What happens to industry when you open a market to consumer products but restrict raw materials and ban export? What doesn’t happen is economic recovery.

The Israeli cabinet decision to ease the closure on the Gaza Strip did not change the sweeping ban on Gaza exports. While industrial raw materials were allowed into Gaza beginning in July, the limited capacity of the crossings meant only small quantities entered (raw materials were 4% of the total amount of goods that entered in July), while at the same time Israeli-made consumer products, no longer banned, flooded the market. The combination does not bode well for manufacturers in particular and the economy in general, as evidenced by the story of Jihad Abu Dan, aged 22, married and the father of two, whose family owns a textile factory in the northern Gaza Strip town of Beit Lahiya. His father was a textile worker who built a two-story factory that spans an area of 1,500 m², meant to support the extended family. Says Jihad:

“Not only did the ‘easements’ Israel declared not help us, they have even harmed us. Exports are still banned, and that is a problem because the Gaza market is very small, and a large amount of ready made clothes have been brought in from Israel and China. The Gaza market was flooded with products, there is a lot of supply and less demand, and because of the stiff competition, we are forced to lower prices. As long as there is no export, it is hard for workers in the clothing and textile sector to profit and produce. After three years of closure, we lost the contacts we had developed with clients from Israel, and they went elsewhere”.

“Before the closure, we worked at our full manufacturing capacity, producing 2000-3000 pieces a day. We did not manufacture for the local market; all of our products were for export to Israel and abroad. Back then, we imported between one and one and a half trucks of raw materials a day through the Karni Crossing, three days a week, and we exported between one and one and a half trucks of goods a day, two or three days a week”.

Mohammad Abu Dan and Co. Textile and Clothes Company. ‘These days the factory operates at only about 10% of its production capacity.’

“Right before the closure began, we received an order from an Israeli client, who asked for 100,000 items, which we had to make in three months. We managed to send him 30% of the order before Israel closed the crossings, and the rest of the goods remained in Gaza; he did not benefit from them, nor did we. Because clothing on the local market is sold more cheaply, we had to lower prices in order to sell the goods, and we lost money”.

“Today we employ 25 workers. There is not much work. The Gaza market is very small, and profits are minute. We mostly just cover manufacturing costs, but we continue to operate out of a desire to maintain the factory my father built. Out of 180 sewing machines, these days we are working with just 20. More than half of the machines broke down, partly due to remaining idle for a long period of time. These days we manufacture about 300 pieces a day, 10% of our capacity and our actual production before the closure. For many hours a day we have no electricity, and during that time we don’t work. We adjust our daily schedule to the power supply – Sometimes we work from 6 in the morning until 1 pm, we then stop working, because there is no electricity, and go back to work when the power returns, sometimes from 10 at night to 5 in the morning.”

Mohammad Abu Dan and Co. Textile and Clothes Company. ‘Out of 200 workers prior to the closure, only 25 are employed today, and 20 sewing machines out of 180 are operational.’

The sewing and textile industry in Gaza – general information

In 2005, prior to the closure, the production value of the sewing and textile industry in the Gaza Strip was estimated at $39 million, and approximately 70% of the manufactured goods were designed for sale to Israel and West Bank. In 2000, 37,000 people worked in this industry, whereas today the number of workers is estimated at 1,500. In the past there were 600 textile and sewing companies in the Gaza Strip, however it is estimated that only 10% are active today.

Source: Paltrade and the Textile Industry Association

For the past several months, Gaza Gateway has reported on the declining amounts of industrial diesel, necessary for electricity generation, entering Gaza. These amounts fall far below the needs of Gaza residents and are even lower than the “minimal amount” set by Israel before the High Court, as part of its policy of supply restrictions to Gaza. Last week, for example, the power station received just 1,200,000  liters of diesel – 35% of what is needed for operation at its current maximum capacity. The result is power outages of 8-12 hours per day, interfering with the operations of humanitarian infrastructure and ordinary life. In today’s post, we call attention to a new position paper by Gisha explaining the reasons for the decline and calling for accountability among the relevant parties, especially Israel, the Palestinian Authority, and the Hamas regime.

