Will they sink or swim?

Palestinians in Gaza

Sep 22nd 2005 GAZA CITY
From The Economist print edition

Israel's withdrawal has left Gaza seething, lawless, poor, cut off from the outside world—and with a one-time chance to make a new start

NO MORE nervously scanning the concrete watchtowers as you drive near an Israeli settlement. No more being shot at for straying too close to an army post or standing on your own roof. No more gazing through high wire-mesh fences at the forbidden beach just a few dozen yards away. No more impotently staring at the cars bursting with settler children as they drive right past your nose to that very same beach. No more driving the roundabout coastal route because the main road is in no-man's-land. No more waking to the roar of bulldozers flattening your orange grove. No more aching shame at working for the settlers because there is nothing else. No more waiting for unexplained hours in the baking sun or through the night at the Abu Holi checkpoint, the only gateway between north and south.

Freedom! After the last Israeli soldier departed on September 12th and the border to Egypt lay temporarily open, it was as if the entire Gaza strip released a breath it had held for 38 years—expelling thousands of residents for a few frenzied days of shopping and visiting in the northern Sinai, then sucking them back in again laden with goods and livestock, and some with guns and drugs. The strip's southerly beaches, once the exclusive preserve of the settlers, were flooded with families, some of whom had lived for decades a stone's throw from them. The orgy of looting and burning in what remained of the settlements was, like the rush across the border, ignored by the Palestinian Authority, and even Israel's government protested only half-heartedly. Both understood that a people trapped for decades needs a respite of at least a few days.

But as Egypt began reluctantly closing the border that it now controls, claustrophobia returned. The Israeli army, redeployed outside the strip, has upgraded its technology to prevent anyone getting through the fence and is building a second line of defences around it. Its white surveillance balloons and buzzing pilotless drones will continue to remind Gazans that they are being watched. Israeli officials promise an even harsher response than before to rocket attacks from Gaza. Movement in and out of the strip will become ever more precious a privilege, as Israel gradually meets its target of having no Palestinian workers at all on Israeli soil by the start of 2008.

Inmates of the Soviet Gulag used to call their prison camp “the zone” and the Soviet Union, wryly, “the Big Zone”. Gazans talk in similar terms about their home; and it is not that big either, with some 1.4m inhabitants in an area a little over twice the size of Washington, DC. Over 60% of them live in the refugee camps that have developed into seamless extensions of its ramshackle cities. The geography—45km (28 miles) long, 2-5km wide and nowhere more than 105 metres high—is about as dull as it gets. More than twice as much water is pumped out of the aquifer as goes back in, so that what comes out is something even prisoners would refuse to drink. The only territories that beat Gaza in population density are Macau, Monaco, Hong Kong, Singapore and Gibraltar, and its population will double by 2020. In GDP per head, though, its near-equals are a rather less flashy bunch: Malawi, Burundi, Somalia and Sierra Leone.

Yet optimists argue that Gaza could one day be mentioned in the first list of places rather than the second: small, dense, semi-autonomous, poor in natural resources, but thriving. The “armpit of Palestine” it may be, but armpits are also pivotal places. In ancient times it was a key port on the incense-trading routes from the Mediterranean to the Red Sea and thence to India and China; later, it was one of the lesser attractions on the Christian pilgrimage tour. Hidden among its never-quite-finished concrete buildings are old mosques and churches, ancient mosaics and other fragments of civilisations gone by.

It has always done well in agriculture, whether locally grown crops or, more recently, the profitable export delicacies raised by Israeli settlers in their greenhouses. The endless beach, cleaned up a little, could attract tourists from all around the region. Gaza is next to, and knows how to work with, the Middle East's most advanced economy: Israel. Its people, having spent decades striving to give themselves the best chance of getting out, are highly educated compared with those in most Arab countries, and skilled as well: wandering in the diaspora, Palestinian labourers and engineers built much of the Middle East and, as they ruefully acknowledge, much of Israel too.

Finally, Gaza could be awash with money if it wanted. Foreign donors are lining up to pay for infrastructure and economic-development projects, or to restart those that were put on hold during the second intifada, which began in 2000. Prosperous Palestinian exiles are a huge reservoir of potential investment. The Palestinian Authority (PA) has revised its land-use plan to envisage keeping the former settlement areas for agriculture and tourism, building new housing districts east of the current main cities, expanding the border industrial zones, building a seaport and restoring the shattered airport, and building a coastal highway and even a light railway.

But for the grand schemes to have even a chance, Gaza needs two things guaranteed: access to the outside world and internal stability. The first depends mainly on Israel; the second mostly on the Palestinians; but they are intertwined. And both are looking extremely shaky.

