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Introduction Stiftung Wissenschaft und Politik German Institute for International and Security Affairs Comments Unlocking the Gaza Strip’s Economic Potential and Fostering Political Stability WP S Europeans Should Seize the Opportunity of the Rapprochement between Fatah and Hamas Omar Shaban Although the UN report of 2012 projected that Gaza would be uninhabitable by 2020, Gaza is likely to collapse into a state of chaos domestically and renewed military con- frontation with Israel much earlier. Gaza’s current reality is shaped by the aftermath of military clashes between Israel and Palestinian groups, the tightening of the blockade by Israel in 2007, the closure of the Rafah Crossing by Egypt, and the international com- munity’s no-contact policy towards Hamas. This has created a situation of isolation, in which the infrastructure as well as the social and political fabrics in the Gaza Strip have suffered. Gaza’s once export-oriented economy is now largely defunct, with the popula- tion impoverished and dependent on foreign aid. These factors pose serious threats to domestic stability, to Palestinian unity, and to the stability of the sub-region. Immedi- ate intervention by the EU is needed to alleviate the humanitarian crisis, advance Pales- tinian reconciliation, and lift the Israeli blockade. The current rapprochement between Fatah and Hamas offers opportunities for the Europeans to engage. Over the last 10 years, the Israeli-imposed sponse to its refusal to abide with the three blockade and the Palestinian factional divi- conditions set by the Middle East Quartet sion have strongly impacted Gaza’s economy (composed of the United States, Russia, the and society and have negatively affected UN, and the EU), that is, the recognition of the Palestinian national project. In January Israel, the renunciation of violence, and the 2006, Hamas (the Islamic Resistance Move- adherence to all previously signed agree- ment) had won the second legislative elec- ments between Israel and the Palestine Lib- tions and then formed its first-ever govern- eration Organization. In addition, the Israeli ment in March 2006, ending the domi- government declared a full blockade of nance of its rival Fatah movement over the Gaza in the middle of June 2007, thus re- Palestinian leadership since the 1960s. Sub- stricting even further the import and ex- sequently, large parts of the international port of goods and the movement of people. community announced a “no contact policy” The small coastal strip (Gaza has an area towards the Hamas-led government in re- of only 362 km2) is densely inhabited by Omar Shaban, Director of Palthink for Strategic Studies in Gaza, was a guest researcher at SWP’s Middle East and Africa Division SWP Comments 42 in August and September 2017 with the kind support of the Friedrich Ebert Foundation October 2017 1 1.94 million people, with a strong popula- that they could be used for civilian pur- tion growth (3.3 per cent). It is estimated poses such as reconstruction as well as the that its population will reach 3 million by manufacturing of weapons. The import of 2030 and 4.8 million by 2050; 69 per cent wood, cement, iron, and many other goods of the population are refugees. Gaza is sur- has therefore been highly restricted. In rounded by Israel, Egypt, and the Mediter- 2006, Dov Weisglass, then a senior advisor ranean Sea. to Prime Minister Ehud Olmert, explained For its population, there are only two ways that the Israeli policy towards Gaza in reac- to exit: The first one is through the Erez tion to Hamas’ election victory was designed Crossing, which connects Gaza with Israel “to put the Palestinians on a diet, but not and, therefore, theoretically enables travel to make them die of hunger”. In 2012, an to the West Bank, Jordan, and the world. Israeli court ordered the release of a govern- However, since 2007 the Israeli authorities ment document that detailed “the number have allowed Palestinians to exit via Erez of calories Palestinians in Gaza need to con- only in “exceptional humanitarian cases”, sume to avoid malnutrition”, a document with an emphasis on urgent medical cases. that had served as a guideline to calculate Whereas in 2000 around half a million in- the volume of imports allowed into Gaza. habitants left Gaza every month through In addition, next to all export of goods has this checkpoint, this number declined to been banned. 