The following guide was inspired by a report by the Government of Israel, summarizing Israel’s humanitarian activities for the Gaza Strip in 2009 and at the start of 2010, which was submitted yesterday to the Ad Hoc Liaison Committee.

1. Take things out of context. When you say that, “41 truckloads of equipment for the maintenance of the electricity networks were transferred”, you do not need to mention that those spare parts were waiting for many months for clearance, and that, at the end of 2009, the Gaza Electricity Distribution Company reported that 240 kinds of spare parts were completely out of stock or had dipped below the required minimum stock. Likewise, “There was a significant increase in the number of international organization staff entering the Gaza Strip” does not require explanation that, were the productive sector in Gaza not almost completely paralyzed, so many aid workers would not be needed and the number of aid recipients would not be so high. You also don’t need to explain that the high number of staff you quote might be misleading, since it’s likely you are counting individual entrances and not unique visitors (the same international aid workers enter and exit multiple times per month).
2. Demonstrate impartiality. Present the transfer of 44,500 doses of swine flu vaccine as having nothing to do with you. There is always a chance people will forget it is a border-transcending epidemic and that the head of the Gaza District Coordination Office himself said an outbreak in Gaza would endanger Israel.
3. Make it look like you are paying the bill. Use vague language such as “In 2009, Israel continued to supply electricity to the Gaza Strip”. Count on the fact that most people don’t know that Israel charges full payment for the electricity by deducting the amount from the VAT and taxes it collects for the Palestinian Authority via import into its territory.
4. Take credit for the work of others. Note that “Between April and October 2009, maintenance work was conducted on the power station by Siemens” and “In 2009, the international community transferred 141,390 tons of humanitarian aid” are your successes too. These actions were undertaken after you decided in a unique instance to lift the restrictions you imposed yourself. You deserve credit even for the summer camps UNRWA runs for children in Gaza: in an exceptional measure you did not prevent the transfer of musical instruments and other items you define as “non-humanitarian” (such as ice cream machines and swimming pools).
5. Make sure to even present your failures as successes. “As part of the preparations for winter” you approved the transfer of glass. Even if you did so only after external parties exerted heavy pressure on you, even if you had to make an exception to a prohibition you imposed for two winters, even if you started transferring the glass only on December 29 (long after winter weather had already begun battering destroyed homes in Gaza), and even if you continue preventing the transfer of heaters – present the transfer of glass as your success.
6. Make sure to use headlines that will stun your readers. “The activities of the private and banking sectors in the Gaza Strip are maintained”. With a headline like that, few are likely to realize you are talking about maintaining an economy that has been at an almost complete standstill for nearly three years, with more than 90% of the factories closed or working at minimal capacity, because Israel has been preventing the transfer of raw materials. The headline “Over the years, Israel has kept the issue of public humanitarian infrastructure out of the conflict” will also obscure the Cabinet Decision to restrict the transfer of industrial diesel fuel to the power plant, which is crucial to the functioning of the water and sewage systems and other vital infrastructure, in an attempt to pressure the Hamas government.
7. Use vague terminology. Choose words such as “transferred” and “were transferred”. This way, some people will understand that “Over 1.1 billion NIS were transferred to the Gaza Strip to cover the salaries and activities of international organizations” came out of Israel’s pocket and not, as actually happened, that Israel simply did not prevent the PA and international organizations from transferring the money through the border crossings under Israel’s control, in a rare exception to its restrictions on cash transfers and on the banking system in Gaza.
8. Use visual tricks. State the number of individual flowers you allowed to Gaza farmers to export (9,782,076). This method can become problematic only if you mention that the potential for export is 55 million individual flowers per year, or that in 2006, 2,089 tons of strawberries were exported (compared to only 54 tons in 2009). 105,701,740 liters of industrial diesel fuel (according to COGAT’s 2009 report) sounds like a respectable amount when you state it in individual liters, but is a little less respectable when you discover that it amounts to only 57% of the amount required for maximum electricity production at the Gaza power plant.
9. You do not have to reveal everything. Play down the extent and nature of your control of the Gaza Strip’s border crossings, including indirect but substantial control of the Rafah Crossing.

 Don’t be so modest! You play a central role in the humanitarian situation in Gaza.

