Michael Horesh

The economics of the Gaza-Israel fighting – Part 2

Two days ago, I questioned  what would have happened if Hamas had invested its capital from the tunnel economy in human resources and social infrastructure rather than in military might. Where would the Gaza economy stand today and would Hamas still thus feel the need to support the frightening cycle of violence?

By way of a follow up, I spied two headlines almost side-by-side in yesterday’s newspaper. The first questioned how Israel will find the money to pay for the additional costs of war. This is expected to top 3 billion shekels or close to a billion dollars. By way of comparison, the annual budget of the Ministry of Defense, the heaviest in the country, already stands at 51 billion shekels.

Now we know that Israel is no longer a third world country. Outside the EU and America, it is one of the UK’s leading trading partners. Many of the world’s high-tech leaders, such as HP and Microsoft, have set up r&d centres in the Holy Land. The Prime Minister, Netanyahu, owns properties in Jerusalem and in Caesarea.

Compare that to the second article, which considered the growing riches of the Hamas leadership. Proportionally, it appears that the Palestinian Prime Minister in Gaza, Ismail Haniyeh, can match the largess of his Israeli counterpart. Back in 2010, Haniyeh purchased a 2,500 sq meter property for around 4 million dollars.

It is not that I am trying to preach a stringent form of Communism. However, we are talking here about Haniyeh, who claims that Gaza is a financial backwater that demands Western taxpayers to support his flagging economy. Haniyeh practices his Islamic religion on his sleeve, branding himself as a man of modest means. And Haniyeh is one of the key leaders of Hamas, which ousted the corrupt fatcats of Fatah from Gaza.

I detect a whiff of deceitful disconnect. You may call it the triumphal return of the pigs from Animal Farm.

For several years, there has been a growing amount of evidence that the Gaza economy can only be explained in a bipolar manner; the poor who have remained desperately poor and the nouveau riche, many of whom have ties with Hamas. There are now hundreds of millionaires in the Gaza Strip. Palestinian commentators have long looked at “the new class of rich“. New cars have been readily available, at least while Egypt kept the tunnels open.

It appears that Haniyeh is not alone in benefitting from the poverty of his electorate. Khaled Mashal is thought to have stashed away over US2.5 billion, according to Egyptian analyst, Dr Ahmed Karima. Chairman Arafat was no friend of Hamas, but the fundamentalists have clearly studied his financial techniques. Arafat took his fortune with him to the grave, and I suspect that the Hamas leaders are also not interested in sharing their gains with their constituency.

The Gabble from Gaza focuses on the numbers of rockets launched or how many people are displaced. Both, from whatever side of the border you come from, are a tragedy. The truth is that not far behind the bloody headlines are pecuniary considerations and personal interests that Hamas is bound to protect, even at the cost of the suffering of its own people.

About the Author
Michael Horesh is a recognised business coach and mentor, and has helped clients collectively to create millions in added value over the past decade. He has substantial understanding of the workings of the Israeli economy and the financial situation of the Palestinians, as well as an incisive way of looking at Middle East issues.
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