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Gaza: The Death of Industry

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Gaza Strip, Asharq Al-Awsat – A ‘cemetery’ in the neighborhood of al Rimal in Gaza is attracting the attention of motorists and pedestrians alike. Set up last Tuesday in al Katiba Square, this symbolic cemetery is comprised of ‘graves’ symbolizing hundreds of factories that have been closed down as a result of the economic embargo. The forty ‘graves’, which have been adorned with flowers, each have a tombstone that bears the name of the factory and the number of employees who have lost their jobs in the aftermath. The Popular Committee for Resisting the Siege (PCRS) in Gaza is responsible for the creation of this cemetery as a protest against the economic blockade that has been imposed on Gaza following the Palestinian legislative elections in 2006. According to the General Union of Palestinian Industries, the embargo has caused the closure of 96 percent of industrial enterprises (3,900 enterprises), which has resulted in the redundancy of 140,000 employees. Presently, the number of factory employees does not exceed 1,500 workers. The census has also indicated that the Palestinian industrial sector is divided into four main divisions: furniture factories, foodstuff factories, textile mills, and factories manufacturing construction materials. Ninety percent of furniture factories have been closed down while 95 percent of timber workshops are out of business. Statistics also indicate that in the furniture industry local products and those manufactured for export have been damaged as a result of being stored for long periods of time in storehouses. These products are normally exported to the West Bank and Israel using an estimated capacity of 400 cargo trucks. The goods are valued at approximately US $8 million. The closure of furniture factories has cost over 6,000 employees their jobs and the estimated losses over that period in the furniture industry are believed to be US $12 million. As for the textiles and clothing sector, estimates indicate that all the enterprises operating in this sector have been closed down; over 960 factories that used to produce 5 million garments annually of which 95 percent is exported to Israel. Textile mills have reported a US $10 million loss in terms of actual value, in addition to approximately one million articles of clothing that had been manufactured for the summer season and ready to export to Israel. Sewing factories are believed to have 25,000 employees, however manufacturing clothes for the local market is likewise paralyzed as a direct consequence of the shortage of fabrics and the cost of materials required for sewing. The estimated losses impacting this sector are believed to be US $20 million. As for the foodstuffs factories in Gaza, they currently only operate 30 percent of the original capacity which is why production is limited and moreover cannot be imported to the West Bank and elsewhere. The three major carbonated beverages factories that previously had a workforce of 900 laborers are now closed down since Israel bans the entry of carbon dioxide into Gaza – an essential ingredient in the carbonating process. The beverages industry has suffered the loss of an estimated US $3 million. The General Union of Palestinian Industries has stated that the blockade has resulted in the closure of all construction factories, which include 13 tile factories, 30 cement plants, 145 marble factories, 250 brick factories – all of which has resulted in the loss of 3,500 jobs. Samih al Haddad who owns Al Haddad Factory for Electrical Appliances told Asharq Al-Awsat that he has not purchased the required raw materials for the past eight months. He added that the factory, which he part-owned with his brothers, has suffered the loss of US $1 million as a direct result of the economic embargo and another million in goods and supplies that have been seized and held in Israeli port warehouses. Al Haddad explained that before the blockade, he had 63 employees, however today he only has 20 workers who work part-time shifts. He said that he was pessimistic and added that he expected the situation to deteriorate even further. Mohammed Abu al Owf who owns a tissue paper factory told Asharq Al-Awsat that prior to the embargo his business was flourishing and that the company was producing 150-200 tons of tissue monthly. Today his company manufactures one kilogram of tissue per month. Abu al Owf revealed that he used to have 45 employees before the embargo and that today he has three accountants. Abu al Owf who participated in the inauguration of the symbolic cemetery in al Rimal last Tuesday, 18 March, said that if he had the means he would erect symbolic tombstones for the tens of thousands who had lost their jobs and the only source of livelihood as a result of the closure of hundreds of factories. “These people are miserable and have become dead after they lost the ability to live and provide for their families. That is the real tragedy,” he said. Like all the other factory owners and traders, Abu al Owf also has goods that have been confiscated and stored in Israeli warehouses that he cannot reclaim because of the blockade. He said that the goods are worth US $600,000 and added, “But what complicates the matter even further is the fact that the dollar has plunged in value, which means that we have endured even greater losses and our situation has become a lot worse.” Abu al Owf believes that Israel is bent on stifling the economic situation and