Building the “perfect home” is a dream shared by many people, especially if you are one of the tenants of the 3,500 homes that were destroyed or of the 56,000 homes that were damaged in last year’s military operation in the Gaza Strip. This week, we’ve pulled together some instructions to help you build your dream house in Gaza. Make sure to keep these useful tips handy! 

First of all, because of Israel’s prohibition on the entry of building materials to the Strip since the June 2007 start of the closure, we will need to use locally available materials. Mud will be used to build the foundation and the walls of the house, easily found during the wintertime in Gaza’s natural surroundings. Make sure to avoid collecting mud from areas where raw sewage flows. Have patience, once the ban on the entry of spare parts, equipment and fuel is lifted, the water and sewage systems will operate at better capacity.

We’ll need to mix the mud with gravel. Due to Israel’s ban on the entry of this material, we will use limestone instead. To the limestone-mud mixture, add rocks found scattered around the area and mix for a long time until a thick mass is formed. In order to hasten the hardening of the mud, approach the nearest wheat field, cut off some shafts of wheat, and add them to the mixture. Place the mud into a baking dish, wait until it dries and presto — you now have material to make bricks and begin construction!

One of the mud houses recently built in Gaza, which serves as an example of the way the Strip's residents are coping with the ban on the transfer of raw materials.

Now, to build the house. For the support structures we will need iron. However, as you can already guess, since June 2007, Israel has prevented the entry of iron to the Gaza Strip. If you can afford to pay for the iron available in Gaza coming in via the tunnels at 4000 shekels ($1,060) a ton compared to only 2600 ($690) before the closure, fantastic! If not, you will need to mix sand, straw and glue and then roll the mixture into long beams.

Next, we will use the most basic building material, which we have avoided using so far: cement. Cement, the entry of which is also banned by Israel, will be purchased from the tunnel operators. Due to the fact that cement is extremely expensive — 900 shekels ($238) a ton, compared with about 450 shekels ($119) before the closure — we will only use it to build the bathroom, though we’re itching to use it for the rest of the house! 

We’re almost finished. All that’s left to build is the roof and for this we will use plates of glass. Finally, something that is found in Gaza! Despite the prohibition on the transfer of glass to Gaza for two and a half years, since the end of December 2009, glass is no longer considered a security threat, and so far about 100 trucks of glass have entered the Strip.  

Now, after all your hard work, turn on the light switch that you’ve just installed and look around at the fruits of your labor. Oh, is there a blackout in the area again? At least you can enjoy the magnificent view of the sky and the light of the stars shining through the glass ceiling of your cozy, little house.  

Gisha reiterates its call on Israel to lift the ban on the entry of building materials so that people in Gaza may rebuild their homes with dignity.

What’s it like to spend at least one-third, if not the whole day, without electricity? One and a half million people have been living like that for over a week in what is just the latest chapter in the ongoing electricity crisis in the Gaza Strip. If there is a common theme that persists throughout this saga, it is the perpetual, imposed sense of “living on the edge“.

In November, the European Union, which funds the industrial diesel needed  to operate Gaza’s only  power station, announced that in a joint decision with the Palestinian Authority (PA), its funding worth 97 million Euros per year would end, due in part to the global economic crisis. Despite the fact that it warned of its intentions months in advance, no alternative arrangement was made, although some European states have expressed willingness to provide funding for the PA to cover the cost of the diesel. In the meantime, the Gaza power station was forced to limit itself to an output of just 30 megawatts, almost a third of its potential generation capacity (80 megawatts). According to media reports, another factor that is hampering resolution of the funding issue is the internal Palestinian conflict and the PA’s demand that Hamas contribute to the costs or collect money from consumers. The PA is effectively inviting Hamas, which has not previously been involved in electricity generation in Gaza, to play an active role in the procurement and funding of the industrial diesel supply for Gaza’s power plant. This week, the power plant increased production to 60 megawatt after receiving additional fuel deliveries, but it is not clear whether a solution has been found.

