Gaza's business community looks to its options following a brokered deal which should allow trade relations to be established with countries other than Israel, reports Erica Silverman in Gaza City Board members of the Palestinian Businessmen's Association crowded into their headquarters last week, a cigar filled evening hub for Gaza City's movers and shakers, to outline the details of a future Palestinian-Israeli business lobby. Members believe such a lobby could have a real influence over policy-making on both sides, most importantly in convincing Israel to end the closure of commercial crossings that has crippled the Palestinian economy. Palestinian trade relations are about to change, but how and to what extent depends on the implementation of the recently signed "Agreement on Movement and Access" between the Palestinian Authority (PA) and Israel. "If the agreement is implemented by the Israeli side this will give the Palestinian economy the chance to revamp and to develop, because the economic situation now is related to a decision by an Israeli soldier on a checkpoint," PA Civil Affairs Minister Mohamed Dahlan told Al-Ahram Weekly. The PA is hopeful international pressure and the presence of the EU, the agreed upon third party, will motivate Israel to adhere to the terms of the agreement. The economic prospects of Israel's withdrawal from the Gaza Strip have led the PA, Palestinian economists, and business people to start planning for a future with greater autonomy, although Israel still maintains control over all Palestinian borders, and taking advantage of free trade is a gradual process. This autonomy depends on Israeli-controlled crossings and since Israel withdrew over two months ago Gaza has been effectively sealed. Just before the withdrawal there were approximately 35 trucks of exports permitted to exit Gaza through Karni crossing (Gaza's only commercial crossing) per day. After the withdrawal that number dropped to 11 trucks per day. The recently brokered agreement stipulates by the end of the year that the number will reach 150 trucks per day, and 400 per day by the end of 2006. Over half of the factories in Gaza are non-operational due to closures. On 25 November the Rafah crossing, Gaza's only window to the outside world, located along the shared Egyptian border, is scheduled to open, upon which Palestinian exports will be permitted to move through the terminal, although all imports will enter through the Israeli-operated crossing Kerem Shalom. The immediate effects of the agreement will be visible at the Rafah terminal -- Gaza's only passenger crossing -- as Palestinian students, healthcare patients, and those travelling abroad will be able to make their way into Egypt, and from there to their final destinations. Seven hundred patients are waiting to travel to Egypt for urgent medical care, according to the public relations director of Al-Shiffa Hospital in Gaza City. Long-term effects will be realised through the Palestinian's ability to export products to Egypt, and through Egypt to other markets, without Israeli intervention, and to import Egyptian products with greater ease. This freedom of movement will promote new bilateral and multilateral economic partners that will stimulate the private sector, and investors will feel more secure knowing that their products and materials can actually move in and out of Gaza in a predictable manner. United States Secretary of State Condoleezza Rice brokered the agreement that will yield Palestinians freedom to travel through Rafah, transit between Gaza and the separated West Bank via a bus convoy system beginning 15 December, and will allow commercial trucks of exports to exit Karni into Israel. According to the agreement, construction of the Gaza seaport can begin immediately, insofar as Israel allows the necessary materials and equipment to enter Gaza. Despite Rice's efforts, Gaza's airport will remain closed. The West Bank and Gaza Strip import $2.5 billion worth of products from Israel per year -- $1 billion alone for Gaza. This same $1 billion could buy $3 billion worth of goods from Egypt; hence an increased flow of imports and exports between Palestinians and Egyptians is expected. Just as important are the numerous projects under consideration for the exchange of services and natural resources -- principally electricity and gas. An agreement is already in place to export gas from Gaza to Egypt. According to PA Minister of Economy Mazen Sinokrot, an estimated $30 million worth of Egyptian products per year are coming into Gaza, comprised of regulated and "suitcase" trade, the latter estimated at 25,000 suitcases worth of Egyptian products -- only three per cent of the total of Israeli products imported into Gaza. Sinokrot has met Egyptian Minister of Foreign Trade and Industry Rachid Mohamed Rachid several times over the last few months to encourage Egyptian investment in the Rafah industrial park and other joint ventures. There is also a proposed Sinai industrial zone, primarily for agricultural products, under discussion. Now that exports can move through Rafah, Palestinians can trade directly with foreign buyers instead of being forced to use Israeli companies as intermediaries. For example, carnation flowers from Gaza are sold to Grisco, a half-public, half- private Israeli exporting company for 0.05 euros, and then Grisco sells the same flowers to European buyers for 0.14 euros. Sinokrot has proposed a "commercial agencies law" that would stipulate that those who wish to work with Palestine must have a registered Palestinian company as a partner, to try and distinguish Palestine as a separate economic entity from Israel. "We understand Israel's security concerns, and security should be for us and for them, but the security measures must be in accord with international rules, not according to the culture of the occupier," explained Sinokrot. The Federation of Israeli Chambers of Commerce, the Manufacturers Association of Israel, and the Palestinian Chambers of Commerce met in Tel Aviv last week to discuss options for a future Palestinian-Israeli business lobby, in the spirit that good economic relations will pave the road to peace. Palestinian and Israeli business people have fostered close trade relations, and tend to prefer each other's higher quality products above those of their neighbours. Palestinian business people have also profited in terms of knowledge from their Israeli counterparts, adopting Israeli technologies and business methods. Also, it will take time for Palestinians to build up the same relations and infrastructure with European and Arab markets. If the crossings to Israel are open to Palestinian imports and exports, it is likely that Palestinian manufacturers would prefer to continue with their Israeli partners. If closures continue, however, they will look elsewhere. The next business-focussed conference will be held a few weeks from now in London under the auspices of the World Bank. Is US involvement the most important component to keep the peace process moving forward? "I think all these agreements... will form a base to restart the peace process. If the US administration wants, they can use it to create a new atmosphere after the Palestinian elections," suggested Dahlan.
