Ending Gaza’s Race to the Bottom

The August 26 permanent cease-fire crafted by Egypt between Israel and Hamas and Islamic Jihad forces in the Gaza Strip offers the best opportunity in years to take Palestinians off the “diet” imposed on them by Israel after Hamas ousted Fatah security forces from Gaza in June 2007.

No sooner had that confrontation ended than Israel expanded an already draconian economic “siege” on the enclave of 1.8 million. It closed Gaza’s border with Israel—its only functioning trade link to the outside world—to all commercial activity.

Deprived of the ability to trade, Gaza—never an economic powerhouse—became a ward of the international community. Its international maritime and air links were severed. Formal border operations with Israel and Egypt were reduced to transit points for the provision of humanitarian assistance—sufficient only to prevent a humanitarian meltdown. At the time, this policy was crudely but accurately described by Prime Minister Ehud Olmert advisor Dov Weisglass as putting Gazan’s on a “diet.”[1]

The siege exacted a terrible cost on Palestinians. The recent war has only magnified these losses. International organizations now estimate Gaza’s war-related costs alone at more than $5 billion, more than three times its GNP.[2]

But the conflict has also placed Gaza’s economic rehabilitation front and center on the international agenda, and offered all parties to the conflict what may be a fleeting opportunity to build a more lasting basis for mutual security and economic and perhaps even diplomatic progress. 

Ending the siege was the principal aim announced by Hamas at the outset of the war. Restoring Gaza’s ability to trade normally with the outside world and ending its engineered penury resonated with Gazans across the political divide and also won the critical support of PLO chairman Mahmoud Abbas during the ceasefire negotiations.

The terms of the ceasefire include the following economic provisions:

* Israel and Hamas have agreed to expand the perimeter (to 6 and later 12 nautical miles) for Gaza’s fishing fleet.

* Israel will also end the policing of “no-go” zones along Gaza’s perimeter with Israel. This policy prevented Palestinian farmers from accessing their lands near the border, effectively reducing Gaza’s much-valued agricultural lands by up to a third.

* Humanitarian aid via Israel, and also from Egypt through the Rafah crossing, will be expanded.  Israel’s sole operating crossing point at Kerem Shalom (Keram Abu Salem) continued to operate throughout most of the war.[3]

In September, discussions mediated by Egypt are slated to begin and are supposed to address the core Palestinian demand to open Gaza to the world, including the rehabilitation of its war-ravaged and moribund seaport and airport facilities. In late September international donors plan to convene in New York and later in Cairo to plan Gaza’s post-war reconstruction.  Former British prime minister Tony Blair, representing the Quartet, announced: “The Quartet will now concentrate on a long-term plan for Gaza and for its reconstruction, including the effective and efficient re-opening and re-connection (of the enclave) to the outside world under the authority of the Palestinian Authority government. Such a plan will enable a proper and decent life for the people of Gaza, as well as protect the security of the people of Israel.”[4]

The resumption of increased levels of international assistance, however welcome, represents a still insufficient first step along the long road to Gaza’s reentry to the international system of trade and commerce.  A serious effort to establish a solid basis for Gaza—and Palestine’s—economic revival must also enable Gaza’s long-suffering people to return to work; to reopen factories and workshops; to import inputs needed for goods, services, and agricultural products; and to export freely to markets and customers around the world.

Many will consider the restoration of the status quo ante to be a great achievement for Hamas. Yet even the trade regimen imposed by Israel prior to June 2007 (i.e., when Fatah ran Gaza’s affairs) was acknowledged by the World Bank at the time to be inadequate to Gaza’s needs as outlined in the Agreement on Movement and Access.

Draconian restrictions on the entry of Palestinian labor to Israel, the failure to establish a reliable export/import regime through Karni and other crossings, and the stillborn safe passage route linking Gaza with the West Bank were all signature elements of Israel’s policy before June 2007, indeed before January 2006. Even before June 2007, this system resulted in the creation of a “soft quarantine” around Gaza that created substantial economic dislocation in Gaza and led to widespread flight of Gaza’s manufacturing base.

Gaza requires trading borders with Israel and the West Bank, and ideally also with Egypt, that are managed according to internationally acceptable security and operational standards. Israel has been providing humanitarian aid and construction materials through the Hamas-run border crossing at Kerem Shalom almost without incident since June 2007. Hamas officials claim that Israel has indeed agreed to operate not only the primitive Kerem Shalom crossing point for material and goods but also to reopen the modernized but shuttered terminals at Karni (trade, aggregates) and Sufa (fuel). Israel has not confirmed this, however.

Gaza’s international maritime and air links should be restored and operated according to internationally acceptable standards. A third party, perhaps an international operator, might be useful in establishing mutually acceptable security and operating standards – not only for trade but also for passengers. A simple seaport, capable of handling cargo through a roll on/ roll off facility, could link Gaza directly to larger Israeli, Egyptian, Cypriot, or Turkish ports and thus reduce Gaza’s dependence on land links through Israel.

The recent war has placed consideration of such options toward the top of the international agenda. Freeing Gaza—and Palestine—from the extraordinary and unreasonable measures that have impoverished its people is long overdue.

[1]Conal Urquhart, “Gaza on Brink of Implosion as Aid Cut-Off Starts to Bite,” The Guardian, 16 April 2006, http://www.theguardian.com/world/2006/apr/16/israel

[2]Adiv Sterman, “Gaza Minister: War Caused $5 Billion Worth of Damage,” Times of Israel, 5 August 2014, http://www.timesofisrael.com/gaza-minister-war-caused-5-billion-worth-o…

[3]“Palestinian Joy as Israel Agrees Gaza Truce,” Al-Jazeera, 27 August 2014, http://www.aljazeera.com/news/middleeast/2014/08/hamas-claims-gaza-truc…

[4]Office of the Quartet Representative Tony Blair, “Quartet Representative Welcomes Gaza Ceasefire Deal,” 26 August 2014, http://www.quartetrep.org/quartet/news-entry/blair-gaza-ceasefire-deal/