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World The Palestinian economy is in tatters, but Gazans aren’t embracing Trump’s aid plan

Zaid Allouh, is the only worker still employed at the Sharaf metal-products factory in Gaza City. It once had 70 employees, but years of Israeli-Palestinian conflict and Israeli and Egyptian blockades on the Palestinian Territories have left the business a shadow of its former self.

Photography by Heidi Levine/The Globe and Mail

The warehouse of the Sharaf metal products factory could serve as a museum to the collapse of the Gaza Strip.

Hundreds of unsold gas canisters, brass valves and fire extinguishers sit covered in a thick layer of dust. They provide a reminder of the time – almost 15 years ago now – when Gaza produced industrial goods for sale in Israel and beyond.

A leaning cement wall, the result of an Israeli air strike that demolished much of the building five years ago, and the bullet holes that let in shafts of light are evidence of the violence that has helped push Gaza and its roughly two million inhabitants into an abyss.

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In its heyday, the family-owned Sharaf factory employed 70 people, paying them between US$110 and US$330 a month, with many of those salaries supporting entire families.

But the size of their work force fell as a series of shocks convulsed Gaza: the rise of the Islamist militant group Hamas, a crippling 12-year-old blockade that Israel and Egypt imposed in response and three brief but brutal wars between Hamas and Israel.

More recently there’s been U.S. President Donald Trump’s decision to slash aid to UNRWA, the United Nations agency responsible for the welfare of Palestinian refugees around the Middle East, as well as a dispute between Israel and the Palestinian Authority over tax transfers that has seen the salaries – and buying power – of many Palestinian civil servants slashed.

In the wake of all this, UNRWA says it now delivers food aid to more than a million people in Gaza, up from 80,000 at the turn of the century.

Gaza’s desperation – and the promise of better lives if the Palestinians agree to a peace deal that’s expected to be largely on Israel’s terms – is the heart of a Middle East peace plan the Trump administration is rolling out this week.

The effort begins in earnest this week with a meeting of regional business leaders convened by Mr. Trump’s son-in-law and senior adviser, Jared Kushner, in the Persian Gulf kingdom of Bahrain.

So far, only the economic side of the bargain is known. On the weekend, the White House unveiled a vision that would see US$50-billion injected into the economies of the West Bank and Gaza, as well as the neighbouring Arab states that have been playing host to Palestinian refugees since the 1948 and 1967 Arab-Israeli wars. Mr. Kushner is hoping wealthier Arab states such as Saudi Arabia will contribute most of the money to the international investment fund. Much of the proposal is directed at improving life in Gaza.

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Yousif Sharaf, left, and his son Hani stand among the unsold canisters of gas in their family-owned factory in Gaza.

The Sharafs, father Yousif and son Hani, now sit almost alone in their vast, silent warehouse. They have one other employee, but wonder aloud how long they’ll be able to keep paying his salary.

“All of this is lost money,” 70-year-old Yousif says, waving his hand at the rows of dust-covered inventory, which he estimates might once have been worth US$6-million. “Now I have nothing. Really, I need to sell something before I can eat.”

Despite their business disintegrating, the Sharaf family still have their factory and occasionally sell things to other Gazans, meaning they remain among the more affluent residents of this desolate place. Most are far worse off.

With Israel limiting the import and export of dozens of categories of goods – and making it extremely difficult for people to enter or leave Gaza – the unemployment rate here has soared past 50 per cent. Among young people, many of whom have never set foot outside this 365-square-kilometre stretch of land, the jobless rate is more than 70 per cent. And a 2017 UN report predicted Gaza would become “unlivable” by 2020. That’s just six months away.

Among the lures the White House is dangling in front of the Palestinians is US$5-billion to construct a transportation corridor that would connect Gaza to other Palestinian communities in the West Bank. The White House plan also hints at easing Gaza’s isolation by building a trading hub next to it in Egypt’s Sinai Peninsula.

