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Gaza economic collapse puts businessmen, legal and illicit, in a bind
By Steven Erlanger
The International Herald Tribune
September 19, 2007

http://www.iht.com/articles/2007/09/18/africa/gaza.php?page=2

KARNI CROSSING, Gaza: One man runs a large clothing business started by his mother. The other runs an illegal smuggling operation started by his father. One deals in clothes, the other in arms and explosives.

Both men are enduring a deep economic depression caused by Hamas and its takeover of Gaza, which has been almost entirely shut off from normal trade and travel with the world. And both men have laid off nearly all their workers.

Nabil Bowab, 46, is beside himself with anxiety - for his employees, his company and his mother, Rabiha, 83, who started the company, now called Unipal 2000, in 1951, sewing clothes. Bowab and his brothers have 800 skilled workers who make clothes under contract for larger Israeli fashion companies - or had them, until Hamas conquered Gaza in June and the main crossing for goods here at Karni was shut.

`I can`t sleep at night,` he said. `I can`t go on like this! I have more than 140,000 pieces I can`t deliver! More than $25 million, and it sits here in Gaza City! Our products have seasons, and all these goods are for summer, and summer is over!` he said, starting to shout, then banged the table. `Summer is over!`

The company has laid off all but the 20 people here in this echoing workroom, making shirts for Gazans for the holy month of Ramadan. Bowab still pays all his workers about $95 a month, 25 percent of their normal average salary, to try to keep them and their families in food and off the street.

To keep his company going, he and a brother each carry, three times a day, two suitcases full of clothes, each weighing 60 kilograms, or about 130 pounds, through the Erez crossing into Israel, where they hand them to their partners. The brothers have special permits, as trusted businessmen, to enter Israel through Erez, but can only carry luggage there, not ship goods.

`I had a comfortable life and now I`m like a donkey,` Bowab said. `I want to show my Israeli partners I`m their partner, in good faith. They all think of moving the jobs to Jordan or Egypt, and I have to convince them.` He lifted his shirtsleeves to show his new biceps and laughed, then his mood shifted again.

`You know Erez,` he said. `You know how far you have to walk. You know the distance under the sun, with this humidity, and sometimes you get there and they send you back.`

Unipal 2000 has sophisticated Japanese cloth cutters and sewing machines in a complex that abuts the Karni crossing run by the Palestine Industrial Estates Development and Management Company, set up in cooperation with Israel in 1996, when times were better.

Both Karni and the Rafah crossing for people, between Gaza and Egypt, have been closed since mid-June, and there is little prospect, with Hamas in charge, that Israel will allow them to reopen. The stated reason is security, since Israel regards Hamas as a self-declared enemy and a terrorist group, eager to expand its military expertise and power to the West Bank.

Israel does not trust Hamas to operate the Palestinian side of Karni or Rafah, or to hire private companies to do so. Nor is the Palestinian president, Mahmoud Abbas of Fatah, complaining, since he and his caretaker government in the West Bank also do not want Hamas to succeed in Gaza.

But the result has been the quick collapse of Gaza`s private sector, unable to import necessary spare parts or building supplies or cloth, and unable to export much of anything. According to Faysal Shawa of the Palestinian Businessmen Association, 70,000 workers in the private sector have lost their jobs since June; 85 percent of factories are shut or operating at less than 20 percent capacity; the loss from agricultural exports alone since June is $16 million.

Israel estimates that its own companies are losing $2 million a day from the closure, but Gaza is losing $1 million a day, which it can afford much less.

`Fatah is paying Palestinian Authority workers to stay at home and not work for Hamas,` Shawa said.

`Hamas is paying its own people. But no one is paying the workers of the private sector. The ones who live on aid do nothing, and the ones who are working get nothing,` he said. `Soon we`ll all be aid dependent, and I hate it, it`s destroying us.`

Before the second intifada began in September 2000, Bowab had 1,200 workers. Before Hamas won legislative elections in January 2006, and the isolation started here, he said, he made up to $120,000 a month in profit.

`With the border open, in Gaza you can become a very rich man,` he said. `People are better skilled here than in the West Bank or Egypt, and they work harder and faithfully.`

Muhammad Bayed, 31, is one of the few workers here, a foreman. He has a wife and four children, and used to make $735 a month, twice the average. Now he`s getting $95.

`I look around this room and it`s very sad,` he said. `This business is collapsing. It`s over.` Asked what he will do, he stared. `That is the question I`ve asked myself many times.`

Bowab gestured around the nearly empty sewing hall. `I miss my workers,` he said. `I miss the chatting. I miss the sound of the machines.` Then he said: `Hamas and Fatah can both go to hell. The stupid Palestinian and Israeli leaders are killing us all. The people of Gaza are not Hamas. They are looking for food, to continue a dignified life.`

The hope seems to be that the people of Gaza will revolt against Hamas, but there seems little sign of that, said Shawa, who supports Fatah. `It`s nonsense,` he said. `We`re poor and tired.`

Once reason is Hamas`s near-monopoly on guns and ammunition, which is destroying the less salubrious arms-smuggling business of Muhammad, 37, who lives in Rafah. His father dug one of the first tunnels between Gaza and Egypt in 1984, Muhammad said proudly - 50 meters, or 165 feet, to smuggle gold and spare parts.

Now his son, who agreed to talk if his last name is not printed, digs tunnels 1,000 meters long to escape detection. Such a tunnel takes six months and costs about $40,000. At the Egyptian end, the tunnel branches in numerous directions, to allow various `eyes,` or openings.

When the shipment is in place above ground, diggers quickly break the surface. Six workers take 30 minutes to pull the goods down, moving cartons to storage rooms previously built on either side of the tunnel near the eye. Then the Egyptian partner covers the eye and disappears, and the cartons are winched back to Gaza.

But the new rule of Hamas has been a disaster for Muhammad. Hamas has banned the carrying of weapons by anyone except its own forces and banned the firing of weapons, even at marriages and funerals. With Fatah defeated and dispersed, and Fatah`s large stock of ammunition and guns captured by Hamas, the arms market for people like him, Muhammad said, has collapsed like a weak tunnel.

The price of the best AK-47 rifles, made either in Russia or former Yugoslavia, has fallen from $2,200 before June to $500 now, he said. The last shipment he knows about was bought and stored by a Gazan arms dealer as an investment, `hoping the situation will get bad again,` Muhammad said, laughing.

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