Economic privation has been used before as an instrument of persuasion over Palestinians, but with the rise of Hamas this may be over, reports Erica Silverman "This is a test from God, to test our faith and our belief, so we know how to stand together and be strong, and to be committed to our democratic choice," declared Prime Minister Ismail Haniyeh during a boisterous rally in Gaza City on Friday. Sworn in only two weeks ago, Haniyeh acknowledged that Palestinians are "wounded people", but have "chosen the path to honour and dignity". Inspiring Friday prayer sermons coordinated by Hamas, Haniyeh reiterated his faith-based message throughout the Gaza Strip. The new Hamas-led government has inherited nearly $700 million worth of debt and an empty treasury, facing a policy of economic and political isolation by Israel, the United States and the European Union. Palestinians in Gaza are preparing for an economic freeze, stockpiling food and fuel in anticipation of stalled paychecks coupled with commercial border closures by Israel. Unemployment hovers at 50 per cent in Gaza, and 67 per cent of families live below the poverty line. For the time being, Gazans are still backing the new Hamas- led government under the banner of their right to democratic elections and resistance to the occupation, although West Bankers are becoming more sceptical. Police, mostly Fatah- affiliated, blocked roads and stormed government buildings this week in Gaza protesting against the late pay. The United States and the European Union suspended assistance to the Palestinian government's cabinet and ministries last week, after the newly appointed Hamas-led government rejected the Quartet's principles of non-violence, recognition of Israel and respect for previous agreements between the parties. As punishment for Hamas's electoral victory, Israel decided to withhold $54 million in monthly tax revenue owed to the Palestinian Authority (PA), which barely covers the salaries of nearly 160,000 PA employees, in violation of the Paris Protocol signed in 1994 in conjunction with the Oslo Agreement. The annual Palestinian budget is approximately $1.9 billion. Palestinians received $1.3 billion in foreign aid last year. The PA is in a financial quandary. Karni, the only commercial crossing for import and export of goods to Gaza, has been sealed shut 60 per cent of this year due to Israeli "security concerns". Meanwhile, reserves of food and supplies have been depleted. At the end of March, the World Food Programme was forced to postpone its food distribution programme due to lack of wheat. "If Karni does not open in five days the UNRWA stores will run out for a second time," reported John Ging, director of United Nations Relief and Work Agency for Palestine Refugees (UNRWA) operations in Gaza. The distribution provides food staples such as oil, powdered milk and flour to 745,000 Gaza residents alone. According to Ging, 339,000 chickens have been culled in Gaza due to avian flu. The PA has been unable to offer compensation. Karni's closure has paralysed Gaza's export market since January; brief openings have only allowed limited imports to squeeze through. The Palestine Trade Centre (PalTrade) has estimated daily Palestinian export losses at $600,000 -- or more than $30 million since the beginning of 2006. UNICEF has not been able to deliver humanitarian supplies to Gaza, including medical supplies for the Ministry of Health and equipment for the Ministry of Education due to Karni's closure. Kerem Shalom, a smaller crossing with limited capacity has allowed an average of 12 trucks per day containing emergency assistance from Egypt to enter Gaza, to alleviate food shortages, reported EU spokesperson for the Rafah mission, Julio De LaGuardia. The recently signed "Agreement on Movement and Access" between the PA and Israel, brokered by US Secretary of State Condoleezza Rice and Quartet Envoy James Wolfensohn on 15 November 2006, stipulates that "passages will operate continuously," and set a goal of 150 daily exported truckloads by the end of 2005 and 400 by the end of 2006. This month, the average number of truckloads exported daily was seven, according to UN Office for the Coordination of Humanitarian Affairs (OHCA). Mustafa Masoud, board member of the Palestinian Businessmen's Association in Gaza, reported that his contracting company and carton factory have been closed for two months. "All construction projects have ceased," Masoud says, adding that, "at first prices doubled and now there is nothing to buy." Masoud is part of a Palestinian-Israeli business lobby borne from an economic conference in London five months ago under the auspices of the World Bank and scheduled to meet next week in Tel Aviv. Shimon Peres, Kadima member of the Knesset and second on the party list, asked acting Prime Minister Ehud Olmert to consider re-opening the Gaza airport. Presently all materials exported from Gaza must enter Israel via Karni before making their way to their final destination, often Europe. "Delays at the [Israeli] airport cause the produce to rot and its direct export by air would solve the problem," said Peres. After Israel's withdrawal in September the Gaza airport and seaport were supposed to be re-opened. Both are closed to date. Foreign Minister Mahmoud Al-Zahhar began an Arab tour to request assistance, meeting representatives of Arab governments and Arab League Secretary-General Amr Moussa in Cairo Saturday. The Arab League called on Arab donors to contribute funds to the Palestinian people through accounts with Egyptian Misr International Bank and the Banque du Caire. The League encouraged the PA to accept the "Arab Initiative" -- a Middle East peace initiative presented by Saudi Arabia's Crown Prince Abdullah in 2002. Under the plan, Israel is required to withdraw to the 1967 borders; in return all Arab states offer normal diplomatic relations, recognising Israel's right to exist. Al-Zahhar promised to "lay out a clear vision of this initiative" to Palestinian law-makers, but reiterated that the plan was rejected by Israel. Al-Zahhar is making stops in Saudi Arabia and southern Asia. Iran pledged $50 million in assistance to the PA Sunday at the end of a three-day conference, but it is yet unclear when the funds will arrive, aside from the fact that much more is needed. Qatar has also pledged $50 million. "Our resources are $30 million per month and we need $170 million -- barely enough to run the daily operations of the government," PA Finance Minister Omar Abdel-Razeq told Al-Ahram Weekly. He anticipates the PA will receive $80 million from Saudi Arabia, Kuwait and the UAE, but was unclear when the money would arrive. The new government is struggling to find a bank willing to handle its finances, casting doubt on whether it can pay employees or receive foreign aid. A Hamas cabinet minister said the Amman-based Arab Bank, which has long handled the "single treasury account" where foreign donors deposit funds, had come under pressure from "abroad" to stop working with the PA now that it was under Hamas control, characterising the move as part of an international campaign against the movement. Israeli banks have started severing remaining financial ties. Israel's largest bank, Hapoalim, plans to stop all dealings with Palestinian banks, and Israel Discount Bank may follow suit. Prior to elections economic improvement was seen as a vehicle of reconciliation; today, economic suffering is being used as an instrument of persuasion over Palestinian political choices, representing a drastic change in Israeli and donor logic. Israel's political calculation is that the population will turn against Hamas. Perhaps they have underestimated the unity of Gazans.
