World Economy

Gazans on Edge of Economic Collapse

Gazans on Edge of Economic CollapseGazans on Edge of Economic Collapse
The Palestinian Authority has also sought in recent months to harm Hamas by damaging Gaza’s economy, including by cutting the salaries it still pays to civil servants there despite Hamas taking over the territory in 2007

Across the 140-square-mile territory, Gazans are struggling to finance their daily lives. Young people—unable to pay for weddings or homes of their own—are delaying marriage, figures show, while health officials say suicide, once virtually unheard of in Gaza, is on the rise.

Universities say students are dropping out because they cannot afford the fees. At the Islamic University in Gaza City, a third of the students did not re-enroll this semester. Graduates have little hope of finding work in their specialized fields, news outlets reported.

Unemployment in Gaza is nearly 50%, and 68% of those between the ages of 20 and 24 are jobless, according to figures from the Palestine Trade Center.

The Gaza Strip’s economy has been crippled by a more than decade-long blockade by Israel, which maintains tight control on trade and movement in and out of the territory, citing security considerations.

“We are on the edge of economic collapse,” said Judge Mohammed Nofal, sorting through a pile of case files in his courtroom in central Gaza, where plaintiffs and accused debtors shuffle in and out to have their financial cases heard.

Nofal, one of two financial judges in the Gaza court, said he heard 12,000 cases last year, up 50% from the year before. The value of checks bounced in the territory surged to $112 million last year, according to the Palestine Monetary Authority. In 2016, the figure was $62 million, Washington Post said.

Desperate for small loans, Gazans seek credit wherever they can, Nofal said. Often, for instance, people turn to electronics stores that offer products on credit, signing up to buy televisions or washing machines on installment plans, then immediately selling those appliances to get cash. When they fail to pay their creditors, a domino effect of defaults is triggered, Nofal said.

  Packed Jails

Sameh al-Madhoun’s eyes fill with tears as he recalls his fall from successful businessman to prisoner in a Hamas jail in Gaza, AFP reported.

Once the owner of a flourishing car dealership, he is one of more than 40,000 Gazans charged in the last year with failing to keep up debt payments as the economy in the Palestinian enclave collapses.

Madhoun, a 40-year-old father of four, has sold most of his possessions, including his house and some of his cars, in a bid to pay back the $3 million debt that dragged his business into bankruptcy.

“I have paid off half of it until now. I do not know how I will pay off the rest,” he told AFP from his jail cell. “I don’t own anything else now except these debts.”

A decade-long Israeli blockade and a dispute between Gaza’s rulers and the West Bank-based Palestinian Authorities have brought the coastal territory’s economy to its knees.

Some 42,500 people were arrested in the past year for failing to pay debtors, according to Hamas police. At least 600 are currently in jail on similar charges.

  Economy ‘All But Dead’

The economy of Gaza, a Palestinian enclave of two million people sandwiched between Israel, Egypt and the Mediterranean, is “all but dead”, said Maher Tabba, an official at the territory’s chamber of commerce.

As Gazans’ buying power has collapsed, the amount of goods being imported into the Gaza Strip has more than halved in just seven months, according to border officials. Tabba estimates that several hundred of those currently in prison are owners of struggling or failed businesses.

In an attempt to contain the crisis, the public prosecutor’s office in Gaza recently announced it would give people an extra month to find the money to service their debts. Much of the world has dropped the policy of imprisoning debtors, but in Gaza it is still common.

Israel has maintained a blockade of Gaza since 2007, which it says is necessary to isolate Hamas, with which it has fought three wars since 2008.

Rights groups and UN officials say it amounts to collective punishment and strangles the economy in the enclave, where unemployment is around 40%.

But the Palestinian Authority has also sought in recent months to harm Hamas by damaging Gaza’s economy, including by cutting the salaries it still pays to civil servants there despite Hamas taking over the territory in 2007.

Hamas has also largely stopped paying civil servants after an attempted reconciliation with the Fateh movement of president Mahmud Abbas stalled.

  US Warns of Full Collapse

The United Nations’ top official for Israel and the Palestinian territories says Gaza is facing a “full collapse”. Even Israelis are publicly raising the alarm.

The head of the army reportedly warned Israel’s cabinet recently that a conflict could break out if humanitarian conditions continue to worsen in the Gaza Strip.

Another trader jailed in November, who did not want to be named, said 35 people had been laid off when his company went bust. “Everything I have built since I set up the company in 2002 was lost in the last year. My debt reached more than a million and a half dollars,” he said. “I was selling property to service the debt, but I wasn’t able to pay it fully.”

The trader said Gaza’s financial woes are a result of the political situation—and that nothing less than a solution will enable the economy to recover. “The market collapsed because of the siege and the crisis with PA salaries,” he added. “While there is no political stability, there will not be economic security here and the market will not rise again.”

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