of the siege and the worsening crises,” he said. He noted that more shops and factories are shutting down, which means more unemployed people, in addition to large losses.

Khudari said that the immediate way out of this situation would be to completely lift the Israeli blockade, open all border crossings, organize unrestricted imports and exports, cancel the list of banned goods and connect the Gaza Strip to the West Bank through a safe passage.

The private sector in Gaza does not seem to be able to withstand further crises, or even survive the current situation. Khudari noted that small and medium enterprises are currently considered to be the most efficient way to overcome the economic collapse.

According to Mazen al-Ejlah, an economics professor at Gaza University, the economic situation in Gaza is worsening by the day, due to debts, low wages and the increasing political crises, including cutting US aid, and political division between the two rivals Hamas and Fatah.

“The lack of liquidity and the disruption of capital turnover has had negative consequences on hundreds of companies and businessmen. Private companies are working on cutting expenses by laying off workers and reducing wages, to be able to face the bad economic situation,” Ejlah told Al-Monitor.

The dire economic situation has cast a shadow on all traders in general.

Maher al-Tabbaa, director of public relations at the Chamber of Commerce in Gaza, told Al-Monitor, “The number of returned checks received by traders during the first half of 2018 amounted to 17,000, worth about $48 million. The number is increasing, which portends a catastrophic situation in the Gaza Strip.”

In addition, the worsening economic situation in Gaza could lead to a possible military confrontation with Israel.

Ahmed Bahar, a Hamas member of parliament and deputy speaker of the Palestinian Legislative Council — which is currently dealing with an internal division — warned Oct. 1 during a weekly seaside march that Hamas has been calling for every Monday since September that “the ongoing blockade will cause Gaza to explode in the face of Israel.”

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Found in: Economy and trade

Hana Salah is a Palestinian journalist who focuses on financial, business, agricultural and development issues. She is currently pursuing her master's degree in economic development from the Islamic University of Gaza. She has worked for Palestinian newspapers, Turkey's Anadolu News Agency and developmental organizations.

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