Gaza’s Economic Crisis Sends Territory Into Poverty and Chaos

May 1, 2019

Dr. Omar Shaban discusses the World Bank report on the shrinking Gaza economy and how Israeli sanctions and restrictions have destroyed a once thriving economy

Dr. Omar Shaban discusses the World Bank report on the shrinking Gaza economy and how Israeli sanctions and restrictions have destroyed a once thriving economy


Gaza's Economic Crisis Sends Territory Into Poverty and Chaos

Story Transcript

MARC STEINER Welcome to The Real News Network. I’m Marc Steiner. It’s great to have you all with us. Life and the economy in Gaza are in a shambles. In 2018, the World Bank warned the economy of the Gaza Strip had shrunk by eight percent. They’re facing a major crisis that also deepens the Palestinian-Israeli crisis. This has all occurred despite the reality that Israel dismantled and removed its settlements from Gaza. The Palestinians in Gaza are now living through the longest pause between Israeli invasions though Israel’s economic war and blockade and sanctions have continued with a devastating effect. While the Israeli invasions of 2008, 2012, and 2014 killed thousands and destroyed property and infrastructure, the World Bank report shows that the economic damage inflicted on Gaza has intensified when the tanks have stopped rolling. Al Jazeera interviewed a school teacher in a marketplace in Gaza. This is what she has to tell us.

GAZAN SCHOOLTEACHER We cut down on meat and the expensive vegetables and fruit. We stopped any extra expenses as we need to adapt. We might be able to survive this month and the next one because we have some savings, but we won’t be able to take it much longer.

MARC STEINER And we are now joined by Dr. Omar Shaban, an economist who is Director of PalThink, a think tank based in Gaza promoting rational thought, peace, prosperity, and freedom through decision-making. He has written extensively on the Palestinian economy in general and on Gaza very specifically. Dr. Omar Shaban, welcome. Good to have you with us here at The Real News.

DR. OMAR SHABAN Very good evening to you and your audience. It’s my pleasure.

MARC STEINER So let’s start here. The World Bank argues that the Gaza Strip, the Gazan economy depends on these transfers from the Palestinian Authority, from Qatar, international organizations. He claims the main reason for the current economic crisis in Gaza is about the decline in those money transfers. So tell us a little bit about why Gaza now has to depend on this foreign money, the role it plays, and what’s the real history here.

DR. OMAR SHABAN Thank you very much. Gaza is part of the Palestinian territory. In 2007, there was the clashes between the Hamas movement and the Palestinian Authority, ending by Hamas taking over Gaza and the Palestinian Authority, which is the legitimate Palestinian leadership recognized internationally, was defeated, confining its authority to the West Bank. This was on a Friday for a period in June 2007. Israel immediately imposed closure in Gaza because Israel withdrew from Gaza in 2005 but continued to control the air and the land and the sea. So according to the international law, Israel is still considered to be as an occupying power to Gaza and Israel imposed closure into Gaza restriction because they consider Hamas as a terrorist organization and Hamas does not recognize Israel. So Gaza was recognized by the Israeli government as a hostile entity, so Israel imposed huge restriction movement to the people, movement of the products, over how people get out or people come in. And there were three major wars between Israel and the Palestinian faction in Gaza, mainly Hamas, in 2008, 2009, 2012 and 2014, which lasted for 51 days. I live in Gaza. I was, all these three wars in Gaza. It was very, very, very miserable. I don’t wish this to happen to anybody even our enemies because war is very bad for everybody. And the situation in Gaza has become severely bad economically. Gaza is very small. The Gaza Strip is 362 kilometers. It’s 200 square miles, inhabited by two million people, so it’s one of the highest populated areas on earth. And it grows by 5,000 newborns every month; 60,000 newborns every year. Gaza now will be in 20 years, will be around five million people. There is no space. There is no space for the school. There are no jobs. Sixty-two percent of the Gaza population are youth, are young people who are under 30-years-old. Two-thirds of this youth have never been outside; they lived all their life in Gaza. And can you imagine this generation who have never been outside, they don’t have the experience of interaction with anybody, even with the Israelis because there is no Israeli in Gaza. They don’t meet Americans, they don’t meet Europeans, so they still talk about the war and Gaza used to be a very good place to live. I want to remember, to remind our audience that Gaza used to receive a couple of thousands of Israelis, Jewish Israelis, coming to Gaza, staying two days in the Gaza beaches. Gaza is in the Mediterranean, has a lot of restaurants, five-star hotels. It was like Cyprus, was like Greece. Many tourists were coming to Gaza— businesspeople. If you ask any Israeli then, they will say, Gaza is a nice place to live.

