The Hamas Economy: The Illogical Choice

In 2015, World Bank figures claimed that the Gaza Strip was on the “verge of economic collapse” and it had an unemployment rate of 44%, the world’s highest. Similarly, the CIA World Factbook reported a difficult economic situation in Gaza that had a real growth rate GDP of -15%. The World Bank pointed to the Hamas takeover, which triggered a drastic reduction in economic activity with Israel, the Egyptian crackdown on cross-border smuggling tunnels, and the 2014 war with Israel as the causes for the negative growth rate. As a result of the worsening financial crisis, approximately 80% of Gazans receive international aid and close to 100,000 remain internally displaced. Unlike Syria where the lower class arose to fight a civil war against an economically progressive regime, the Hamas-controlled Gaza Strip metrics have not compelled a popular uprising.

Under Bashar Assad, the Syrian economy grew substantially from 2000-11. Using a more lassie-fare economic structure, Syria opened its markets that allowed for a boom in tourism and a massive increase in trucks couriering supplies to the Arabian Peninsula. The open economic policy allowed for heightened economic activity. These market policies increased living standards for the middle and upper classes.

However, these policies and other issues created economic difficulty for those on the lower end. The open markets contemporaneously brought in a surge of imports. The expansion of imported products available in local markets curtailed local manufacturing, thereby damaging those employed in the manufacturing sector. Those workers were primarily part of the lower class. This occurred during strong Syrian population growth, which increased the labor force while having decreasing employment prospects. In addition, an influx of Iraqi refugees, numbered at over 1 million, joined the workforce, further diluting the labor pool. A four year drought from 2006-10 hampered the traditionally strong wheat sector. Inflation hit 17% in 2008, complicated by the drought and the surge in world food prices in 2009. The aggregate of these factors put the poverty rate at over 33%. An overall decline in oil production also hurt the economy, when oil revenues fell from 11.2% GDP in 2004 to 5.4% in 2010.

In 2011, building anger and the genesis of the Arab Spring in Tunisia prompted a popular uprising in Syria against the Assad regime. Unlike Egypt where the upper class initiated protest against the government, the lower class initiated the popular Syrian uprising that remains in perpetual war. Syrians sought regime change because government policies helped the upper class while the average Syrian saw lifestyle regression. Since the onset of the civil war, trucking to the Arabian Peninsula via Syria has grinded to a halt; international economic activity has stopped; and inflation has accelerated.

Parallel to Syria, the Gaza Strip economy has continued on a downward spiral. Like Syria, a significant part of the Gaza economy was agrarian. Gazans shipped products into Israel while Israel sent products to Gaza. The trade provided Gazans with jobs. The Hamas government assumed a regime of terror, compelling Israel to shut off trade with Gaza and to look for other avenues of revenue. In response to Hamas and hostility from West Bank Arabs, Israel blazed a new economic trail by investing in technology and seeking international customers. This, combined with Israel devaluing its currency, transformed Israel into a technology-based exporting economy. Despite this reality, Hamas continued its agrarian-based economy and its terror functions.

Despite its dismal economy and continued terror campaign, Hamas remains in power with no resistance. Unlike Syria, the lower class does not protest; they do not start a popular uprising; they did not leverage Arab Spring inertia to replace Hamas with a business-minded economic regime. In fact, the people have become more dependent on foreign aid, which Hamas drums-up through anti-Israel propaganda.

It seems that the people of Gaza either direct their anger toward Israel instead of their government or are card-carrying Hamas members. Although local political elements compel people to support Hamas over Israel, the economic conditions should be a tipping point for Gazans to take control of their own destiny. Yet they choose to remain with the status quo. Either way, their hatred for Israel is stronger than their personal economic situations. So, despite its parallel with Syria, things do not change in Gaza.

About the Author
Ari Mushell works in the banking industry.
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