The Globe and Mail spoke to more than two dozen residents of the Gaza Strip – frustrated high-school students, desperate food-aid recipients, fishermen blocked from accessing the sea by the Israeli navy and a top Hamas official – and all agreed there was a desperate need for economic development in the strip. But none saw peace emerging if the promised aid was connected to Palestinians having to compromise on their dream of a having an independent state.

“This is our land, our homeland, and Trump is trying to buy it,” said Soma Shaheen, a 36-year-old mother of five who has been forced to slash prices in half at the henna stall she runs in the Gaza Strip’s lone shopping mall. Still, she said, the promise of money, on its own, couldn’t bring peace to the region. Asked if promises of economic development could convince Palestinians to accept Israel’s control of Jerusalem, Ms. Shaheen had a simple response: “We do not agree.”

The political side of the White House plan likely won’t be revealed until after Israeli elections scheduled for Sept. 17. But Mr. Kushner has already suggested the founding principle of previous talks – a two-state solution, one for Israel, one for the Palestinians – won’t be a starting point this time around. The old land-for-peace principle has been abandoned in favour of something that could be described as aid-for-peace.

That shift, combined with Mr. Trump’s decision last year to move the U.S. embassy to Israel from Tel Aviv to Jerusalem (a city the Palestinians still hope to share as the capital of their future state), has convinced the Palestinian leadership to boycott both the Bahrain conference and Mr. Trump’s Middle East initiative.

The Palestinian business community – some of whom received separate invitations from the U.S. government – is also staying largely away.

Some low-level political figures are attending the Bahrain workshop, such as finance department officials from several governments, including the Persian Gulf states, although none who formally represent either the Israeli government or the Palestinian Authority.

“We must begin with the political problem, and after that we can talk about the economy,” said Abed Alkarim Ashour, a Gaza business consultant who rejected a written invitation from U.S. Treasury Secretary Steve Mnuchin to attend the Bahrain meeting. “Not the economy first, as a gift for forgetting about the political problem.”

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Abed Alkarim Ashour, a member of the Palestinian Businessmen Association, rejected the U.S. government invitation to Bahrain to discuss the Trump administration's aid-for-peace plan.

Soma Shaheen draws a henna tattoo at the indoor Capital Mall in Gaza City, while two of her five children look on. Gaza's economic woes have forced her to cut prices for tattoos in half.

Najih El Khalir, 44, and her son carry their food at a UNRWA food distribution centre in the Shati refugee camp in Gaza City. She depends on the aid to help feed her four children.




Previous peace efforts, most famously the Oslo process that earned the Nobel Peace Prize for Yasser Arafat, Shimon Peres and Yitzhak Rabin in 1994, were both impossibly complicated and yet straightforward compared with today’s situation. Those peace talks failed over snags such as who would control which parts of Jerusalem. But the outlines of an eventual deal seemed to have been established: there would be two states for two peoples, with borders approximating those that had existed before the 1967 war.

Then came Israel’s abrupt 2005 decision to pull its military out of the Gaza Strip, along with the Jewish settlements that had been built there.

Hamas’s subsequent takeover of Gaza left the Oslo parameters looking obsolete. If ending direct Israeli rule of Gaza led to the rise of a group dedicated to destroying the Jewish state, why – or so the reasoning in Israel has gone ever since – should any more concessions be made to the Palestinians?

Hamas’s control of Gaza has its roots in the 2006 Palestinian election, which saw Hamas stun the world by winning a majority of the seats up for grabs (though not a majority of the popular vote). Under pressure from Western governments, including Canada’s, Palestinian president Mahmoud Abbas refused to cede key powers to Hamas, provoking a burst of violent internecine fighting that left Mr. Abbas’s secular Fatah movement in control of the West Bank and Hamas dominant in Gaza.

Israel – seeing the entire strip as now under the control of “terrorists” – launched its blockade, and Gaza’s slide began to accelerate. Where more than 500,000 Gazans had once crossed into Israel in average month, many of them day labourers who earned salaries in Israel that were better than they could earn Gaza, last year’s monthly average was less than 9,000, according to figures provided by the Gisha Legal Centre for Freedom of Movement, an Israeli human-rights organization.