Escape from the mini-market

“If I were an investor and businessman looking at this, I wouldn't touch it. It's too risky.” Snappily dressed Bassil Jabir is talking about his main project: the takeover of some 400 hectares of greenhouses, which American Jewish donors paid the settlers $14m to leave behind. Mr Jabir heads the Palestinian Economic Development (PED) Company, set up by the PA to run the greenhouses and keep their 3,000-4,000 labourers in work until buyers are found. Later, PED plans to become a sort of equity fund for local start-ups; it hopes to have $1 billion invested within five years.

But the greenhouses are an iffy proposition. Partly because nobody knew what condition they would be in until they were handed over (answer: mostly passable, though the settlers had ripped out some of the equipment and plastic sheeting, and Palestinian looters ripped out more). Partly because of the problem of water. But mainly because nobody knows whether their crops will get to market. The strawberries, carnations, cherry tomatoes and other high-profit produce that made Gush Katif one of Israel's agricultural export powerhouses will find few buyers in Gaza; the more mundane crops could compete with local farmers and send prices plummeting. Whether the goods get out of Gaza depends on what happens at the borders.

At the moment Israel, for security reasons, unloads and inspects the goods at the border, then loads them on an Israeli truck—and then unloads and reloads again if the goods are destined for the West Bank. Since the intifada began, waiting times at the borders, and with them transport costs, have shot up. “It used to cost 1,000-1,500 shekels ($220-330) to bring a truckload from the West Bank to Gaza,” says Salah Abdel Shafi, an economic consultant in Gaza. “Now it costs 7,000.” Even a short delay can ruin perishable goods for the demanding export market.

The Palestinians want to replace this “back-to-back” haulage system with a “door-to-door” one. Foreign donors have agreed to pay for huge scanners that would let soldiers examine a whole truck. But first the two sides must resolve a dispute rooted in history about whether Gaza's northern border should in fact be a kilometre farther north. Then ordering and installing the custom-built scanners will take at least a year. And even then, says an Israeli official, Palestinian drivers are still considered a security risk: “A truck like that, someone can take it and run over anybody he wants to.” One option, he says, might be escorted convoys, which ran between Gaza and the West Bank several times a day before the intifada.

But the position, on this and other issues, keeps changing. Israel said yes to letting Gaza rebuild its seaport. But will it insist on monitoring the imports and exports, or allow a third party to do it? Re-opening the Gaza airport, says the Israeli official, “isn't on the agenda right now”. On the Gaza-Egypt border, Israel has closed its terminal at Rafah, insisting that all people and goods must move through the Kerem Shalom tri-border point, within Israel, until a new deal is worked out on the unified customs process. At present everything goes through Israeli customs, which then gives the PA the revenues on imports destined for the Palestinian territories. For Gaza to be truly autonomous, it would have to give up that relationship. But then it would be under a different regime from the West Bank, thus breaking Palestine further apart.

Gaza-West Bank ties also depend on having more or less free access between them. But talks on a sunken road for Palestinians to travel the 35-40km across Israel are stuck too. Meanwhile, Israel is beefing up its system of permanent checkpoints outside each West Bank city, turning each one, in effect, into a mini-enclave and pushing up the costs of movement between them.

All that is bad news not just for strawberries, but also for tourism, manufacturing and just about anything else that Gazans could do to earn money. The Israeli insistence on gradually cutting out Palestinian labour in Israel is a serious blow too. Without much more freedom of movement, argued the World Bank in a report last year, even all the promised donor money will not stop the Gazan economy collapsing even further than it has.

The problem, complain Palestinian officials, is that Israel still treats its withdrawal from Gaza as the unilateral move it originally was. “The challenge is to create a balance between legitimate Israeli security concerns and Palestinian demands for economic recovery,” says Saed Bamya, who leads the Palestinian negotiating team on the border crossings. “But when your counterparts are generals and defence ministry people, their only thought is security. They're not willing to consider risk management, standards, co-ordination, market needs or a normal business environment.”

For the same reason, Israel has not decided what economic relationship it wants with the Palestinians in the long term, says Arie Arnon of the Aix Group, a group of Israeli and Palestinian experts studying that question. Should the customs union ultimately remain or be dismantled; should Gaza and the West Bank be treated as one entity or two; should there be a lot of Israeli-Palestinian trade, or a little? Unless Israel is willing to think about “the principles of a final-status solution”, says Mr Arnon, today's questions of borders and ports will not be resolved. But Israel's current approach is to leave final-status issues well alone.

Shimon Peres, Israel's vice-prime minister and a loud advocate of helping Gaza develop, this week took over the responsibility for talks from the defence ministry. That might change attitudes a bit. But much time has already been lost. “People need to see quick, tangible results, or the whole thing will collapse,” insists Mr Abdel Shafi. He says that a few low-risk concessions, such as issuing more temporary work permits or keeping the crossing points open longer so more trucks can go through, would generate instant good feeling and buy some time.

