Reviving Gaza’s Economy Is in Everyone’s Interest
(The Bloomberg View) -- Two million Gazans are trapped in a cycle of misery, frustration and doomed outbursts of violence. A lion’s share of the responsibility for this misery rests with the militant group Hamas, which controls Gaza and which the outside world rightly seeks to isolate.
Yet this presents a tragic dilemma. For no deliverance seems possible so long as the outside world focuses on punishing Hamas. A better way to undermine support for the group would be to improve the well-being of ordinary Gazans.
As grim as Gaza’s economic situation has been in the decade since Hamas took power, it’s now reaching a nadir. The water is undrinkable. Power is available only a few hours a day. Nearly half the population is unemployed — including two out of three young Gazans. The territory has effectively deindustrialized. In the 20 years since the Oslo peace talks, its manufacturing and agriculture sectors have shrunk by half, and exports have dwindled to almost none. Four in five Gazans receive some form of social assistance.
Leaving Gaza — for school or medical treatment or to trade — has become virtually impossible. Protests this spring, in which thousands of Gazans marched on the heavily guarded Israeli border fence only to be met with gunfire, were a sign of hopelessness as much as defiance. Israeli generals have until recently been among the loudest voices warning of another war if the situation isn’t addressed.
And there are good ways to address it, because Gaza’s potential for growth is greater than commonly realized. Its economy is small, so well-chosen projects could have a big impact. The population is young and relatively well-educated. Next-door Israel presents a ready and wealthy market, and a potential source of jobs, and Gaza’s position on the sea offers other export opportunities. Were its economic engines to be revived, Gaza should be able to generate double-digit growth rates. By some estimates, unemployment could be brought down to 10 percent within 15 years.
Hamas has cruelly ensured Gazans’ isolation by keeping up futile attacks on Israel, sending flaming kites across the border to burn Israeli fields. Israel has retaliated and temporarily closed off the border to all but essential supplies. Meanwhile, the Palestinian Authority has slashed the salaries of thousands of its former employees in Gaza, as well as payments for electricity, because Hamas continues to defy its authority. Egypt has clamped down on trade and smuggling through its border. The U.S. has cut funding for the United Nations Relief and Works Agency, a critical source of aid, education and employment for tens of thousands of Gazans.
Such actions are understandable, yet there’s little reason to believe they will be any more successful than before in freeing the territory from Hamas’s grip. If the current ceasefire between Hamas and Israel holds, it makes sense to look for ways to ease up on Gaza’s isolation without increasing security risks intolerably.
In theory, Israel could afford to ease its blockade of the territory. Given its recent success at shutting down tunnels built by Hamas under the border, it should be able to allow more construction materials to be imported into Gaza without fear that they’ll be misused. The U.N. has developed a highly detailed system to track cement so it’s not diverted into tunnel-building, and such monitoring could be expanded to a broader range of goods — everything from wooden planks to electronics components — critical to reviving old Gazan industries and developing new services.
Plenty of ideas exist as well for safely processing imports and exports — from expanding the number of industrial zones in Gaza to, more grandly, building an offshore island to house port, power-plant and desalination facilities. Israeli forces could escort convoys carrying goods and workers between Gaza and the West Bank. Entrepreneurs and investors, who need to travel if they’re to develop relationships and scale up their businesses, could be vetted thoroughly. Simply expanding Gaza’s fishing zone would immediately benefit tens of thousands of families.
At the same time, if both Israel and Egypt are to relax their cross-border restrictions, the PA, rather than Hamas, must fully control Gaza’s checkpoints. And to ensure that any economic growth is sustainable, the PA also needs to harmonize regulations between the two Palestinian territories, streamline the public workforce, and widen the tax base. Gaza must be able to meet its obligations: While Israel could increase the territory’s energy supply by building an electricity line it’s already approved, as well as a gas pipeline to Gaza’s main power plant, someone still needs to pay the bills.
Money from the U.S., Europe and the Gulf — particularly funding for UNRWA and for infrastructure projects that can quickly generate jobs — is surely needed. But more important is a shift in strategy. The siege of Gaza hasn’t worked because the isolation of Hamas has enabled the group to deflect blame for its failed governance. Promoting jobs and growth for young Gazans could instead diminish the appeal of extremism. At the very least, that is a proposition worth testing.
Editorials are written by the Bloomberg View editorial board.
©2018 Bloomberg L.P.