The blockade also crushed exports. Gisha says the number of truckloads allowed to exit Gaza via Israel fell from more than 1,000 a month in early 2007, just before the Hamas takeover, to a monthly average of 217 last year. Meanwhile, the flow of imports – including humanitarian supplies such as fuel, gas and construction materials – has fallen by a quarter, even as the population’s needs have multiplied.

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Gaza’s fishermen, who form one of the few industries in the Gaza Strip that’s still semi-functional, have become used to a routine that sees the zone in which they’re allowed to fish fluctuate almost weekly. Israel prohibited all fishing last week, leaving the Gaza fleet bobbing in harbour while the Israeli navy patrolled off the coast. When a 10-mile fishing zone reopened two days later, it was the 16th change to Gaza’s fishing rules dictated by Israel since the start of the year and the ninth in less than a month.

Israeli military spokesman Lieutenant-Colonel Jonathan Conricus acknowledged the situation in Gaza was “appalling and sad.” But, he said, the core problem was Hamas’s presence and its focus on building up its military capabilities for the next round of hostilities – a fight both Israel and Hamas view as inevitable.

“Our very delicate balance is to try to avoid a disaster, a humanitarian disaster, in Gaza, while not allowing, or minimizing, Hamas’s ability to enhance its military capabilities,” Lt.-Col. Conricus said in an interview in Tel Aviv. “The most dominant fault and responsibility lies with Hamas. They’ve been ruling Gaza now for the better part of 12 years and have nothing to show for it.”




Gazan fishermen mend their nets on a day when Israel closed the Gaza Strip's coastal fishing zone due to a launch of incendiary balloons. Two days later, Israel reopened the zone to 10 nautical miles. Israeli authorities have changed the rules for Gazan fishermen 16 times since the beginning of 2019.

Boys walk past metal rods that have been salvaged from a Gaza building that Israeli forces recently damaged. New construction materials are harder to come by since Israel began blockading Gaza.

Palestinian women and children sit on a rooftop of a residential building, surrounded by the black plastic containers that Gazans use to store their water. Gaza's tap water is unfit for drinking, and most families have to buy water instead.




Sitting in his office on the top floor of a building – once a business centre – that’s guarded by bearded men with black uniforms and Kalashnikov assault rifles, Hamas official Bassem Naim acknowledges Gazans have suffered in the 12 years since the organization seized power here. But, he insists, it’s not fair to blame the Islamists.

“We admit that we have bad economic conditions here,” he said. “But this question [of why conditions have deteriorated during Hamas rule] must not be directed to us. It must be directed to the occupier.”

Mr. Naim, a former health minister who now heads Hamas’s de facto foreign ministry, is angrily dismissive of Mr. Trump’s economically focused peace plan. “The goal of this meeting is not the economy,” he said of the Bahrain gathering. “The goal of this meeting is how to integrate Israel into the region without ending the occupation.”

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He waves off the possibility that Gazans – some of whom are on the brink of starvation – might be more interested in the billions of dollars in aid and investment than they are in the fate of Jerusalem, a city many Gazans have never visited.

'We admit that we have bad economic conditions here,' says Bassem Naim, a Hamas official, but he says Israel should take the blame for that.

But business people and civil-society activists in Gaza say Hamas is very much part of their problem. Mr. Sharaf’s factory was briefly closed in 2013 because Hamas officials decided gas canisters produced there looked too much like those being sold in Israel.

Basil Eleiwa, an entrepreneur who runs Gaza’s poshest new restaurant, Level Up, says his business has been hampered by Hamas bureaucrats who dislike a public place where men and women can sit at the same table and smoke hookah pipes. He said Level Up must seek a special permit whenever someone wants to hold so much as a birthday party there. (One of Mr. Eleiwa’s previous businesses, a hotel, was burned down by Islamic extremists in 2000 because guests could consume alcohol on the premises.)

