Al-Ahram Weekly | Economy | Down, but not out

		7 - 13 November 2002 Issue No. 611 Economy	Current issue Previous issue Site map
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Down, but not out
The difficulties of starting and running a business are taking on new dimensions in the Palestinian territories. Sherine Nasr talks to some Palestinian businessmen

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Businessmen worldwide know exactly what it takes to start a new business. To keep it running successfully is definitely a challenge. In Palestine, however, buying or selling anything in the present circumstances is akin to miracle-working.
"Traders have shut down their businesses. The Palestinian economy is rapidly deteriorating, if it has not already come to a standstill," said Mazen Annan, deputy chairman of the Palestinian Society of Economists (PSE) at a recent meeting between a visiting Palestinian business delegation and the Egyptian Society of Economic Journalists.
Annan said the Israeli authorities make it difficult for Palestinians to start their own businesses. Imported products are held by customs until past their expiry date, import licences are delayed for months in government departments and strategic products such as wheat, cement and gas can only be purchased in Israel.
"The whole idea is to tie the Palestinian economy to the Israeli economy. In fact, the Palestinian economy is intrinsically linked to the Israeli economy and there is nothing we can do to alter the situation," said Annan.
Exports of high-quality oranges, olives, vegetables and flowers boomed for a few years after the Oslo Agreement was signed. "These excellent products were shipped immediately to European destinations via the airport at Gaza," said Marwan Al-Agha, PSE treasurer and lecturer at Al- Azhar University in Gaza.
The exports stopped after the Intifada. Because Palestinian borders have still not been defined, all products have to be imported and exported through Israeli outlets. Those few products which Israel allows Palestinians to buy from outside Israel have to undergo a security check, which is both time-consuming and expensive.
"It can, for example, cost up to $4000 to pass a television set through the security check. This means we are forced to buy Israeli products," said Mahdi Abdullah, a member of the Palestinian Chamber of Commerce.
Abdulla, who owned the duty-free shops which once operated in Gaza airport, claims he had to go through lengthy and costly procedures before he managed to open his businesses. These stores closed after the airport was bombed. "I had to pay around $160,000 to get the licence. The market operated under the supervision of the Israeli free market department and the licence was issued by Israeli customs," he said.
Abdulla said his losses totalled $600,000 over the past two years because of the shelling of the airport. The majority of products in his warehouses are now past their expiry date.
The impact of Israeli occupation on the Palestinian economy is difficult to assess. Not only has infrastructure been destroyed systematically, but many public utility projects which were started have not been completed. "The electricity power station, for example, was due to come into operation last year. This has not happened yet. This means we depend on Israel for electricity," said Al-Agha.
Unemployment rates among Palestinians has risen to 65 per cent. This is due to both the poor economic situation and an increase in the number of permanently handicapped members of the workforce. Employees sometimes go for months without pay. The number of Palestinians employed in Israel has also been reduced for security reasons. There were around 120,000 Palestinians working in Israel at the start of the Intifada, this number has dwindled to 7,000, which of course adds to the unemployment problem," said Al-Agha.
The tourism sector has been badly affected. Hotels owned and run by Palestinian businessmen have had no guests for months. The real estate market has also slumped and property, particularly land situated close to Israeli settlements, has lost its value. The insurance sector is in chaos. Olive and orange trees, which constitute the bulk of agricultural wealth, have been systematically uprooted by the Israeli army. Palestinian fishermen are not allowed into Israeli-run harbours. In short, every simple form of investment in Palestine has been halted.
"It is hard to talk about investment in the current situation. There is no way Palestinian capital can be used for new projects, and investing foreign capital, which we fear has disappeared for ever, is out of the question," said Al-Agha.
The Israeli government has frozen around $830 million of Palestinian Authority (PA) funds. "We have used every possible form of pressure to free small amounts of these funds but we were not successful," said Annan.
At present, the bulk of the PA's expenditure is used to treat the injured, sustain families that have lost their bread-winners and support those detained in Israeli prisons.
Ironically, Palestinians pay for their own detention. Al-Agha said detainees are provided with barely enough to keep them alive and that each has to pay $600 a month for extra supplies, such as diabetes medication, cigarettes or newspapers.
Even though Palestinians are denied official boundaries, a national currency or even a decent life, they still maintain a strong will to go on. "We will survive to see the day when Palestine becomes a living reality," said Al-Agha.

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