Gaza Power Plant

Indeed, it seems that all the players in this drama are exploiting a need as basic and obvious as electricity in order to promote their political objectives. Despite the fact that the power station is clearly a vital civilian infrastructure, despite the fact that it is largely privately owned, and despite the fact that the industrial diesel is used solely to operate the power station’s turbines, Israel decided to bomb the station in 2006, inflicting damage which has yet to be fully repaired. Moreover, since 2007, Israel has limited the transfer of industrial diesel to the Gaza Strip to a “minimum” that it set at 2.2 million liters per week, despite the fact that in reality 3.5 million liters are required for the present maximum output of the power station.

The Israeli policy of “reduction to the minimum” means that the power station has no ability to stockpile reserves of industrial diesel to prepare for interruption of supply. So when supply is interrupted, this time due to funding problems and the conflict within the Palestinian leadership, 1.5 million people need to learn to live with power outages for 8 hours or more per day.

The closure of the Gaza Strip is tight enough to make life difficult for residents, but fences and checkpoints don’t prevent viruses from passing through, as became apparent earlier this month. Despite predictions that the closure of Gaza might protect it from exposure to the Swine Flu, the virus was identified in the Gaza Strip two weeks ago, and already some 185 people have been diagnosed as infected, 13 of whom have died.

Not only has the closure of Gaza failed to protect it from the virus, but the restrictions on the passage of equipment and fuel are making it difficult to contain the virus’s spread.

During the military operation last winter, 15 hospitals and 34 medical institutions were damaged, and their repair has not been possible due to Israel’s refusal to allow building materials into the Gaza Strip. While Israel boasts of permitting increased quantities of humanitarian aid to Gaza, it continues to restrict the entrance of medical supplies, claiming security risks. Thus, Israel is making it difficult to send batteries needed for the UPS systems that protect sensitive hospital equipment during the frequent power outages and is limiting the supply of additional medical supplies, such as X-ray equipment.

The Swine Flu, however, known for its tendency to breach borders, is not treated like other illnesses, and Israel has allowed 6,000 vaccinations purchased by the Palestinian Ministry of Health in Ramallah into Gaza. The vaccinations are destined for Gaza residents who participated in the pilgrimage to Mecca (the Hajj) and for the medical professionals treating patients diagnosed with the virus. It is estimated that more than 400,000 vaccinations are needed for people in high risk groups.

Allowing vaccinations through to Gaza residents is surely a nice public relations photo opportunity, but preventing the outbreak of an epidemic requires appropriate sanitary conditions and infrastructure, too. Frequent and extended blackouts (8 hours a day, 4 days a week), due to Israel’s refusal to allow the transfer of the required amount of industrial diesel to the Gaza power station, interfere with the proper functioning of local hospitals. Hospitals rely on back-up generators during the power outages, but limitations on their power production interferes with the heating and ventilation systems that are vital for maintaining proper air-pressure.  Likewise, the ongoing shortage of gas limits the ability to run hospital washing machines needed for basic hygiene. This past week, only 34% of the gas needed by Gaza residents was supplied (518 tons out of the 1,500 tons needed per week).

Other types of infrastructure systems which are needed to deal with infectious diseases are the sewerage and water purification systems, which also rely on fuel and supplies limited by Israel. A roof over the heads of the thousands of residents uprooted from their homes and the hundreds still living in tents since their homes were destroyed in the war is another basic requirement.

Some people resort to prayer to protect them from the Swine Flu. We would make do, for starters, with policies that allow the ongoing transfer of equipment required for sanitation and the proper functioning of the health system – out of respect for the rights of the 1.5 million people who live in the Gaza Strip.

On December 6^th, the Israeli Ministry of Foreign Affairs released a newsletter highlighting the economic situation in the West Bank and the Gaza Strip. Though there are some miscalculations, for the most part the MFA’s data are accurate. The real problem is that the numbers appear without context.

In this week’s post we provide context for the MFA’s (mostly) correct numbers.

Israel’s policy in the Gaza Strip: Permit the entrance of humanitarian aid ONLY – no development, no prosperity, no economic activity.

Food: No luxury, no production

True: “All food products are brought into the Gaza Strip, except for those that definitely constitute luxury items”.

