Despite the Egyptian revolution, which ousted Israeli ally and former Egyptian president Hosni Mubarak, and despite Israel’s claim to have eased the blockade on Gaza following last year’s bloody clashes on the ill-fated Mavi Marmara flotilla, the coastal territory’s economy remains crippled thanks to both countries.
International attention will once again focus on the siege of Gaza when the Mavi Marmara makes a second attempt at the end of June to bypass Israel’s naval blockade of Gaza’s coastline.
Last May, 10 Turkish peace activists were shot dead, some at point-blank range, by Israeli commandos when the flotilla tried to deliver desperately needed aid to the besieged territory.
However, following the Egyptian revolution in February the new interim military government promised to open the Rafah crossing between Egypt and Gaza.
Egyptian foreign minister Nabil al-Arabi told Al-Jazeera at the end of April that the Rafah crossing would be opened to "put an end to Palestinian suffering." However, this has still to happen, and when it does it is unlikely to open for exports and imports which are vital for the Gazan economy.
A 2005 Agreement on Movement and Access between Israel and the Palestinian Authority (PA), supported by Egypt, the European Union (EU) and the U.S. stipulated that the Rafah crossing could only accommodate pedestrians and vehicles. At a later date this was meant to include goods but following the 2007 Hamas-Fatah civil war this was postponed.
"Nothing has changed and in fact the situation now is worse than ever," says Wadi El Masri, general manager of the Palestine Industrial Development Limited (PIEDCO).
"Gaza’s economy has collapsed. It is down by 90 percent. Any country’s economy is dependent on the free movement of goods and people, and that remains frozen. Most of Gaza’s factories have closed. Nothing can be exported or imported. The few factories that remain open are dependent on local consumption but many people here are living below the poverty line," El Masri told IPS.
Israel and the West Bank used to be the largest consumers and purchasers of Gazan exports. Many Gazan manufacturers worked in joint productions with Israeli companies which not only boosted Gaza’s economy but provided employment.
"With just three of Gaza’s six crossing points open, the majority of the 1.5 million Palestinians in Gaza remain trapped under a blockade that is also conditioning entry of materials and banning all exports except for a few select items allowed shipment to the Netherlands," Karl Schembri from Oxfam in Gaza told IPS.
"Gaza, Israel and the West Bank are part of a single customs envelope, in which free trade is to take place and in which customs regulations are to be uniform. Any arrangement for permitting goods to cross via Rafah should consider the need to maintain the unity of the Palestinian economy existing in Gaza and the West Bank," said Schembri.
Yoni Eshpar from the Israeli human rights organization Gisha explained that there was never any starvation in Gaza.
"There is food on the shelves. The problem is that since Israel imposed the blockade there has been a complete devastation of the local economy. Gazans lack purchasing power, they lack job opportunities, and around 80 percent of the population is dependent on aid," said Eshpar.
Israel has also prevented the import of construction material into Gaza, vital for rebuilding its infrastructure destroyed during Operation Cast Lead, Israel’s military assault on Gaza from December 2008 to January 2009.
From July to December 2010 just 744 truckloads of construction material or about 149 trucks per month, were allowed into Gaza for international projects. Prior to June 2007 residents of Gaza were buying more than 5,000 truckloads of cement, gravel and steel each month.
Last year following legal action Gisha forced the Israeli state to release documents related to the closure on Gaza, including a list of banned items. Initially the Israeli Defence ministry refused to hand over the documents. According to the ministry, as long as the policy in question was in force, the release of the documents "would constitute harming national security and Israel’s foreign relations."
It turned out the banned items included cement and other materials needed for building, despite the fact that these objects have no military use, have not previously been included on any Israeli or internationally-recognized dual-use list, and are needed for rebuilding damage caused to homes and civilian infrastructure.
Ironically the smuggling tunnels, linking Gaza with Egypt’s Sinai peninsula, will continue to be a conduit for bringing in goods from cement to household items. But this form of import is dangerous, unreliable and the poor quality products are very expensive once the smugglers add on their profit margins.
"The mostly Chinese goods coming through Rafah are low quality. The smugglers pay no official taxes or other fees. There is no way we can compete with them," El Masri told IPS.
Still the Egyptians could help the situation dramatically. "If Egypt wanted to be more generous, they’d go back to what the situation was in 2005 and 2006," says Sari Bashi, executive director of Gisha. "In those years, any Palestinian with an Israeli-approved ID could come and go through Rafah. We don’t know what the Egyptians have in mind," added Bashi.
"In practical terms the blockade will remain in effect until all crossings points are opened to allow for the free movement of people and goods, in accordance with the 2005 Agreement on Movement and Access," said Schembri.