pushing it towards total disaster. He added that the factory owners are going to press litigation charges against the Israeli government in the Supreme Court of Israel not only to lift the blockade and restore working conditions for factories, but to save thousands of families who have been devastated after the embargo. Yousef Shumar, the owner Shumar Foodstuffs factory, which produces a variety of biscuits and confectionary, said that the main obstacle facing his factory is the shortage of raw materials. He revealed to Asharq Al-Awsat that the main problem was not the lack of basic foodstuffs, such as flour and oil, but rather it was the absence of packaging material like cardboard and plastic. Shumar disclosed that to overcome this problem, he has been forced to distribute his product in packets and boxes that do not carry the company’s name. Sometimes he uses the boxes of other products, which in turn affects sales among consumers. But Shumar highlighted a graver problem; the shortage in fuel. He told Asharq Al-Awsat, “Often times, only a quarter of the distribution rounds are completed for lack of available fuel for the vehicle to continue its rounds.” He revealed that the blockade had led to the reduction of Gaza’s industrial capacity by 90 percent, which was what compelled him to let go of the majority of his employees. Faisal al Shawa, head of Al-Shawa Contracting Company, which manages a number of factories, is pessimistic. He said that the situation cannot get worse than what it already is and revealed that everything had hit a standstill. Al Shawa who is also the Secretary-General of the Businessmen’s Association in Gaza said, “Businessmen have gone bankrupt, they have endured huge losses. No businessmen or businesses remain, the disaster has affected everyone indiscriminately and we do not know who will compensate us!” One of the chief problems facing the owners of factories that have been closed down is their considerable debts with banks. According to Fadl al Garwe, “Like other factories, we secured loans from banks but when we suffered huge losses the banks started to demand the money we had borrowed back. These are significant sums that will take a long time to be paid back and we do not know when and how we will be able to do that.” Meanwhile, Amr Hamd, the head of the General Union of Palestinian Industries stressed that Gaza has reached the point of no return warning that it will be an increasingly difficult feat to attract or convince investors to invest in the Gaza Strip, he said, even if the blockade is lifted. Hamd added that there was an “erosion of capital” in the industrial sector. He said: “When Israel used to block the border crossings and factory owners faced crises, they used to sell miscellaneous tools – however now, the situation has become very grave.” Rami Abdo, an economic expert stated that the collapse in Gaza’s industrial sector has had a negative impact on the private sector, which provides 53 percent of job opportunities. The industrial sector has been hit hard with industrial capacity at 11 percent having sharply declined from 76 percent. Abdo told Asharq Al-Awsat that the trade sector relies on the industrial one and disclosed that over 43 percent of private sector establishments have halted all trading activities, while the rest had decreased trading activities by nearly 75 percent. For his part, Jamal al Khadri, head of the Public Committee Against the Blockade told Asharq Al-Awsat that unemployment has risen sharply and that 140,000 employees have been made redundant – their families undoubtedly impacted by it. He said: “If we assume that the average family is comprised of five to six members then that would mean that 700,000 Palestinian citizens have been harmed by the closure of factories.” Al Khadri confirmed that power outages, shortages of materials, fuels and capital, in addition to the inability to purchase machines or repair and maintain the ones available, have taken their toll on the industrial sector. He stated that the losses have been estimated at US $500 million, in addition to another US $150 million, which is the estimated worth of goods confiscated and stored in Israeli warehouses. He also stressed that the blockade has disrupted countless projects, business ventures and construction and infrastructure projects in the Gaza Strip. Omar Shaban, the prominent economic expert, rejects the idea of converting the serious problems that have struck the industrial sector into figures and percentages and stated that it does not reflect nor diminish the manifestation of these crises. He also pointed out a critical factor, which is the repercussions of the Palestinian industrial sector’s isolation from Europe, Israel and the Arab world, in addition to the loss of importers whom it had taken a great deal of time and effort to win their trust and confidence. According to Shaban, even after the blockade is lifted it would take huge efforts to restore confidence in Palestinian products. “The loss of confidence in Palestinian products by foreign importers cannot be estimated at any price,” he said. Shaban also stressed that what has befallen the industrial sector is part of the ongoing and determined Israeli plan to strike the Palestinian industrial sector and regress it back to decades of underdevelopment. “The Palestinian people cannot restore the situation to what it once was except with monumental and powerful efforts, however it is clear that we do not have a strategic plan to counter such attacks in light of the internal Palestinian division,” he concluded.