More true: Did you know that honey and canned fruit, which have been banned since the beginning of the closure, definitely constitute luxury items? Or that, for 8 months, tea definitely constituted a luxury item, until it was suddenly permitted into Gaza about two months ago, indicating that maybe it is not a luxury item after all? On the other hand, pasta is definitely not a luxury item anymore, since Secretary of State Hillary Clinton expressed concern about obstacles to the entrance of aid in February. Margarine in small packets is not a luxury item, but margarine in large buckets is definitely a luxury item, because it could then be used as a raw material for local food production, giving Palestinian residents of Gaza the luxury of engaging in productive work.

There are no published lists of what kinds of goods can and cannot enter, and Israel has refused to explain which products constitute a luxury, and which don’t. Without some kind of list – how are we to know?

Unemployment: Revealing all the numbers

True: Unemployment in Gaza dropped from 45.5% in the second quarter of 2008 to 36% in the second quarter of 2009.

More true: According to the Palestinian Central Bureau of Statistics, the reason for the second quarter drop in unemployment may have been that temporary relief projects, especially for clearing rubble after the military operation, were initiated by international organizations and the local government. The MFA neglects to mention that in the third quarter of 2009 unemployment again rose to 42.3%, as these temporary relief projects ended. Compare this with 32.3% unemployment in June 2007, just before the closure began.

Fuel and electricity: Not meeting needs

True: Israel meets the minimum threshold set by the Israeli High Court for the passage of industrial diesel for electricity production at the Gaza power plant.

More true: The minimum threshold for industrial diesel set by the court is far below what Gaza needs. In fact, the industrial diesel that was transferred in the month of November met just 39.1% percent of needs, creating power outages.

Re-building projects: A drop in the bucket

True: “Israel is conducting discussions with the Palestinian Authority, the US, EU representatives in the area and others, with the aim of establishing an agreed-upon supervisory mechanism, subject to international standards, which will ensure, if and when a decision is made to that effect, that monies, materials and equipment that are brought into the Gaza Strip for vita humanitarian projects actually reach their destinations”.

More true: Israel has refused to allow reconstruction materials to enter Gaza, despite “discussions” that have taken place over the past 11 months. Gaza needs at least 25,000 tons of iron and 40,000 tons of cement for reconstruction. Since the war, Israel has blocked all but 19 trucks of construction materials permitted to enter on an exceptional basis for the humanitarian infrastructure (i.e. water and sewage systems), though restrictions on other materials mean that infrastructure continues to function below capacity (see below). Without reconstruction materials it is impossible to rebuild the more than 3,500 homes destroyed and the approximately 56,000 homes damaged, in addition to over a thousand businesses, factories, and other commercial establishments destroyed and partially damaged during the war. Even if construction materials were permitted in to fix the estimated $45 million in damage to private sector establishments, the ban on import and export ensures that these businesses would likely lay idle, as 97% of factories generally have done so for over two and half years. Some cement enters via the tunnels beneath the Gaza-Egypt border, but prices are beyond the reach of most residents, and many international organizations are restricted from using these materials.

Water, Sewage and Electricity Infrastructure

True: “Israel is conducting a dialogue with Robert Serry, special emissary of the UN Secretary-General, regarding vital humanitarian projects, primarily relating to sewer systems”.

More True: Dialogue notwithstanding, Israeli restrictions on supply of spare parts and materials for the devastated water and electricity systems mean that 10,000 people are without running water, 40,000 people are cut off from electricity, and power outages lasting 8 hours, four times per week are a common occurrence in most homes.

Education: Children paying the price

True: UNRWA schools recently received shipments of education materials, including notebooks and pencils.

More true: UNRWA is the only agency permitted to receive school supplies in Gaza, and only after Israel delayed the entrance of these items for several months. Israel continues to ban the entrance of supplies for two-thirds of the schools in Gaza, the private and government-run schools which educate 240,199 children.

The final section of the MFA newsletter includes a quote by EU Special Representative to the Middle East, Marc Otte. Find here another important statement made by Marc Otte recently in an interview for Al Quds newspaper, describing the EU position on the closure:

“[The] Gaza closure and denying entry to construction materials is morally unacceptable and is a failure. I was in Gaza last week, there were large quantities of cement in Gaza, but the only people who do not get it are the ones who most need it. For this, ban on constructions materials is not acceptable and I have explained this to the Israelis and told them that this is also not in their interest. Our position is clear, especially that winter is coming, and people can not live in tents in the cold and under the rain”.

