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Small Israeli businesses have significantly cut back on their activity in the Gaza Strip, the Israel Association of Craft and Industry (ACI) yesterday.

"Small businesses in Israel have reduced their business dealings in the Gaza Strip in recent days to only 30 percent of what they were prior to the deposing of Fatah and rise of Hamas to power in the area," ACI economist Baruch Snir said yesterday.

The association represents most of the country's small manufacturers and service providers.

Snir said that due to Gaza's relatively low wage costs, small local businesses, particularly in textiles and metalworking, transferred production worth $1.5 million a year over the past several years to the strip. Product completion including assembly, design and marketing, meanwhile, has been conducted in Israel.

ACI head Nir Klinger said Israeli firms that operate in Gaza were prepared for the possibility that crossings into Israel would be closed, and many have already transfered their manufacturing operations to the West Bank, particularly to Hebron and Nablus.

In addition, companies are looking at manufacturing opportunities in Egypt and Jordan, and having already started importing goods from there in place of Gaza.