This week we will try again to understand what the possibilities are for industry in Gaza when the import of consumer goods, such as furniture, is permitted, when raw materials for industry have been cleared for entrance after many months, and while the ban on export remains firmly in place. This time we spoke with Tahseen al-Isi, director of the al-Isi furniture company in Gaza City, whose family has manufactured furniture for the Gaza market since the company was founded in 2000.

Employees in a furniture factory in Gaza.

As opposed to the textile factory we wrote about last week, al-Isi’s factory did not export to the West Bank before 2007, instead focusing on the local market. But since the sweeping ban on export was imposed in June 2007, al-Isi has found himself competing for the small local market in Gaza with all of the vendors who cannot export to the West Bank. The market is flooded with local merchandise, in addition to Israeli merchandise that is allowed in, and as a result, prices have dropped to the point where merchants hardly make any profit.

But that’s not the only problem. Al-Isi explains that when Israel banned the import of wooden boards, he bought expensive boards smuggled through the tunnels. When the ban was lifted, al-Isi discovered that the price of the boards he was buying was three times higher than the price of those recently brought into the Gaza Strip through the crossings from Israel. And so al-Isi found himself having to compete with other furniture-makers who had paid less for their materials, which in turn forced him to reduce production by 50%. If he had continued producing at the normal volume, says al-Isi, his losses would have reached $50,000.

Furniture factory in Gaza

The ban on export not only floods the market with cheap products but also causes a steep rise in unemployment. Whereas in the past al-Isi had 18 carpenters working in the factory’s workshops, today he has only five workers. Al-Isi says that the workers suffer from the situation the most. So much so that most of them now rely on the aid of local and international organizations: “Most are frustrated and desperate about the economic situation”, al-Isi says sadly, “and we merchants do not have a magic wand to change the situation in Gaza”.

Therefore, the ban on export, which is one of the most important aspects of the closure on Gaza, affects directly the citizens’ right to live with dignity.

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

Agence France Presse (AFP) news agency recently published a report about two sisters from the Gaza Strip, aged 13 and 16, who went to work in the fishing industry to support their family following their father’s illness. The report drew much interest and was translated and published on several Arabic language websites. True, it is out of the ordinary for two girls in a conservative society to find themselves in a field, or sea, as it were, usually reserved for men, but considering the difficult situation in Gaza– 39.3% unemployment in the second quarter of 2010, with the number of people living in abject poverty rising in the last two years from 100,000 to 300,000 according to the UN Office for the Coordination of Humanitarian Affairs in the Occupied Territory–many women are taking the initiative to try and earn a living to help their families make ends meet.

In addition to testimonies from the field, statistics are also pointing towards a change. According to the Palestinian Central Bureau of Statistics, the percentage of women working outside the home in Gaza in 2009 was 11%, low compared to other countries, however there has been a gradual rise. In 2005, before the closure, only nine percent of women were present in the workforce.

On the occasion of International Woman’s Day this week, we decided to look at situation of women in the Gaza Strip. Out of 1.5 million people in the Gaza Strip, women comprise 49.2% of the population. The percentage of women in the labor market today is 12.2% of the total workforce, a percentage that is considered low when compared to other countries in the world.

We interviewed Muna Al-Almi, Manager of FATEN, an organization that provides loans and business development advice to women, in order to understand the unique situation of women in Gaza.

When was FATEN established and what are its aims?

The organization was established in 1998 with the aim of providing financial services to low income Palestinians, principally women. We support projects that can help women improve their lives and position.

Whoever receives a loan from the organization undergoes training that we provide with the help of civil society organizations, with the goal of helping women in different areas, for example: time management, marketing, pricing of goods and women’s rights. This is with the aim of educating women about their rights as women and as workers.

Our loans vary between $500- $5000 and are paid back over a period of 24 months. The criteria that guide us in our decision to finance a business are mostly good management and planning, and also the extent to which the business is intended to serve women. Examples of businesses that have received loans include: candle and jam manufacturers, agricultural businesses, a poultry farm, a cosmetic business, and financing a women-run pharmacy. Other projects that mainly employ or provide services to women include: embroidery, home cooking and sales. 

