Ha’aretz: ‘Gaza Strip blockade could seriously harm Israel’s economy’

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(Farming produce entering from Gaza into Israel through the Karni crossing in 2006 [AP])

Interesting article from Ha’aretz about the economic implications of the Gaza blockade both for Israel, the PA and Gaza. So far most analyses on the blockade have been confined to political implications. We knew the blockade would be harmful on the Gazan side (that’s what it was designed to do) but as Ha’aretz correspondent Meron Rapoport argues here, the current blockade and long term separation between Israeli and Palestinian economies will significantly harm the Israeli economy, too.

I disagree with Rapoport’s long term assessment, although of course he is right in the short term. He forgets that economies can re-adjust. Forcing the Palestinian and Israeli economies together in an unharmonious marriage has not and will never bring the two sides together peacefully. As Israel pushes to further divorce itself from Gaza, both economies will have to re-adjust, plain and simple. Israel can step up produce exports elsewhere, such as in Europe, including to an expanded list of less prosperous Eastern European or Balkan countries, and/or increase local exports to peaceful neighbors such as Turkey or possibly Egypt and Jordan, while Gaza simultaneously integrates its economy more closely with Egypt. It is true that these non-‘captive markets’ will not buy the second or third rate fruit which goes to Gaza, but it may be worth it in the final balance sheet. Rapoport doesn’t speak of the military expenditures, the bloodshed or the cost to Israel’s image worldwide which result from continued conflict in Gaza. For example, if there was no economic integration between the two, there could be no siege. And let’s not forget how many agricultural exporting countries around the world survive without reliance on a ‘captive market’ resembling the case of Gaza. Many are beginning to agree that a separation is both logical and inevitable, whether or not the Mubarak regime wants much to do with Gaza, or the Palestinians think that integration with Egypt amounts to an abandonment of their struggle.

(Ha’aretz) — “Despite all the intifadas, the Palestinian Authority is the second biggest customer of Israeli exports, after the United States.”A death blow” is how Hillel Adiri, a former director general of the Agriculture Ministry, describes the economic blockade on Gaza… If the blockade becomes permanent policy, Israel will lose a large part of its “captive market” – a stock phrase which in this case literally describes Gaza. “Israel benefited from its relations with the Palestinians,” says Dan Catarivas, head of the foreign commerce branch of the Manufacturers Association and a former senior official in the finance and industry ministries. “And at the end of the day, it will lose if these ties are cut.” The Gazans buy from Israel between 60 and 80 tons of fruit per year – bananas, apples, pears, peaches and avocados. Eshel estimates that some 10 percent of the Israeli fruit harvest goes to Gaza. This statistic can be misleading. “There are producers for whom it is 100 percent of their harvest,” Adiri says.

Closing Gaza to Israeli exports, Eshel says, will lead to a situation where “we will have to uproot 20,000 dunams of fruit, and someone will have to compensate us for that.” One dunam of orchard brings in about NIS 6,000 to NIS 10,000 per year. But even if all these avocado and pear trees are uprooted, the problems will not be solved. Eshel says that third-class fruit is sent to Gaza.

“This is fruit that is good but slightly damaged or too small, which the Israeli market is not prepared to buy.” A source familiar with the situation says that Gaza is a kind of security valve for Israeli agriculture. “When there are surpluses, they are marketed in Gaza so that the prices in Israel will not hit rock-bottom,” he says…” Click for full article

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One Response to “Ha’aretz: ‘Gaza Strip blockade could seriously harm Israel’s economy’”

  1. Michael Horesh Says:

    Dan, let’s face it, in economic teory, war is supposed to be bad for an economy. I invite you to look at http://michaelhoresh.wordpress.com/2008/12/29/the-gaza-ratio-israels-economy/srael being Israel she often goes teh other way.

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