Post-script: a perceptive reader pointed out to us that in a November 24^thbriefing to the Security Council, Assistant Secretary-General for Political Affairs Mr. Haile Menkerios, made comments in reference to the stalled Serry Plan mentioned in the MFA newsletter:

“Beyond immediate humanitarian needs and the water and sanitation sector, I regret to inform the Security Council that the United Nations has not yet received a satisfactory response from the Israeli government to the proposal, put forward in May, to complete $77 million of stalled UNRWA and UNDP projects in the area of housing units and school and health facilities. The UN has left no stone unturned in seeking approval of this package in extensive consultations with the Israeli authorities, and is confident of its capacity to ensure the integrity of programming. It is completely unacceptable that no meaningful progress has been made in kick-starting UN civilian construction activities essential for the well-being and recovery of a war- and blockade-affected population, half of whom are children”.

The first storm of the winter hit Israel last week. Following a long period of drought, the plentiful downpour was greeted with joy, even though the stormy weather predictably caused flooding and damage. The rain and strong winds also hit Gaza, where residents found that they are particularly vulnerable in stormy weather.

Prior to the storm, international organizations warned of the poor conditions of the residents living in destroyed houses and tents and of schools with no windows. Special aid was allocated to prepare for the winter. The warnings were based on the well-founded fear that the ongoing supply situation would continue: since June 2007, Israel has blocked the entry of most raw materials into the Gaza Strip, even those urgently required to repair the heavy damage sustained in the war and to repair and upgrade the humanitarian infrastructure. The electrical system is in urgent need of hundreds of different parts which are either entirely out of stock or are down to minimum quantities only – parts that are waiting in the West Bank and Israel until the latter will permit their transfer to Gaza.

Nedal Toman, Engineer and Project Manager at the Gaza Electricity Distribution Company (GEDCo), said:  “We have bought all of the equipment we could find on the local market, even parts that do not meet the standards of the system but can at least be used as ‘band-aids,’ so that we can supply electricity to the people in the meantime.”

Indeed, the storm’s strong winds knocked out power for between 150,000 and 200,000 people, after the makeshift infrastructure was damaged . GEDCo warned that without spare parts and raw materials, Gaza’s entire electrical network is in danger of collapse.

Rafiq Maliha, Project Manager at the Gaza Power Generation Company (GPGC) heaves a heavy sigh before beginning his description of the current situation at the Gaza Power Plant. Apparently he’s been over this quite a few times already.

Maliha, who holds a Doctorate in Mechanical Engineering from the Middle East Technical University in Turkey, has worked in various positions in the electricity sector in Gaza over the past 14 years.

“Originally, the Gaza Power Plant was designed with an output capacity of 140 megawatts of electricity,” he explains. “Throughout its years of operation, the plant’s maximum output level was 118 megawatts. That was in 2006, just before Israel bombed the power plant and destroyed all six transformers”. 

Since then the damage has been partially repaired, but another problem has arisen: Since November 2007, Israel has restricted the transfer of industrial diesel to the Gaza Strip. This diesel can only be used to operate a power plant and it is paid for by the European Union. Thus, a power plant that requires 3.5 million liters per week has been forced to operate on 2.2 million liters per week – 63% of the necessary amount. This causes power outages lasting 6-8 hours, four days a week, with which Palestinian residents of the Gaza Strip must contend.

 “Throughout the month of Ramadan we worked differently,” explains Maliha. “Since it was very hot and the peak consumption and shortage hours were in the evening – due mostly to cooking – we used up reserves of industrial diesel which we accumulated beforehand in order to ease the impact of the shortage on the residents”.

Immediately after the conclusion of the month-long festival, he explained, the power plant was forced to return to its previous level of operation, due to a supply of industrial diesel sufficient to generate only 55-60 megawatts of electricity.

 “What do I need most?” he asks rhetorically, “I need fuel. And also spare parts. We have no other alternative”.

How does he view the future? “It’s hard to look ahead and make plans. Even if we had a plan, we wouldn’t be able to carry it out due to the restrictions. It’s a complicated situation. Right now we are just taking things one week at a time”.