Critical economic situation in Gaza – OCHA press release

CRITICAL ECONOMIC SITUATION IN GAZA

(New York: 16 July 2007): Almost no raw materials were imported into Gaza between 3 to 9 July due to continued border closures, halting $370 million worth of construction in the Gaza Strip. Some $93 million of those were United Nations projects – their suspension by the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) will leave a number of refugee shelters, schools, community centres, water and sanitation works and medical facilities in disrepair. It will also mean that new schools will not be built, guaranteeing overcrowding in UNWRA’s existing classrooms once the school year resumes.

“The closures have come at a terrible cost to people. Their humanitarian needs will only get worse if further efforts are not made to open the crossings properly,” said the Emergency Relief Coordinator, John Holmes.

The lay-off of 65,000 workers by Gazan companies, which are curtailing production due to lack of supplies, could affect as many as 450,000 dependents. There is also a fear that companies will relocate to Egypt or other countries, resulting in money flowing rapidly out of the territory and further undermining Gaza’s fragile economy. Currently, only 780 firms remain open, or one-fifth of those operating in June 2005. Furniture-makers, textile and garment companies and food industries can afford to employ only 4,200 workers out of the usual 35,000, and the construction industry is supporting a mere 7,000 construction workers out of 42,000.

Some building material was able to pass through the Sufa crossing, including pipes, fittings and other equipment for sewage treatment being conducted by the World Bank and the Coastal Municipality Water Utility in Gaza. However, the utility does not have the money to buy the fuel it needs to run power generators used to operate its wells. The United Nations Children’s Fund (UNICEF) has stepped in to provide 50,000 litres of fuel, in addition to 20,000 litres from the International Committee of the Red Cross (ICRC) and 40,000 litres from Oxfam, but as much as 250,000 litres are required in a month.

Power outages – due to the poor capacity of the Gaza power plant, which suffered a bombing in June 2006 – have also become more frequent over the past week and can last as long as 5 hours a day. A transformer is waiting in Egypt, which, if successfully brought in, could supplement the electricity being produced by the plant. At the moment, one turbine has already shut down due to overuse, and another one is likely to do the same if maintenance does not take place. Efforts are now underway to deploy a technical team to Gaza.

The Sufa crossing remains the main entry point for humanitarian supplies entering the Gaza Strip, and is open on weekdays. The Karni crossing, the main commercial crossing point, remains closed but one conveyer belt is operating outside the terminal to transfer some grains and animal feed to Gaza. The Erez crossing was open from 4 July to senior Palestinian traders entering Israel, as well as international agencies and individuals with health referrals in Israel. The Rafah crossing has not been open since 10 June, leaving 6,000 Palestinians stranded in Egyptian cities and an additional 400 to 700 stuck at the border itself. A United Nations assessment has determined that no immediate humanitarian assistance is needed, but it is clear that stranded Palestinians will run out of money in the coming weeks.