MARC STEINER What you’re describing, did this take place before the 67′ war? Is that what you’re saying, in that period or post?

DR. OMAR SHABAN In the 80s and in the early 90s.

MARC STEINER Okay, yeah. I just want to be clear.

DR. OMAR SHABAN And Gaza used to export a lot of products to Israel, to America, because our neighbors are very skilled. We used to have some 50,000 laborers go to Israel every day, learn the technology, and there was lot of interaction between the Israeli businessmen and the Palestinian workers and businessmen. So there was peace without agreement. It’s what they say all the time— the people who were living and working together, despite the fact that they were enemies. But people were smart enough in Israel and in Gaza, working together and leaving politics aside. Now Gaza is very poor. Eighty percent of the Gazans are very poor. Gaza became more radical. Gaza exported radicalism to Sinai and the youth are frustrated. People have become narrow-minded because they don’t travel. They don’t know what’s going on. Although they are educated— the illiteracy rate in Gaza is just one percent-— they go to the Facebook. They understand what’s going on. They speak English. They speak different languages. Many of the Gazans students are fresh graduates from American University. So in Gaza, the youth, they know what happens in France or in Washington, and they compare it with their miserable life. So that gathers the youth. So people become more radical. And this is not good for not only for us, but also for the Israelis because we are far away from Israel by ten kilometers only. Gaza is far away from Israel by ten kilometers, which I say all the time to the Israeli people, to the Israeli public: look, we need to make peace. We need to have our rights. Let’s talk about peace. Let’s make prosperity together. What happened in Gaza is not good neither for us, neither for you.

MARC STEINER So going back to the World Bank report for a moment. It Indirectly blames the Palestinian Authority on the West Bank for the crisis in Gaza. Abbas and his folks who have cut salaries to authority workers in Gaza, cut funding for energy and health services, and all the rest. So talk a bit about why you think the Palestinian Authority is sanctioning people in Gaza. And do you agree that all this responsibility for this crisis really rests on their shoulders, which is where it seems to be being placed, as opposed to really understanding the breadth and depth of the sanctions and the blockades that are taking place on the part of the Israelis as well?

DR. OMAR SHABAN In very simple words– since 2007, Hamas controlled Gaza and the P.A. controlled the West Bank. The relationship between the West Bank and the Palestinian Authority, and the West Bank and Gaza, continue in many shapes. For example, the West Bank provides electricity. It pays for the electricity bill to Israel, will receive $120 million from the Israeli company, which is paid by the P.A. There are a couple of thousand employees who used to work in the public sector in the P.A. and they continue to receive salaries from Ramallah, from the Palestinian Authority. Hardship cases– the poor people, they receive some allowances every month, medical referrals from Gaza to Israel at the West Bank hospital because we don’t have good hospitals for some chronic diseases like cancer and others. These bills for medical referrals are paid by the Palestinian Authority, so the relationship financially with the Palestinian Authority continues to support its people in Gaza. However, some people in our Palestinian leadership thought that this benefits Hamas. So they have taken some measures to decrease their salaries, to decrease the medical referrals to the West Bank. This started in March 2017, aiming to squeeze Hamas in Gaza and make it difficult for them, for Hamas. At the end of the day, people will suffer. We suffer, not Hamas. We used to have twelve hours of electricity. Now we have four hours of electricity until a couple of months ago, until Qatar and some other Gulf countries started to come. So there is a fight. There is a competition between Hamas in Gaza and the West Bank, and people are paying the price in the middle. I cannot blame the P.A. only of course, because still Israel controls the border. The three wars have left Gaza with a huge destruction. The international community, especially the American NGOs, who are working in Gaza, helping a lot of the people. I used to work as the head of an American NGO working with the poor people. For eight years, we were helping the poor people in Gaza, making some projects for children, for students, for universities. Some of the American NGOs stopped working in Gaza, firing people. Recently, President Trump stopped the operation of USAID in the Palestinian territories. You cannot imagine this destructive impact of the suspension of the U.S. in support to the Palestinian people. And this is not good not only for Palestinians, but also its not good for the Americans because if you continue to work in Palestine, this sends a good message to the Palestinians that the American people or the American leadership are in support of the Palestinian people. So if the Americans withdraw, this leaves a vacuum, which will be filled by other radical groups and other radical organizations.