However, the general Israeli line, as expressed by Ariel Sharon, the prime minister, in a speech last week at the United Nations, is that “Now it is the Palestinians' turn.” Gaza, he said, will be a proving-ground for the PA, a test of its ability to dismantle the militant factions there and of the Palestinians' worthiness for statehood. Israel's reward for its relatively quick and smooth Gaza withdrawal is that the rest of the world buys his argument.

Guns, jobs and trouble

“Jerusalem and the West Bank after Gaza”, read the bright yellow banners, in English, that hang over Gaza City's main streets. They are signed: “Hamas”. In public relations as in everything else, the Islamist party and the main opposition to the PA's ruling Fatah is streets ahead of its rival. It is popular both for leading the intifada—which 84% of Palestinians believe prompted the Gaza disengagement, according to a poll this month by the Palestinian Centre for Policy and Survey Research—and for its extensive social programmes for the needy. It is now winning a third pillar of support with its efficient running of the municipalities that it won in two rounds of elections earlier this year. A third round, plus legislative elections due in January, may well cement it as the biggest political force in Gaza.

Israel says it will do all it can to obstruct the elections if Hamas takes part. But Hamas's militant wing is much too powerful and enjoys too much popular support for the PA to tackle it, and when Mahmoud Abbas, the Palestinian president, calls for it to disarm voluntarily, he is laughed at. Recently it named its regional commanders for Gaza, in a direct challenge to the PA's own forces. Though it has largely observed a general ceasefire called in February, there is a fear that once it has received a mandate in the elections, it will restart the intifada, perhaps transferring it to the West Bank. Or it might take the cynical option of launching attacks to provoke an Israeli clampdown and boost its own support.

Yet Hamas has also shown that it can be a force for order. Before and during the Israeli withdrawal it worked closely with the PA and other factions, through a long-standing forum called the Higher Follow-up Committee, to minimise violence, even after two lethal attacks on Palestinians by Israeli extremists. If Hamas does well in the elections, “it will become more accountable than ever,” says Ziad Abu Amr, a legislator and member of the committee. And polls also show that most Palestinians do not now want another intifada. If their lives also improve in the wake of the Gaza disengagement, they might want Hamas to behave with more restraint as an elected part of the PA.

The more unpredictable threat comes from within Fatah itself. Gaza has seen a spate of violent attacks and kidnappings, some by powerful family groups, others by squads of Fatah militants who also work for the security services. Most are meant to put pressure on the PA to release jailed relatives or to protest job cuts. In a way they are even promising signs: that the PA is trying to impose reform. But they underline its impotence—most dramatically this month, when a large gang assassinated Musa Arafat, a former security chief and cousin of the late Palestinian president. Palestinian officials have estimated that armed groups have twice as many weapons as the PA, and that was before the brief opening of the Egyptian border allowed them to smuggle in thousands more.

Infighting between powerful members of Fatah has also held back reform of the security services. Since Israel's disengagement Gaza has teemed with armed gangs staking out patches, and Mr Abbas stayed away from one of the main celebration rallies out of fears for his own safety. That is hardly an advertisement to come to Gaza and invest.

The noise and dust of politics obscure the fact that in the end, it all comes down to economics. Gazans who cannot get any work will take the 100 or 200 shekels a month that the militant factions offer. Both Israel and the PA can do a lot to create jobs: Israel by making the effort to balance security with openness, and the PA by organising itself to carry out the mass of infrastructure projects that donors are willing to pay for. That could turn the vicious circle of no security and no prosperity into its virtuous opposite.

Indeed, right now Mr Abbas's and Mr Sharon's interests are aligned, argues Gershon Baskin of the Israel/Palestine Centre for Research and Information, a think-tank in Jerusalem. Poverty in Gaza will strengthen the militants at the expense of Mr Abbas and increase the risk of terrorism; that in turn would fortify Mr Sharon's hard-right critics who opposed the disengagement plan. With Israel also facing elections soon, the two leaders have an incentive to support each other. But it may be fleeting, and mistrust may be a stronger force.

There are still some who believe. Five years ago, pious militants burned down Basil Eleiwa's hotel in Gaza City because it allowed guests to bring their own alcohol. But he kept opening businesses; the newest, just two months old, is “Roots”, a swish but firmly booze-free restaurant frequented by top PA officials. As waiters bring fresh carrot juice and Albinoni's “Adagio” plays in the background, it is easy to share his optimism. “Gaza for me is a kind of addiction,” he explains. After 20 years doing business there, he still thinks the place has potential, and now has a chance to prove it. He also thinks it could be the last it gets.

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