Egypt is committed to helping Palestine build its economy, following the military withdrawal of Israeli troops from Gaza later this month, writes Erica Silverman On Tuesday 27 August, chief of Egyptian General Intelligence, Omar Suleiman, stood before the Palestinian Legislative Council in Gaza City to "pledge that our hands will be tied to yours until the end of the Israeli occupation, and the establishment of a Palestinian State," stressing, "this is a pledge that every Egyptian has supported." Speaking on behalf of President Hosni Mubarak, he declared, "there is no security for us until your rights have been returned," while offering Egyptian support for the rehabilitation of the Palestinian economy as well as democratic reforms. As Israel's scheduled date for military withdrawal from the Gaza Strip approaches, anticipated between 8-15 September, Egyptian authorities have taken a seat at the negotiating table between Palestinians and Israelis, and between the Palestinian factions themselves, to maintain the ceasefire and negotiate a complete Israeli withdrawal, principally from their shared border. Gaza's economic recovery and stability require the free movement of goods and people both across Egypt's borders and into Israel. Direct access to the rest of the world through Gaza's airport and seaport, as well as the creation of a viable, safe passage connecting Gaza to the West Bank, are also essential. However, Israel has proposed continued occupation of the Rafah crossing -- the only Palestinian access point to Egypt -- for another six months in order to satisfy their economic and security concerns. Palestinians have been pushing for the presence of a third party, which Israel has refused. Deputy Prime Minister Nabil Shaath stated that the Palestinian and Egyptian sides have rejected the Israeli proposal, and negotiations are still underway. Under Israeli orders, an estimated 700 Palestinians per day are allowed to leave the Gaza Strip (to Egypt), while an estimated 90 per cent are routinely denied the ability to travel. Israel has proposed moving the crossing to a new location, where Gaza, Egypt, and Israel meet, at Kerem Shalom, so that Israeli customs officers can ensure that only specified goods are imported into Gaza. Palestinians would agree to allow goods to enter through the Kerem crossing, but insist that people must be able to move freely without an Israeli presence through the Rafah terminal, presidential spokesperson Nabil Rudeineh told Al-Ahram Weekly. The Paris Protocol, signed in 1994 in conjunction with the Oslo Agreement, created what is referred to as a "customs envelope" in Israel and Palestine whereby goods entering into the envelope are taxed only once and goods within the envelope are not taxed. Under this regime, Israel has the right to collect all tax revenue for goods coming in and out of Gaza, and in theory should return 97 per cent of the taxes to the Palestinian Authority. It is argued that this condition is in place in order to prevent smuggling, but it also ensures that the Israeli market will not be affected by cheap goods imported from Egypt into Gaza. At present, goods are imported into Israel and then sold to the Palestinian market, effectively absorbing the Palestinian economy. As of June 2005 the ratio of imports to exports for Gaza was 12 to one. Last week, Israel threatened to break the protocol if the crossing is not moved. Without an independent Palestinian state, this would result in immediate fiscal losses since Palestinians lack the expertise to collect the customs revenue amounting to $60 million per month. $2.8 billion worth of goods per year is traded between Palestine and Israel. If Palestinians had access to outside markets at least half of that trade revenue would be transferred to Egypt and Jordan. Israel has approved an agreement with Egypt for the handover of security control of the Philadelphi route to the Egyptian government, stipulating that Egypt will deploy 750 security officers along the border. President Mahmoud Abbas faces greater challenges internally than externally and has welcomed Egypt's gradually increasing role. Spokesperson Rudeineh praised Egyptian efforts in negotiating with the United States and Israel, and affirmed a shared position -- the crossing between Gaza and Egypt must be free. "We are in need of the Egyptian role to convince these factions to sustain the ceasefire," stated Rudeineh, noting that the numerous meetings between Palestinian factions and Minister Suleiman were coordinated with the PA. Fatah leadership welcomed Minister Suleiman's visit, praising Egyptian support for the legitimate rights of the Palestinian people, while affirming their adherence to the ceasefire. "The most suitable player between Palestinian factions is the Egyptians, because Palestinians see them as neutral," determined Fatah Revolutionary Council member Abu Ali Shaheen, after meeting Minister Suleiman. Hamas spokesperson, Sami Abu Zahri stated, "Hamas, in Palestine or abroad, is part of this positive relationship with our Egyptian brothers," confident that Egyptian interests are aligned with theirs. According to Abu Zahri, "Egyptians are part of the Palestinian people, and their role in negotiating between the factions is positive." Hamas asserted that if any Israeli military presence remains at the Rafah crossing, or in any part of Gaza post withdrawal, they will attack. After the withdrawal there will be a meeting of the Palestinian factions in Cairo, and the period of "calm" will be re-assessed at this juncture. Abu Zahri asserted that Hamas will not compete with the PA for coordination of the steps to be taken post - withdrawal, but they will ensure there is no misuse of the land. Hamas still seeks an office in Cairo, and believes they enjoy popularity there as a role model for Islam and for their resistance to occupation. Gaza and Egypt's shared border hinges upon political and humanitarian concerns, since Egypt is Gaza's only window to the world. The real trade issues lie on the border between Gaza and Israel, where 80 per cent of Gaza imports and exports flow. Presently there is little trade between Egypt and Gaza, mostly consisting of "suitcase trade", largely unrecorded and untaxed, although smuggling is prevalent, particularly of cigarettes, drugs, and weapons, explained Nigel Roberts, World Bank director for the West Bank and the Gaza Strip. Wage structures and production costs in Gaza are a derivative of Israel, and therefore much higher than those of neighbouring Egypt. Perhaps lower- end consumer items could make their way across the border, but overall exporting to Egypt is limited in the short term. The main exports emanating from Gaza are textiles and agricultural products, oriented to intermediate markets in Israel and final markets in Europe and the US. High labour costs in Gaza exclude Egypt from this arena. Gaza could import cheap competitive products for a lower end consumer market, which would immediately benefit Gazans, but not their economy. There is legitimate concern that Palestine's economic dependency could be transferred from Israel to Egypt. If goods could move freely within a regulated system, Arab investors have already expressed interest in manufacturing goods from the Erez industrial zone, where they may look to avoid export quotas already reached back home, and may seek to tap into a lucrative Israeli market. "I was born three months before the occupation of the Gaza Strip, which means I was raised all my life under occupation, and now I am witnessing its withdrawal, not through negotiations, but through resistance," stated Abu Zahri, of Hamas. Palestinian economist and member of the Technical Committee for the Withdrawal, Mohamed Samhouri, offered his analysis. Half of Gaza's population of 1.4 million is under 15 years of age, there are no jobs, no access to the Israeli or Arab labour market, and only the Gaza private sector could employ them, contingent upon border access which has been denied. Yet Israel expects this young population, on this meagre 365 square km strip of land, to remain calm, and to remain occupied.
