The Guardian, June 25, 2010

Gazans wait for Israel’s easing of the blockade to make a practical difference.  Factories are still starved of raw materials as Israel drags its heels over what will be let through

Harriet Sherwood in Dair El Balah

 Alawda, a factory in Gaza, has been forced to import ingredients for its biscuits and wafers through the tunnels since Israel’s blockade was intensified three years ago.

Manal Hassan plucks a date biscuit from an industrial tray, breaks it in half to inspect the filling, and discards it with a shrug of despair. “You see, they allow in dates, but not date paste,” she says, referring to Israel’s economic blockade of the Gaza Strip.

Alawda, the factory for which she is purchasing manager, has been forced to find an alternative source for the ingredients for its biscuits, wafers and ice-cream, which it has manufactured in dramatically reduced quantities since the siege of Gaza was intensified three years ago. Most of its raw materials are now illegally imported through the tunnels to Egypt which have become Gaza’s lifeline.

Hopes that Israel’s announcement last weekend of a relaxation of its blockade might lead to a recovery of Gaza’s shrivelled economy are rapidly evaporating among local businessmen and women – if, indeed, they ever rose.

The practical consequences of the new policy are still opaque, but few in Gaza realistically expect even a trickle of the raw materials essential to revitalise factories like Alawda, let alone a resumption of anything approaching normal import-export trade.

Hailed as a significant breakthrough by President Barack Obama, Middle East envoy Tony Blair and British foreign secretary William Hague, the loosening of the embargo so far applies only to finished products for individual consumption. Gazans are making ironic jokes about dining on mayonnaise and ketchup – now allowed in after three years of prohibition. Factory-owners and economic analysts are sinking further into gloom over the prospects for recovery.

As Hassan tours her half-idle factory in Dair El Balah, she recites a list of banned materials, among them cocoa powder, food chemicals, milk powder, packaging materials and spare parts for machines. “They don’t give any explanation. Can cocoa powder be used to make weapons or rockets?” she asks.

Human rights organisations say the express purpose for banning such items is to stifle economic activity as a way of pressuring the de facto Hamas government and punishing the civilian population for electing it. But the siege has failed to diminish Hamas’s authority while unquestionably worsening living and working conditions for Gazans.

Alawda is down to around 10 days’ production each month, massively reducing its 300 employees’ incomes. “They are suffering, they all have big families and there is no other work,” says Hassan.

The factory used to export 60% of its produce to the West Bank. That is now down to zero. Local supermarkets refuse to stock its ice-cream because the power cuts of eight hours a day make it impractical to run freezers.

The tunnel imports are expensive, says Hassan – “the Egyptian traders can ask any price they want” – and the quality varies. Nor can the factory access the raw materials, imported from abroad, that have been languishing in Israeli warehouses for three years. Much of it is now ruined.

“It is very difficult to know if we can keep going,” she says.

Alawda’s experience is not an isolated one. Gaza used to have around 3,800 functioning legitimate businesses, trading with the West Bank, Israel and beyond. Fewer than one in six have survived the blockade and the war in 2008-9, according to the UN.

“Soon there won’t be an economy in Gaza,” says Ali El-Heik of the Palestinian Businessmen Association. “What remains will be destroyed.”

Raed Fatouh, a Gazan official who deals with Israel on the crossing points, says the Israelis have told him that all consumer food items will be allowed in following last weekend’s announcement, but no mention has been made of raw materials or exports.

“It’s a positive step, we can’t deny that, but all the stuff now allowed in is available through the tunnels anyway,” he says. “There won’t be a big change unless Israel allows raw materials for industry.”

Over the past few weeks, Israel has gradually increased the number of permitted items from around 120 to between 400 and 450 – and has promised to boost that further in the coming days, he adds.

Israeli officials say that decisions on raw materials are still pending. Both the White House and Blair’s office are quietly optimistic that the loosening of the blockade may lead to a broader effort to revitalise Gaza’s economy.

Some in Gaza have mixed feelings about Israel’s change of policy. In the baking sands of Rafah, butting up to the border with Egypt, where the usual industrious activity was largely absent this week, tunnel owner Hosaim Shaer fears the good times are over.

“There is already less work because Palestinian shop-owners are now making deals with Israelis rather than us. At the same time, there is an overload of goods in Gaza and people are buying less because they have less money.

“The point is not just to ease the blockade. There is no economy in Gaza, no money, no employment. What’s the difference between goods coming through the tunnels and through the crossings if no one can afford to buy them?”

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