Left to Rot in Gaza
Strip's Economy Suffers as Trade Passage to Israel Remains Sealed

By Scott Wilson
Washington Post Foreign Service
Sunday, March 19, 2006

NETZARIM, Gaza Strip -- The harvest is underway inside a row of greenhouses here on the grounds of a razed Israeli settlement. But most of the tomatoes and sweet peppers, usually shipped to European markets, will rot in a nearby ravine.

"We keep getting it, but we don't know what to do with it," said Abdul Fatah al-Eilah, the greenhouse manager, as workers stacked boxes of vegetables in a storage shed while tractors towing flatbeds full of produce lined up to enter.

The main trade passage between the Gaza Strip and Israel has been closed for much of the year, despite an agreement brokered by Secretary of State Condoleezza Rice in November that required Israel to "ensure the continued opportunity to export." Israeli security concerns, heightened by Hamas's parliamentary victory in January and the almost daily rocket fire from Gaza, have rendered the deal largely moot.

To protect Gaza's small farmers from competition by Eilah's Palestine Economic Development Corp. and its 1,000 acres of greenhouses, the corporation is barred from selling its produce locally. But without regular access to the outside world, the corporation has had to donate some produce to local charities and dump the rest. Losses so far add up to millions of dollars.

"The government will likely have to give this away," Eilah said of an operation once considered the key to Gaza's economic future.

The lost harvest is the most recognizable sign of Gaza's declining fortunes six months after Israel's evacuation. It is also a telling indicator of Israel's evolving policy toward the Palestinian territories as Hamas, known formally as the Islamic Resistance Movement and at war with the Jewish state, prepares to take political power.

Unreliable trade passages, frozen Israeli tax transfers that helped pay salaries and lapsed permits of Palestinians who work in Israel are evidence of a broader disengagement, one that Israeli security officials say they hope to accelerate once Hamas installs its cabinet this month.

The Israeli defense establishment plans to resurrect a proposal to ban thousands of Palestinian workers from Israel, seal trade passages and end utility services once the Palestinian Authority has arranged alternative sources. Behind the push is the belief, promoted by senior security officials, that Hamas's election has made it all but impossible to sustain economic and political relations with the Palestinian territories, at least in the near term.

Acting Prime Minister Ehud Olmert, whose Kadima party is far ahead in opinion polls heading into Israel's March 28 elections, chose another approach to the caretaker Palestinian government last month. But Olmert has said he may adopt a stricter policy after Hamas assumes control of the Palestinian ministries.

That will happen at about the time Israel concludes its own election, which is shaping up as a referendum on Olmert's proposal to withdraw unilaterally from parts of the West Bank. Olmert has said he intends to draw Israel's final borders over the course of his four-year term, consolidating scattered Jewish settlements in the West Bank into larger blocs on the side of a separation barrier that Israel intends to keep.

Carrying out that move, designed to ensure the longevity of a Jewish majority inside Israel's final boundaries, would also entail the economic separation now quickening in Gaza. A World Bank assessment last week said frozen tax transfers, trade restrictions and future reductions in foreign aid would result in "a one-year contraction of economic activity equivalent to a deep depression," warning that per capita income in the territories would fall 30 percent this year.

As those sources dry up in Gaza, an economy dependent on public salaries, agriculture and foreign aid to sustain its 1.3 million people is already lifeless. Regular rocket fire into southern Israel, carried out by the radical group Islamic Jihad, has turned the northern strip into an artillery range. Prices have soared in stores as the supply of flour, sugar and dairy products that come from Israel is constantly interrupted.

"The thing we get most is the horror," said Ibrahim Harb, an unemployed father of 10 in the village of Um el-Nasser. "There is a panic here."

The village, alive with rowdy children one recent morning, sits on the edge of an area in the northern strip that Israel has designated a no-go zone. An Israeli artillery shell whistled high above the Harbs' sandy street, followed by a nearby bang. The children didn't pause from their play.

Among dunes in the near distance, a pair of tires mark a makeshift border. Israel declared the area beyond the tires off-limits in order to have a freer hand in targeting Palestinian fighters who launch crude rockets from there toward the smokestacks of the Ashkelon power plant in the middle distance. Earlier in the day, gunmen from Islamic Jihad had done just that.

"We want them to do this far from us," Harb said. "We live here, and we'll be the first ones harmed."

Until last month, Harb was one of the fortunate 4,000 or so Palestinians with a permit to work in Israel, where wages are higher. When his permit expired in February, it was not renewed, as the Israeli government reduces the Palestinian workforce. Harb's family gets by with help from a Hamas-run charity.

"You sit here, there is nothing, so you go inside," said Harb's 68-year-old father, Mohammed, passing a stormy morning on a bench. "That's it."

The Karni crossing, the main trade passage between Israel and Gaza, is nearby. This year, the crossing has been closed more often than not because of Israeli security concerns. A U.N. humanitarian assessment estimated that the 21-day closure that ended in February cost more than $10 million.

The Israeli military opened Karni 10 days ago for several hours a day to allow essential supplies into Gaza, but closed the crossing Tuesday. It has not reopened, and its future remains unclear, even though the Bush administration has paid to upgrade security, including state-of-the-art cargo scanners.

Nasser Jaber, director of the Palestinian Industrial Estates and Free Zone Authority at Karni, has little to do these days. He manages the compound of 30 factories adjacent to the crossing, a complex built in part with U.S. development money. A U.S.-funded security fence was being installed at the time of Hamas's election. That project and other U.S. development work in the territories have been suspended.

Jaber said Israel has closed Karni to move the main crossing to the Kerem Shalom terminal in the south, far from the strip's economic center. On Friday, Israeli defense officials said Kerem Shalom would be opened on Sunday. "This industrial park was invented by the Americans," Jaber said. "Now look at it. Things are being done you can't understand."

At a furniture factory inside one of the long corrugated-steel sheds on the grounds, 17 of 50 employees were still at work finishing stacks of living room chairs. There is no wood to begin new orders, all placed by Israeli companies.

"This will stop soon, too," said Yusef Ahmed, 27, a father of four children from the Jabaliya refugee camp. "Then we don't know what we'll do."

At Netzarim, where most of the Jewish settlement's structures were demolished during last year's evacuation, scavengers still come in hopes that the piles of concrete blocks bristling with wires and weeds may hold something of value. Beneath where homes once stood, a small canyon has become the dumping ground for export-quality peppers and tomatoes from the Palestine Economic Development Corp.

The company, formed to manage the greenhouses that were bought with international funds on behalf of the Palestinians, is nearly bankrupt. Amid al-Masri, the project manager, said he will recommend that the business be closed and its 4,000 workers laid off at the end of the month if Karni is not opened soon.

Even if it is, Masri said, the failure of the November agreement to keep the crossing running has cost him future investors he counted on to develop the greenhouse operation. He estimated that the closures have cost him more than $6 million.

"The worst time to make a decision is during moments of chaos," Masri said. "And right now we're in such a moment."

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