Muna Al-Almi, Manager of FATEN

We focus on women because they comprise the weakest section of society. We have many families who are financially dependent on women, where their husbands have died, been killed or have been disabled as a result of the difficult circumstances of the conflict or are completing prison terms in Israeli jails.

Many women turn to us for help, they don’t feel that there is a risk in taking a loan to open a business because in our society it is acceptable that women are forced to work and support their children. The women compete with men in the sense that they go out to work in order to support their family and this empowers them. Sometimes women do this better than men.

How has the closure impacted FATEN and its clients?

The closure has affected all residents of Gaza and impacted a big percentage of the women that have taken out loans. These women in the past purchased their raw materials from Israel, whether these were textiles or industrial goods. Since the closure, these materials are not permitted to enter Gaza. In addition, a lot of men have stopped working in Israel. This also impacts women greatly, and requires them to have to look for work. They are forced to become integrated in the job market in order to support their families.

At the start of the closure, the women did not honor the loan repayments which they were supposed to return to FATEN. Some of the businesses did not receive projected profits, because the business plan was conceived according to the conditions in place before the closure. We helped women via training and financial support for businesses that were on the verge of bankruptcy.

We started to think about alternatives as a means to adjust to the new conditions and the rising prices of raw materials as a result of the closure, such as providing limited finance to established businesses in order to prevent bankruptcy.

Moreover, instead of supporting industries requiring raw materials, we financed businesses that do not need raw materials that are not available in Gaza. So, for example, there is a preference for embroidery instead of jam manufacture that requires jars that cannot enter Gaza. We have been forced to be creative in order to operate in a manner that suits the conditions in Gaza. Despite everything, we continue to encourage women to become integrated into the labor market because of the rise in the unemployment rate and the decline in per capita income in the Strip as a result of the closure.

What are the needs of women in Gaza?

For women in the Gaza Strip there is a need for stability and security in order to realize their dreams and to provide a dignified life for their children. Women in Gaza also need to work in order to advance equality between women and men. They need society to look at women differently, and for views that do not support women going out to work, not to be encouraged. We need to promote women to aspire to be even more active.

Women in Gaza need more opportunities for work, but not only this. They also need opportunities to express themselves and for new opportunities to open up for women.

As the manager of an organization that supports women, what is the message that you give to the women of Gaza on International Women’s Day?

Our message is that women have an important role in breaking the closure. She needs to go out to work and to show the world that despite the hardships, she has the power to change the situation. Our work assists women in all respects, from loans to training, business management and the rights of women in general. I hope that the closure will end and that we will see stability in the Palestinian Territory, especially in the Gaza Strip. We hope that the borders will be open so that women will have opportunities to change the economic situation of our society.

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”.

Last week Israel proudly boasted of a sharp increase in the transfer of humanitarian aid to the Gaza Strip. This announcement coincided with the publication of a statement of concern by the European Union regarding the humanitarian situation in Gaza, noting that there has been no improvement since January 2009, when the war ended.

One can’t help but wonder if an increase in the supply of aid is really something to be proud of. Israel isn’t the one paying for the aid. On the contrary, international organizations claim that due to the problems and restrictions created by Israel, they are forced to spend millions of dollars on logistics to work around the restrictions, instead of investing all their resources on the aid itself. They also say that the increase in supply over the past year stems from the drastically increased need for aid following the war.

Besides the fact that Israel is once again proud of itself for overcoming obstacles of its own creation, and that it deliberately chose a point of reference which is very low, the connection between the closure policy and the increased need for humanitarian aid should also be taken into consideration. In 2007, aid represented only 3% of all imports into the Gaza Strip. Yet in 2009, aid now represents 26% of all imports.

So long as the economy is paralyzed – with 95% of factories closed, Israel continuing to prevent the import of raw materials for industry, and the unemployment rate having risen 30% since the start of the closure to its current rate of 41.5% – it is doubtful whether there is any possibility that the need for aid will decrease.

Is this what the future has in store for the Gaza Strip – its residents left dependent on aid while the process of de-development continues?