The fighting between Fatah and Hamas, Mr. Eleiwa said, has damaged the Palestinian cause as much as any outside factor. “Even Israel used to respect the fact that we have rights. Now we’ve lost the respect of even other Arabs, because of what we’ve done to ourselves.”




Basil Eleiwa looks out at the Gaza skyline from his restaurant, Level Up. The trendy restaurant has survived damage from the conflict between Israel and Hamas, but he still finds himself at odds with Hamas officials who don't like a public place where men and women can sit together.

Outside a Médecins Sans Frontières (Doctors Without Borders) clinic, men wait for treatment for injuries sustained in demonstrations against the U.S. embassy's move from Tel Aviv to Jerusalem. Mohamed Hamdan, middle, was shot in the leg. He is an unemployed father of three who studied in university to become a teacher.

A new mosque stands by the Gaza City port. Periodically, the Israeli military has intercepted and turned back boats of protesters trying to bring supplies past the maritime blockade.




Pierre Krahenbuhl, the commissioner-general of UNRWA, says it should be “an international scandal” that so many Palestinians living in Gaza are now reliant on food aid. Of the million people who rely on UNRWA, 620,000 are now living in what he called “abject” poverty, meaning their entire family is living on nothing but the assistance UNRWA provides.

“This isn’t a natural disaster. This is completely man-made,” he said in an interview at UNRWA headquarters in Jerusalem.

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But the scandal in the eyes of some is the very existence of UNRWA and the fact it has provided aid to generations of Palestinian refugees who claim they have a right to return home to what is now Israel. Last year, the Trump administration cut off the US$300-million in annual aid the United States provided to the organization – the State Department said UNRWA was “irredeemably flawed” – creating a funding crisis just as demands on UNRWA were multiplying. (Canada also cut its funding to UNRWA under Stephen Harper’s Conservative government; in 2016, the Liberals restored Canada’s support to its previous level of $25-million annually.)

UNRWA has drummed up enough emergency support from donor countries to meet the swelling demand for its aid packages that contain flour, rice, chickpeas, milk and other essentials. But the budget hole left by the U.S. aid cut, combined with Gaza’s growing food needs, forced UNRWA to cut other services – such as social and psychological counselling – in order to focus on primary needs.

“Our health staff describe the deterioration of psycho-social conditions as being of epic proportions in Gaza. … There’s so little capability to absorb further shocks that any little thing that happens – a dispute with a neighbour – escalates very, very quickly,” Mr. Krahenbuhl said, adding that domestic violence was also rising at an alarming rate. “Nothing I see in Gaza is reconcilable with anybody’s security concerns.”

Jeneen al-Huweihi, 15, is a student parliament leader at her school in Gaza. Her dream is to become the Palestinian ambassador to the United Nations.

Also under threat is UNRWA’s ability to maintain the 252 schools it operates in Gaza that provide 280,000 students with a free education based on the Palestinian national curriculum, rather than Hamas’s version.

Jeneen al-Huweihi, a 15-year-old whose peers elected her to UNRWA’s student parliament, said Gaza’s economic tensions were evident in her classroom, where even things such as pencils and stationary had become scarce. “With the current crisis that Gaza is going through, that UNRWA is going through, the problem we see most is bullying and higher levels of theft,” she said, her voice cracking with emotion. “Kids steal backpacks, and even small things like a notebook, so that they have the resources they need to get educated.”

Jeneen said her dream was to one day serve as the Palestinian ambassador to the United Nations, so she could change the way the world saw Gaza and Gazans.

Amjad Shawa, the director of the Palestinian NGOs Network, an umbrella group for Gaza’s civil-society organizations, said hopelessness is rampant among Gaza’s youth, who see no route to a better life so long as Israel maintains its siege.

But, he said, the scale of what Palestinians have endured was exactly why they couldn’t accept the kind of lopsided aid-for-peace deal Mr. Trump and Mr. Kushner are seeking. “Too many people were killed, too many people died,” Mr. Shawa said, fighting back tears as he spoke. “And they didn’t die for this.”



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