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The Economics of a ‘Rabbit Cage’

Posted on Jun 26, 2011
© 2011 Reese Erlich

Israel continues to impose an economic blockade on Gaza, making it difficult for the inhabitants to find some goods. Some commodities are smuggled in through tunnels from Egypt.

By Reese Erlich

BEIT LAHIA, Gaza Strip—From his house just half a mile from the Israeli border, farmer Ahmad Shafi can sometimes see homemade Palestinian rockets streaking toward Israel. Despite his strong opposition to the firing of those rockets, his house has been shelled in retaliation by the Israeli military.

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As we walk on his land ripe with eggplant and cucumbers, we can see the Israeli cities of Ashkelon and Sderot. The farm is so close to those communities that Shafi’s family members use an Israeli telecommunications company to get Internet access. But the family can’t export its crops.

Since Hamas won Palestinian elections in Gaza in 2006, Israel has imposed an economic embargo, severely restricting imports and exports. Israel says the sanctions put pressure on Gaza’s ruling party, Hamas, and help deter rocket attacks on Israeli civilians.

But Shafi calls the blockade a form of collective punishment. No one in Shafi’s family voted for Hamas in the last elections, but they and every other Gazan suffer from the blockade.

“We live in a large rabbit cage,” he tells me as we walk back to his home for an evening meal.


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Last month, for the first time in five years, Egypt opened the Rafah Gate crossing into Gaza. Shafi had hoped the opening would help soften the effects of the Israeli blockade, but he was disappointed because only people can cross, not commercial trade.

“Economically it doesn’t help that much,” he tells me. “But for sure it will help the Palestinians because it opens Gaza to the outside world.”

Israeli officials argue that opening the Egyptian border to normal trade would facilitate arms smuggling. So far, they have successfully pressured Egypt’s interim military government to prohibit normal commerce.

© 2011 Reese Erlich

Near Ahmad Shafi’s farm, militants sometimes fire rockets into Israel, and Shafi’s property has been hit with Israeli artillery shells.

To get around the Israeli blockade, entrepreneurial Gazans built tunnels into Egypt, smuggling in everything from wheat flour to disassembled cars. 

A taxi driver takes me to the city of Rafah in the far south of the Gaza Strip. We see a wall with an Egyptian flag waving atop a guard tower. There’s a few hundred feet of empty, sandy desert. Then, on the Gaza side, we see lots of metal scaffolding covered with plastic, what looks like tomato hothouses.

In reality, the plastic tarps shade tunnel entrances. I was surprised that the entrances were so easily identifiable. We see no hidden entrances from buildings or even camouflage to help prevent Israeli airstrikes.

The Israeli military argues that the tunnel operators smuggle arms in from Egypt, and therefore Israel periodically bombs the tunnels. They quickly reopen, however, because workers have already dug alternative routes.

Abu Omar, his preferred pseudonym, shows me the winch used to lower a rope into a 50-foot-deep tunnel entrance. He operates a tunnel that used to bring smuggled consumer goods from Egypt to Gaza every day.

“We’re down to operating about one or two shipments a month,” Abu Omar tells me. “Now people bring their own goods across through Rafah Gate.”

Other tunnel men, however, continue their thriving business importing gasoline and building supplies. Many goods remain scarce and expensive, but the blockade has eased somewhat over the past year.

On May 31, 2010, a flotilla of passenger boats from Turkey tried to bring supplies into Gaza. Nine people traveling in the flotilla were killed and many were injured in fighting when Israeli commandos boarded.

The resulting international outcry put pressure on Israel. Today, cement and construction materials are allowed to enter Gaza, but only for U.N.-approved projects. More food can be imported, and even a few new cars. Flowers and strawberries can be exported, but in very limited quantities.

Economy Minister Allaa El-Rafati tells me Palestinians have been unable to export most products or get raw materials for their factories.

“Even before the siege, Israel imposed many restrictions on our exports,” says El-Rafati. “We always had to work through specific Israeli exporting companies, which controlled everything, including prices. Before the siege, we had $250 million in exports of flowers and strawberries. Now, all of our exports total less than $2 million per year.”

Unemployment in Gaza is at 45 percent, according to a recent United Nations Relief and Works Agency report.

Back at his farm, Ahmad Shafi tells me he wants peace between Israelis and Palestinians. He strongly opposes those who launch rockets into Israel.

“It causes a lot of trouble for us as farmers,” he says. “It corrupts the relationship between Israel and us. Life stops. They have the right to live, and we have the right to live.”

Shafi says the Israelis and the Palestinians each will have to recognize the right of the other to exist in an independent nation. “We are neighbors. We are on the same land. You [the Israelis] have the right to live here and so do we.”

Shafi says ending the economic sanctions on Gaza would be a good first step toward peace. But Israel shows no signs of lifting the blockade, and it appears unlikely that normal trade with Egypt will be allowed anytime soon.

Egypt has scheduled parliamentary elections for September, and Gazans hope a new government there will fully open the Rafah Gate. For Palestinians, such hope springs eternal.

Veteran foreign correspondent Reese Erlich has covered the Middle East for 25 years. His reports from Egypt and Gaza are funded by the Pulitzer Center on Crisis Reporting. Follow his blogs and read his other stories at the Pulitzer center’s website.

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By Howard, June 28, 2011 at 12:40 pm Link to this comment

Fairy tales and false narratives do not change reality.

