Palestinian Reconciliation Moves Drive Down Gaza Prices

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A man cuts shawarma at a restaurant in Khan Younis in the southern Gaza Strip, September 27, 2017.
A man cuts shawarma at a restaurant in Khan Younis in the southern Gaza Strip, September 27, 2017. Credit: IBRAHEEM ABU MUSTAFA/REUTERS

Gaza's merchants and consumers are reaping early rewards from reconciliation moves by the enclave's dominant Hamas Islamists and the Western-backed Palestinian Authority.

Israeli border restrictions, including a nearly blanket ban on exports from Gaza, and three wars since 2008 have imposed severe hardship in the territory. Israel says its rules are driven by security concerns, accusing Hamas of having used imported material to build weapons including rockets that have been fired at its cities. 

Since Hamas ceded Gaza's border crossings with Israel - the main gateway for commercial imports - to the Authority on November 1 under an Egyptian-brokered unity deal, many prices in the territory have dropped. 

The main reason for the decrease: the Authority has cancelled surcharges, sometimes as high as 25 percent, that Hamas collected in cash from merchants in Gaza. 

Businesses, in turn, have passed on some of those savings to customers: a 2017 Kia Picanto compact car, for example, now sells for $20,000 instead of $22,500, and a kilo of beef costs 40 shekels ($11), down from 50 ($15). 

And this week, the PA, which takes its own tax in an arrangement agreed with Israel, allowed the import of cigarettes costing eight shekels a pack compared with the usual 21 shekels for other brands, through Israel's Kerem Shalom commercial crossing for the first time. 

Cigarettes used to come in only via smuggling tunnels under the Egyptian border but the PA is seeking understandings with Hamas and Cairo to choke off that channel. 

"(Hamas's fees) led to a weakening of sales power because the people in Gaza live under bad economic conditions and because of the Israeli blockade and the loss of jobs," said Tareq Al-Saqqa, who owns an electrical goods company in Gaza, where unemployment tops 40 percent. 

Border restrictions

Citing security concerns, Israel and Egypt maintain tight restrictions at their Gaza borders. Hamas, regarded by the West as a terrorist group, seized the enclave in fighting in 2007 against forces loyal to Palestinian President Mahmoud Abbas. 

Israel's limits on Gaza's import of so-called "dual use" material, such as steel and cement that it fears could be used by Hamas to make weapons or fortifications, are unlikely to change soon. But hundreds of truckloads of food and a wide variety of consumer goods move into Gaza daily via Israel. 

Hamas, which handed administrative control of Gaza to the Authority under the reconciliation agreement signed in Cairo on Oct. 12, has spurned Israel's demand it disarm. 

"Israel said it would deal with the new administration in Gaza but in the way that would not allow Hamas and other factions to develop their military capabilities, which means it will continue to ban essential materials," said Mohammad Abu Jayyad, a Gaza economist. 

He and other local economic experts cautioned against any hopes of a rapid revival of Gaza's economy unless Israel's restrictions were fully removed. 
Responsibility for security in still an open issue in Gaza, where Hamas, which is still policing the territory, has what analysts say are at least 25,000 well-equipped fighters. Further unity talks are scheduled for Nov. 21 in Cairo. 

Keeping pressure on Hamas, Abbas has yet to lift economic sanctions he imposed in Gaza in June that included a cut in salaries the Authority paid to 60,000 civil servants. Abbas recently sent nearly 15,000 of them into early retirement. 

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