The tragedy of Gaza’s dual economy

On either side of the Gaza-Israel divide, hundreds of thousands have fled their homes. That means livelihoods are destroyed or close to ruins.

Because of the greater loss of life and larger physical destruction, the focus has been on the Gaza side. After all, in recent years Israel’s high tech economy has seen it become a member of the OECD and enter the top rung of stock exchange indexes. And by this reasoning, the harm done towards Israelis has a lower social value to news followers overseas.

Read any economic report on Gaza since 2000, when Chairman Arafat launched the Intifada, and there is very little positive information. That ranks in stark contrast to the three previous decades, when the World Bank estimated that under Israeli rule real annual average GDP growth was around 5.5% .

Today, unemployment is in the tens of percents. The border with Egypt has been sealed shut for nearly a year, and around 95% of the smuggling tunnels have been destroyed. On the Israeli side, hundreds of trucks still deliver provisions daily, even during the war, as many locals depend on food hand-outs.  It is an accepted fact that by mid summer 2014, the Hamas junta was bankrupt and could not even pay its supporters. (It should be pointed out although most factories were barely operating, the military underground complex continued to be funded and extended).

There are those who argue that Gaza can return to its better days, especially by leaning on the Egyptian economy. What people forget too readily is that up to 1967, Egypt ensured that Sinai and Gaza had remained a pathetic economic backwater. The irony is that the World Bank has confirmed that the main commercial boom for Gaza in the past century emerged during Israeli governance after 1967.

However, for one strong minority, this analysis is irrelevant. Since 2007, a nouveau elite has come to the forefront in the Gaza Strip, as described by the BBC. For the all the squalor, a Pan-Arab newspaper, estimated that there were around 600 millionaires in the area.

Many of the party and military elite are rumoured to live in the Rimal district. There you can find the Palestinian Presidential Palace, the Governor’s Palace, the Gaza Mall, the Roots Club (frequented by most overseas journalists), and the United Nations beach club. Interestingly, the quarter also hosts the Al-Shifa hospital, which is considered the HQ of Hamas military operations. It is nearby that the Prime Minister of Gaza, Ismail Haniyeh, purchased his four million dollar home in 2010.

Rimal has not escaped the attacks of the Israeli air force. For example, one assumes that Haniyeh has now sought the help of the local insurance companies for what happened to his own property. There again, one wonders just how many times the area needed to be targeted, assuming that Hamas was not readily prepared to use this specific community as a cover to launch Kassams.

I have previously cited Doron Peskin from Infoprod. For Peskin, Raed Al-Atar symbolises this new group of Gazan yuppies. Today, Al-Atar is head of the southern command of the Hamas military wing. This gives him direct control over the tunnels going out towards Egypt – there were probably over 1,000 at heir peak, creating annual revenues estimated between three and nine billion dollars. Somewhat unsurprisingly, given his biography on Wikipedia, Al-Atar would make an excellent occupant of Broadmoor or Alcatraz.

It was through these tunnels that new cars entered the district and the fashionable shops of Rimal could be stocked. Peskin estimates that this micro-economy was controlled by between 600 to 1,200 cohorts. I assume that many of these people have ensured that they have remained hidden away from the war in the underground labyrinths built for them……… underage slave labour.

I live in Israel. I see my commercial clients cry, as the war dampens local sales. And from my comfortable chair, I read the reports of the suffering of 1.5 million people in Gaza, where a military oligarchy has invested billions in violence and hatred rather than in its own people. And that is the tragedy of the two economies of Gaza.

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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