Billitteri, Tom

LSE Research Online

Gaza’s	endemic	economic	misery	lies	behind	theconfrontationOn	Feb.	4,	the	Israeli	Defense	Forces’	chief	of	staff,	Lt.	Gen.	Gadi	Eisenkot,	issued	a	stark	warning	to	his	country’sgovernment:	Israel	could	soon	face	another	conflict	in	Gaza	with	the	Islamic	fundamentalist	group	Hamas	because	ofdeteriorating	economic	and	humanitarian	conditions	in	the	territory.	Eisenkot	said	Gaza’s	Palestinian	residentssuffered	from	chronic	shortages	of	the	most	basic	things,	including	electricity,	water	and	food.It	didn’t	take	long	for	Eisenkot’s	warning	to	find	fulfilment.	On	March	30,	a	mass	Palestinian	protest	at	the	borderbetween	Gaza	and	Israel	turned	ugly.	Israeli	soldiers	opened	fire,	killing	15	Palestinians.	One	week	later,	a	similarprotest	left	nine	more	dead,	including	a	Palestinian	journalist	who	was	said	to	be	wearing	a	vest	labeled	“Press.”Palestinian	leaders	said	the	protesters	were	entirely	peaceful;	Israeli	officials	said	their	troops	were	forced	to	openfire	to	prevent	demonstrators	from	breaching	the	border.As	Eisenkot	suggested,	the	backdrop	to	the	confrontation	is	Gaza’s	endemic	economic	misery,	writes	SAGEBusiness	Researcher	freelance	correspondent	Sara	Toth	Stub	in	her	report,	The	Palestinian	Economy.	Gaza’sunemployment	rate	was	44	per	cent	in	mid-2017	and	could	reach	48	per	cent	by	2025,	according	to	the	World	Bank.Seventy	per	cent	of	Gaza’s	population	is	dependent	on	international	aid.	“The	central	challenge	is	to	revive	growthand	generate	sufficient	jobs	for	a	burgeoning	population,”	International	Monetary	Fund	officials	concluded	in	a	reportlast	year.And	underlying	the	grim	statistics,	Toth	writes,	is	a	looming	sense	of	hopelessness.	“Nobody	is	buying	in	the	stores,businesses	are	closing,	people	no	longer	have	anything	to	lose,”	one	Gaza	resident	told	a	journalist.	Another	said	hefeels	like	“an	explosion’s	coming.”Gaza’s	problems	have	been	exacerbated	by	a	years-long	internecine	battle	between	Hamas,	which	controls	Gaza,and	the	Palestinian	Authority	(PA),	which	governs	the	West	Bank.	One	consequence	of	this	conflict	is	that	the	PA,which	controls	the	budget	for	both	territories,	has	cut	spending	in	Gaza.Gaza	also	suffers	from	Hamas’	reputation	as	a	terrorist	organisation.	Israel	and	the	United	States	have	both	formallybranded	it	as	such,	and	Hamas	rocket	attacks	on	Israeli	communities	have	led	to	two	Israeli	military	incursions	intoGaza	in	the	years	since	Israel	unilaterally	withdrew	its	forces	from	the	territory	in	2005.	Israel	has	imposed	a	strictland,	sea	and	air	blockade	on	Gaza	that	has	thwarted	numerous	efforts	to	smuggle	in	explosives,	but	also	hasincreased	the	cost	of	importing	chemicals	and	machinery	vital	to	agriculture	and	industry,	Toth	writes.LSE Business Review: Gaza’s endemic economic misery lies behind the confrontation Page 1 of 2		Date originally posted: 2018-04-25Permalink: http://blogs.lse.ac.uk/businessreview/2018/04/25/gazas-endemic-economic-misery-lies-behind-the-confrontation/Blog homepage: http://blogs.lse.ac.uk/businessreview/While	Gaza’s	economy	is	clearly	in	worse	shape	than	the	West	Bank’s,	there	is	no	shortage	of	problems	in	the	latterterritory.	Israel	controls	about	60	per	cent	of	the	West	Bank	and	imposes	restrictions	that	make	economicdevelopment	extremely	difficult	there.	The	unemployment	rate	in	the	West	Bank,	while	far	lower	than	in	Gaza,	was21	per	cent	in	2017.	Both	the	West	Bank	and	Gaza	rely	heavily	on	international	aid,	but	budgets	for	this	assistanceare	falling,	in	part	because	the	Trump	administration	is	cutting	U.S.	contributions.Experts	say	the	two	things	that	would	be	most	beneficial	to	increased	Palestinian	economic	development	are	apeace	agreement	with	Israel	and	a	rapprochement	between	Hamas	and	the	PA.	At	the	moment,	neither	is	likely,Toth	writes.For	all	these	difficulties,	there	are	efforts	underway	to	improve	the	economic	conditions	of	Palestinians.	One	suchendeavour	is	the	town	of	Rawabi,	built	at	a	cost	of	$1.2	billion	and	perched	on	a	hillside	near	the	PA	headquarterscity	of	Ramallah	in	the	West	Bank.	Rawabi’s	developers	hope	to	attract	high-tech	businesses	and	middle-classresidents	with	the	town’s	seaside	vistas,	shops,	office	park	and	thousands	of	apartments.So	far,	it	has	been	slow	going.	As	of	November,	only	3,000	people	lived	in	the	town,	which	was	built	for	40,000.	Ithas	attracted	ASAL	Technologies,	a	Palestinian	software	company	with	several	international	clients,	and	a	few	start-ups.	While	Rawabi	and	ASAL	serve	as	models	of	what	could	be	done	to	improve	the	Palestinian	economy,	a	revivalof	the	peace	process	is	probably	essential	to	attract	more	development,	experts	say.“Right	now,	all	of	these	investments	are	what	I	would	call	‘patient	capital,’	”	Sam	Bahour,	an	American-Palestinianentrepreneur,	told	Business	Researcher.	“They	are	made	by	people	who	are	convinced	there	will	be	a	politicalsolution.	But	we	are	still	waiting.”♣♣♣Notes:This	blog	post	is	based	on	the	report	The	Palestinian	Economy,	on	SAGE	Business	Researcher,	by	Sara	TothStub.The	post	gives	the	views	of	its	authors,	not	the	position	of	LSE	Business	Review	or	the	London	School	ofEconomics.Featured	image	credit:	When	you	leave	a	comment,	you’re	agreeing	to	our	Comment	Policy.Tom	Billitteri	is	executive	editor	for	SAGE	Business	Researcher,	which	delivers	deep	dives	oncontemporary	business	issues	to	students	and	faculty	three	times	a	month.	He	has	more	than	fourdecades	of	experience	covering	business,	economics,	tax	law	and	other	issues	for	news	outlets	in	theUnited	States.		LSE Business Review: Gaza’s endemic economic misery lies behind the confrontation Page 2 of 2		Date originally posted: 2018-04-25Permalink: http://blogs.lse.ac.uk/businessreview/2018/04/25/gazas-endemic-economic-misery-lies-behind-the-confrontation/Blog homepage: http://blogs.lse.ac.uk/businessreview/

Gaza's endemic economic misery lies behind the confrontation

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Gaza's endemic economic misery lies behind the confrontation

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