Business as Usual With Gaza, Despite War and Blockade

Commerce continued even as Israel and Hamas were heavily shooting at each other. Gaza is big business for Israel, and Hamas simply has to let it happen.

Ilan Assayag

“We’ve been working with exporters from Gaza continuously since Operation Protective Edge began, even during the shelling,” said A., an Israeli customs agent working with food importers from the Strip. He was speaking as one of the several cease-fires that were supposed to end the fighting was being called last week.

“We’re releasing all the goods that arrive for them at Israeli ports, we’re conducting money transfers and have even paid some of the customs fees ourselves, because we know they’ll pay us back when things calm down,” A. said.

But the next day, after another cease-fire evaporated, A. sounded much less hopeful. “It’s an impossible situation. When the cannons roar, I don’t know who cares about any of this,” he said. “I’m divided, torn between loyalty to our soldiers on the one hand — all of Gaza could die to save one of our soldiers. But on the other hand, you try again and again to be a good, considerate person, not an animal.”

The hundreds of Israelis involved in the complex web of commercial ties with Gaza, among them farmers, industrialists, exporters, customs agents and lawyers, have indeed found themselves in a dire situation the past four weeks. While Israel and Hamas kill each other and cause heavy material damage, Gaza-Israel business continues if only because Jerusalem doesn’t want to stoke a humanitarian crisis in the enclave and risk infuriating the international community.

Hamas, which rules Gaza, would rather not do business with Israel, and Israel feels the same way, but geography, and more recently Egyptian hostility toward Hamas, give both little choice. Gaza’s ports are closed by the Israel Navy, so food and medicine can only get through via the Kerem Shalom crossing with Israel.

Even if Egypt opened the Rafah crossing, its closest farmlands and industrial areas are hundreds of kilometers away from the Strip. Each day the fighting rages, the efforts to keep goods moving into Gaza are becoming more and more desperate.

“I’ve been working in Gaza for 15 years,” said Awas Haj Yihya, the owner of a refrigerated-trucking company in Israel. “Not just us, but retailers in Gaza have gotten it pretty hard, too.”

He explained how retailers brought products to Israel that are only needed at Ramadan, like salted corvine and herring, the kind eaten after the Ramadan fast. They couldn’t first get the goods into Gaza, so some of it was sold in the West Bank at a loss and some just rotted.

“There were six or seven containers I was supposed to take to Gaza that got stuck at the port. They couldn’t get into Gaza. Merchants couldn’t get to the border crossings to take goods in. The blackouts and lack of electricity are a problem for refrigeration, too,” Yihya said.

“The Israeli market is weak these days, too. So we’re not working; we’re driving around for no reason. Let’s hope things quiet down soon — for the soldiers and the innocent civilians, for the Arabs and Jews who want peace. The problem is our leaders.”

Strictly business

According to Shalom Hatoka, an importer who sells to Gaza, “I’ve worked with them for 30 years. They don’t identify with any political movement, only with their business. We import and sell to them. But right now the ports and warehouses are full. Ships arrive at the port and wait, each day costing them thousands of dollars.”

With a population of 1.8 million people living just 60 kilometers from Tel Aviv, the Gaza Strip has always been an important part of the Israeli economy, even after the blockade Jerusalem imposed in 2007 after Hamas seized power in Gaza. According to the Palestinian Central Bureau of Statistics, the value of Israeli goods sold in the Strip the year before stood at $570 million.

But Israeli officials don't know the precise numbers because goods sent to Gaza are not considered exports. Still, the army says some 45,000 tons of goods were arriving there weekly this time a year ago. Sources say that in recent years 400,000 tons of seeds and 60,000 tons of fruit and vegetables have made it into Gaza annually, as well as more than 40,000 containers of clothing, canned food and medicine.

Though thousands more tons of merchandise used to make it into Gaza through tunnels from Egypt, when it comes to legal imports, Gazans have always preferred the route through Israel. In any case, since Egypt has done everything over the last year and a half to end the smuggling of goods into Gaza, the territory’s market is dominated by Israel more than ever. At least 50% of all products entering Gaza are produced in Israel.

Most of the companies queried in recent days played down their business ties in Gaza. No company wants to be identified with the enemy. Still, most large Israeli companies sell their products in the Strip, but because these goods are sold through middlemen, the companies themselves have little idea what’s going on.

“We have no ties with Gaza, but much of our merchandise ends up on the market there, and we have no idea how it got there,” said one Israeli steel producer.

Suppliers of raw materials, particularly building supplies, are even more reluctant to divulge details on their sales to Gaza. It’s no surprise — Hamas’ bunkers and the hundreds of kilometers of tunnels being uncovered required extraordinary amounts of concrete, wire and other materials. Though it's assumed that most of this stuff came in through the tunnels from Egypt, some Israeli-produced materials no doubt found their way into the tunnels as well.

Ironically, Hamas’ repeated wars with Israel ensure strong demand for building products. More than 4,000 buildings were destroyed and another 21,000 damaged during Israel’s last major ground incursion into Gaza in January 2009. Rebuilding this time around could easily translate into the largest building project ever west of the Jordan River.

“Before Hamas took over in 2007, cement importers would sell directly to individuals in Gaza through the Kerem Shalom crossing. After Hamas took over, and the restriction on building materials went into effect, the amount of cement being sold dropped from thousands of tons to only a few hundred,” said an executive in the Israeli cement industry.

“If tomorrow Israeli suppliers were allowed to send raw materials into Gaza, they wouldn’t be able to meet demand. It’s hard to imagine the amounts that will be needed.”

One-way street

The political situation since Hamas’ rise has made trade relations between Israel and Gaza unilateral. Until 2007, 85% of Gazan exports were marketed in Israel and the West Bank.

But for the past seven years, Gazan goods have been barred from Israel, depriving the enclave of the main means for paying for imports. Since 2010, Israel has let exports from Gaza be sent abroad through Ashdod Port, the Allenby Bridge into Jordan and Ben-Gurion International Airport, but this is complicated and the amounts are negligible.

“Israeli control of the Gaza Strip is reflected in part by preventing it from marketing products in its natural markets of Israel and the West Bank, which are only a short distance away,” said Iman Jabbour, research director for Gisha, an Israeli NGO that advocates the freer movement of goods and people in and out of Gaza. “To create an economy with any kind of independence, Israel must find a way to let Gaza trade with the West Bank.”

Also, the absence of movement to and from Gaza deprives Israel of Gaza’s large and low-cost workforce. “The solution of bringing Eritreans and Thais into Israel came about only after the Strip was closed off,” said Edi Polonsky, head of the dairy at Kibbutz Or Haner near Gaza.

“We didn’t stop employing Arabs because they weren’t good workers. One of the best things that can happen for both them and us is to open the gates and allow trade between the two sides – they’ll get money and we’ll benefit, too. Israelis can say ‘let the Arabs die, we won’t sell to them,’ but economically that’s just wrong.”