Just like the historical facts of ‘39, when Hitler attacked Poland, and like the facts of Pearl Harbor in ‘41 , spin and stories do not change their reality.

Likewise, as a result of the attacks thrust upon Israel in ‘48, ‘67, ‘73 by the arab countries resulted in loss of lands it was their declarations of war that caused the land to be lost.

Israel is looking for peace , not land. Waiting still for those countries who attacked and stiffed the palestinians to make peace with security for Israel.

Those countries yet stiff the pal’.  They do Not want an independant pal state.  Will give them nothing to cover up their despotic leadership.  Witness Syria at this very moment.

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By diamond, June 27, 2011 at 9:07 pm Link to this comment

“Would the U.S. have negotiated with the Nazi’s ?”

Negotiate with them? America supplies them with weapons and knows they have hundreds of nuclear bombs. Israel is nothing more nor less than a US military camp in the Middle East and if you can’t see the striking resemblance between Gaza as Israel has made it and the Warsaw Ghetto, you’re just not trying.

“Israel did NOT take these territories by force.”

Huh? What on earth are you talking about? Israel has done nothing BUT take territories by force since the first settlers arrived there and started carrying out ethnic cleansing. I don’t know why you bother spouting these incessant lies. People are not as ignorant as you seem to think they are.

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By Howard, June 27, 2011 at 1:54 pm Link to this comment

Israel did NOT take these territories by force. These were lands from which war was waged against it.
  Arabs in ‘48 rejected the partition plan of the UN, and went to war against it. A decision to go to war has consequences, just as it did in 1939 or 1941.

And Israel certainly wants peace.  But with whom? People who do NOT recognze Israel.  And wish to destroy it?

Would the U.S. have negotiated with the Nazi’s ?

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By Lafayette, June 27, 2011 at 1:38 pm Link to this comment


What is INHUMAN is Hamas’s stated goal,and announced in their charter, and school education and mosques to eradicate, destroy, and eliminate Israel.

As I said, it is time to STOP the finger-pointing of blame. Which has obtained for both side nothing but more deaths.

Israel is occupying West Bank territory which it took by force. If the reverse were the case, Uncle Sam would be all over the Palestinians.

It’s time for peace, because after 60 years the world is fed-up with the mutual intransigence.

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By Igor Slamoff, June 27, 2011 at 12:44 pm Link to this comment
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Reply to Howard:

Israel’s incessant playing of the victim’s role in its successive military conflicts with its nighbours is belied almost without exception by history and by Menachem Begin. I admit that citing the Protocols of the Elders of Zion in Hamas’ 1988 manifesto is in poor taste and reveals massive indifference to the truth, a Mohammedan trait, what’s more. On the other hand perhaps such inclusion was proposed to Hamas’ leaders by Hamas’ founder, the Shin Bet (see Stephen Zunes’ exposé of how Israel founded Hamas.) Hamas is a Zionist robot that runs a Zionist program with Saudi financing. I hope the Israelis now realise how stupid they were.

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By Howard, June 27, 2011 at 6:38 am Link to this comment

What is INHUMAN is Hamas’s stated goal,and announced in their charter, and school education and mosques to eradicate, destroy, and eliminate Israel.

Pal’s were not made homeless by the Israelis.  They were made homeless by their brethen countries, 4 of them,whose military attacked Israel.  Over and over. Starting in ‘48.

Those countries have yet to make peace with Israel. (except Egypt—which is a very cold peace at that)

When Israel left Gaza they left in place a functioning multi million dollar greenhouse business for them. Hamas destroyed it in within 48 hours.

Israelis were not ‘dumped ’ into the land.  They have had a presence there for quite a few thousand years.  Read that as ‘a few thousand years.

Even despite that most Israel’s agree the pal’s should have a homeland.  Their first.  But they seem not to want one if it has to be next to an existing Israel.

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By Lafayette, June 27, 2011 at 12:57 am Link to this comment


What Israel is doing to the Palestinians is cruel and inhuman.

A settlement must be found at the negotiating table. It would help if the US puts the $3.2B of yearly military and economic aid on the bargaining table.

Furthermore, the Palestinian State’s acceptance into the UN would then help make any incursion of Israel upon Palestinian territory an offense under the UN charter. (Presuming the two sides can find a mutually recognized partition of territory.)

Which didn’t help much when Uncle Sam invaded Iraq, a UN charter signatory ...

I recall, in the early 1990s, an unofficial meeting of non-government people from both sides met in Geneva. They came up with a partition of the West Bank territory that would define the boundaries of the two states. Of course, for political reasons, it was never implemented - because it meant that Israel would have had to give up a large portion of its illegal West Bank settlements.

Which is just fine - for the Palestinians made homeless by Israel.


Surely, both sides are at fault in this hostility which is now more than half a century old. But it is time to put the “blame” they throw at one another behind them in order to find a way to live together in peace. Besides, cheap labor on its doorstep is a good incentive for Israeli industry - particularly its textile exports, which is a highly competitive business. (It’s better that we put nimble Palestinian fingers to work rather than Chinese.)

There’s a win-win solution there somewhere. These two peoples lived in relative harmony for centuries under Ottoman rule. It all came apart when the allies (the Brits) dumped European Jews, who had survived the Holocaust, into Palestine.

Of course, the Jews deserved a “homeland”. But so do the Palestinians - both defined by a signed non-aggression treaty.

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