144,000 in 2016. Although Israel’s blockade After the 2014 military confrontations, policy has gone through different phases, the Israeli government agreed to what it has never been oriented towards Gazans’ became known as the “Gaza Reconstruction needs. Mechanism” (GRM), which was adminis- The second way to exit Gaza is through tered by the UN and was to regulate and the Rafah Crossing, which connects Gaza supervise the flow of commodities into with Egypt’s Sinai Peninsula. Although the Gaza. Through the GRM, some construction crossing has been sealed by the Egyptian materials have been allowed into Gaza, but authorities on principle since mid-2007, sever restrictions remain. All in all, accord- due to its non-recognition of and enmity ing to a report by the Israeli NGO Gisha, the with Hamas, Cairo has occasionally opened volume of imports has increased gradually the crossing for humanitarian purposes. since the worst years of the closure (2007– Thus, since then, the Rafah Crossing has 2010), when everyday items such as chil- operated for three to five days every two dren’s toys and paper were blocked. or three months, with individuals meeting certain criteria (e.g. for pilgrimages, stu- dents in a third country, medical reasons, From Legal to Black Economy etc.) being allowed to exit. Whereas the Israel and the West Bank used to be Gaza’s monthly average number of entries and main commercial partners. Cutting these exits through the Rafah Crossing reached economic ties by way of the blockade has about 40,000 per month in 2005, it declined resulted in a significant decrease in the pro- to 3,520 entries and exits per month in 2016. duction levels of the local industries. They were replaced by organised smuggling through a complex system of tunnels under Economic and Social Impact the Rafah border. Thus, the economic restric- The blockade of the Gaza Strip has not only tions imposed by Israel led to a fundamen- imposed severe restrictions on the move- tal shift: It pushed the Gazan population ment of people, but it has also dramatically to depend on tunnels to obtain all types decreased the influx of goods. Israel has of goods, ranging from milk and cement limited or denied entry for all materials to stationery, clothes, and even fuel and that can be considered “dual-use”, meaning cars. SWP Comments 42 October 2017 2 Until June 2013, the number of tunnels other taxes, which has caused enormous re- was estimated to range from 450 to 1,200 sentment among the population and led to beneath the 12-km-long Gaza-Egypt border. a decrease in the government’s popularity. The tunnels shifted the economic centre of the Gaza Strip from Gaza City to Rafah and triggered the emergence of a new business Palestinian Civil Society: class, which made huge profits out of the Deepening Polarisation, New Roles tunnel trade and whose members came to The Palestinian factional division has put be known as “the new millionaires”. The civil society’s independence to the test, as change from a legal to an illegal economy the rivalling parties have each applied pres- also affected the values and social princi- sure to gain support for their cause and ples that govern Gaza’s society. Although delegitimize their rival. At the same time, the latter perceived the tunnel trade to be the split has reshaped civil society, con- illegal in the beginning, the business was fronted it with new tasks, and equipped it promoted as a tool to challenge Israel’s with new tools. occupation and, thus, started to gradually Many civil society organisations have gain social acceptance. tried to make use of their positions as non- Realising that the tunnel trade could partisan mediators and grassroots mobilis- be a source of revenue that would enable ers in favour of reconciliation and over- it to overcome the financial boycott by the coming the intra-Palestinian split. Adapting Palestinian Authority (PA) and many in their priorities, they have focussed on pre- the international community, the Hamas- venting negative effects of Palestinian divi- led government started to regulate the tun- sions on society at large. The new functions nel business by charging commissions on of civil society that arose thus were media- the smuggling as a replacement for regular tion, bridge-building efforts, and the provi- income taxes. For example, from 2008 to sion of visions, plans, and forums for debate 2013, Hamas collected a tax of 10 shekel on how to overcome the divide between ($2.50) for one ton of gravel, 20 shekel ($5) the PA and Hamas. At the same time, many for one ton of cement, and 50 shekel NGOs engaged in advocacy activities such ($12.50) for one ton of metal. The launch as demonstrations, vigils, and the creation of a new tunnel was taxed with around of networks and coalitions; capacity-build- $2,800, and the tax for a smuggled car of ing; and trainings aimed at overall sensi- around $6,000 in value was $1,000. All in tisation for a culture of tolerance between all, it was estimated that the Gazan govern- the two camps. Palestinian civil society ment collected around half a billion US dol- has therefore played a constructive role in lars per year from various types of tunnel achieving a modicum of stability and mod- taxes.

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