Businesses in Southern Israel Slow to Recover From Gaza War

Government aid is insufficient and middlemen take too much commission, owners say.

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Ayala Isaacson. She and her husband cultivate 25 acres of flowers.
Ayala Isaacson. She and her husband cultivate 25 acres of flowers. Credit: Ilan Assayag

More than three weeks after Operation Protective Edge ended with a cease-fire between Israel and Hamas, businesses in southern are still feeling the impact of the war.

Advances on compensation payments for war-related damage have come quickly in most cases, but the government’s aid formula often fails to take into account the real damage suffered by businesses. Many businesses have yet to rebound to their prewar levels, but professionals who profit from the claims process seem to have few complaints.

Here are four stories.

War like no other

When Operation Protective Edge began, business at the law offices of Moty Moyal, the biggest in Sderot and the area adjacent to the Gaza Strip, dropped to almost nothing. While rockets were raining down in the town, people has other things to do than pursue the real estate and civil and commercial cases the firm specializes in.

The firm’s two full-time lawyers, the intern and the secretary all asked to remain at home to be with their young children. In any case, they were afraid to come in. Moyal’s son, a soldier, was wounded lightly during the fighting and hospitalized.

Moyal and his brother Eli, a former mayor of Sderot, set up their partnership 24 years ago and today its annual turnover is just north of 1 million shekels ($270,000).

Even now, three weeks after the hostilities ended, Moyal says business is not back to usual. The firm is doing about half of its normal workload.

“Unlike in the previous military operations, this time the blow to the office’s operations was harsh,” says Moyal. “I believe that was because people felt abandoned and because the fighting was drawn out. Also because people preferred to stay at home or go on vacation.”

Nonetheless, the war hasn’t been all bad for Moyal: No less than 250 farmers and small business owners have asked his office to represent them in seeking compensation from the tax authorities for war-related damages.

Middlemen such as lawyers and accountants have been accused of taking excessive fees for helping with compensation claims. Moyal says he charges “reasonable” fees of 4% to 15% based on the business’ turnover and the difficulties involved.

Moyal himself has already won some government aid. “I didn’t calculate the [actual] damage, but I’ve submitted a claim based on reduced revenues for a sum of 80,000 shekels. In the meantime I’ve received an advance of a few tens of thousands of shekels. I must say that within 10 days the money arrived in my bank account. I hope that will also be the case for my clients.”

400 meters too far

Ayala and Ilan Issacson, who grow flowers on some 100 dunams (25 acres) in Moshav Sde Nitzan, have started preparing their compensation claim but say that at this stage they don’t plan to submit it. Their bigger priority is a petition to the High Court of Justice submitted on behalf of Sde Nitzan and four other communities in the Eshkol Regional Council.

All five of these communities are 7.4 kilometers from Israel’s border with the Gaza Strip. That means they has just 15 seconds to seek cover after a rocket siren sounded. But whereas people whose homes or businesses are 7 kilometers or less from the border are eligible for compensation equal to 66% of their estimated losses due to the fighting, for those beyond the 7-kilometer zone the figure drops to 33%.

Within about a week after the cease-fire took effect, the Issacsons received an advance equal to 80% of the compensation they received after Operation Pillar of Defense, in 2012. That came to 55,000 shekels.

But because they are only eligible to receive 33% compensation, they decided to hold off on their application, which they prepared with the help of a lawyer and an accountant, in the hope that the High Court will rule in their favor.

A Gaza Division battalion commander in the reserves, Ilan was called up for the entire war. “For me it was critical, because I did 57 straight days of reserve duty and in the meantime my farm was completely destroyed,” he says. “What I’m due to get back under the current arrangement won’t cover my losses for July and August … [Being paid for] reserve duty is not proper compensation for someone who owns a business.”

The residents of Sde Nitzan are ineligible for many benefits enjoyed by their counterparts living less than half a kilometer closer to the Gaza border, such as subsidies for retrofitting older homes with a reinforced room, discounts on property and other taxes and discounts on preschool tuition.

Happier with 
the government

The fighting hurt Shimon Malka’s income seriously. Business at his Catering Malka Plus, which provides meals to factory workers, fell 60% during Operation Protective Edge because so many factories in the south closed or scaled down their operations for the duration.

Turnover fell from 1 million shekels a month to 40,000 shekels during the war, adding up to 200,000 shekels a month in lost revenue, Malka says.

“I don’t remember exactly how much compensation I requested after Operation Pillar of Defense,” Malka said in an interview right after the cease-fire took effect. “What I remember is we expected reasonable compensation, and it never came.”

Three weeks later he actually has something nice to say about the Tax Authority. “We applied for an advance and within three or four days the money was in the bank,” says Malka. “It was 70,000 shekels, 80% of what I received for Pillar of Defense. The money came quickly, and it helped a lot. I was surprised to discover how efficient they were and how many lessons they learned from previous operations. Now we will wait and see what will be with the overall compensation amount.”

The accountant who submitted Malka’s request — the same accountant he used after Operation Pillar of Defense — will receive 10%. of the final amount. “If I could have done it myself it would have been better,” says Malka. “But it’s better that someone who knows exactly what’s needed does it. I can make a mistake.”

Mad at the middlemen

Operation Protective Edge ended three weeks ago, but Yaakov Cohen, 54 and the owner of a small grocery store in Ofakim he opened in 2009, is still very worried.

“We’re at around 70% to 80% of the number of customers we had before the war,” says Cohen. “ The reason for it is simple. Purchasing things from the [local grocery] is a matter of habit, and during the war people went elsewhere, maybe to stores closer to home, maybe protected places, and they aren’t coming back.”

Cohen says he has not yet put a figure on the damage to his business from the six weeks of fighting. “I need to sit with my accountant,” he says. “In the next few days we’ll check revenues for July and August and then think about the compensation track.”

Did you request an advance?

“Not yet. I need to talk to my accountant. I’ll do what he says.

Cohen is especially furious about what he calls the “brokers:” lawyers, accountants and other “fixers” who profit from submitting the compensation claims to the Tax Authority. He says they demand commissions of at least 10% or 15%.

Everyone is Ofakim is talking about it, he says. “A friend came to me and said, ‘Hire him, he’ll take care of you and you’ll get more money and speed up the process.’ And I asked him, ‘Why does it matter who submits the forms? Aren’t I entitled to get what I deserve?’”

Moty Moyal. Business at his law firm hasn't recovered to prewar levels, but processing compensation claims is bringing in revenue.Credit: Ilan Assayag

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