MARC STEINER So to that point, as we try to conclude is that there have been protests in Gaza against Hamas itself because of a declining standard of living. Hamas says okay, but don’t worry about that because we can bomb Israel and that makes them give us what we want and extract the things from Israel, so that must be working like the fishing zone being expanded but really not by that much. So I’m curious what you as an economist, as someone who is a political observer in Gaza and in the Palestinian world, as we talked about before we went on the air, your family had to flee in 48′ from near Jerusalem to Gaza. So this is your home. It’s important to emphasize that. So tell me about what you’ve been writing and thinking about in terms of how you respond to the World Bank report, how you respond to the perception of the world, in terms of what can ameliorate this? What can change it? What can change the nature of the future?

DR. OMAR SHABAN Marc, this conflict has been there for 70 years– the Israeli and the Palestinian– and we have been in fights for several times in the West Bank and in Gaza. It is not going to continue like this and the Americans waste a lot of money either to support Israel or to support the Palestinians. This area receives a lot of money but still, it is not stable. We need to look differently. We need to end the conflict. The two-state solution is the solution that was proposed by the Americans, by all the presidents of America, by the international community, and by the U.N. And even the Israeli leadership, Yitzhak Rabin and Shimon Peres, recognized that Palestinians need a state. We need to go to that solution. My second point is that this area could be a prosperous. Palestinians and Israelis can make a lot of money. I want to tell you something. Now under the problem in Gaza, there are so many I.T. companies working with Israeli companies, with Bill Gates, with Google, with Microsoft from Gaza because this I.T. sector can overcome the closure. And there are so many companies in Israel and Israel is growing, is doing a lot of good things in I.T. and they need the Palestinian graduates and we have so many talented Palestinians. You know in Palestine, we have 4 million, but we have 8 million Palestinians everywhere– in Chicago, in America, and Europe and they have a lot of money. There is an estimation that the Palestinians outside the country that they own $200 to 300 million. And these Palestinians, they have family, Christian families in Beit Sahur, in Beit Jala, in Jerusalem. They want to help them, so stability will encourage these people to come in. What I want to say is that both the Israelis and the Palestinians, they were trapped by the conflict. I want them to open their mind to the future. Let’s make peace. Let’s give us our rights. We need an airport. I want to travel, like any others. Let’s give the Palestinians the opportunity to work hardly and lets the Palestinians and Israelis meet up together to talk about peace. We need peace. It’s done. Everything has been experienced. We have experienced the war several times, for many years. Why not try peace for once? As I said before, there was peace without an agreement. Now we could have many agreements but without peace, because people don’t meet. The new generation of Israel and the new generation in Gaza, they didn’t meet for the past fifteen years because there were a lot of walls. The Israeli stopped hearing about us because they stopped seeing us. And the Israeli and Palestinian generation who was born in the 80s and the 90s and they became adults in the 2000s under the siege, they stopped seeing Israelis. The only image in their mind about Israel, is the Israeli soldier, the Israeli settlers. They don’t see the Israeli citizens. And Israel is the same. I am old enough to get out of Gaza. Whenever I go to a restaurant in Jerusalem or Tel Aviv and I meet some Israelis, they are shocked because they have a very bad image still about the Palestinians. Let’s see where we can go from this. We have to stop. What I would say there is a huge asset, a huge opportunity this are missed by both of us. Gaza has a lot of gas like Israel. Just to close, there’s a lot of gas from Syria, Lebanon, Egypt, Palestine and Israel. So Gaza has a lot of gas discovery. Nobody can come and spend money, invest money, until there’s peace and certainty. There is no certainty. Who is going to invest $1 billion in Gaza or Gazan offshores for gas without stability. And there’s a lot of many other things that Gaza under stability can bring to the Israelis and the Palestinians. There were many studies that show that if there is peace, Israel will make an extra $20 million and the Palestinian economy will be tripled. By then, we will not need American money. You can keep your money. We need your love and your emotion. The last thing, Palestine is a holy place for everybody– for the Muslim, for the Christian. We are the most holy place in the world. Saudi Arabia is holy for the Muslim only. This is very important. But Palestine is holy for everybody. Jesus was born in Palestine. So the Jews, the Christians, and the Muslims can come to Palestine. Saudia is making around $20 billion from the pilgrims every year, much more. Can you imagine if we receive one million Christian, with one million Muslims, with some 200,000 Jewish who come to Palestine in peace, spend a few days in Bethlehem or Jerusalem and go around? How much money we can make? That’s my theory, my friend.

MARC STEINER Dr. Omar Shaban, you can see that we can go on for hours together and I will look forward to a much longer conversation. Thank you for your work and for your conversation today with us here. Stay safe and we look forward to talking to you again very soon.

DR. OMAR SHABAN Thank you very much and my greeting to all American people. Thank you.

MARC STEINER We have been talking to Dr. Omar Shaban in Gaza and I’m Marc Steiner here for The Real News Network. Thank you for joining us. Take care.