GAZA CITY, 14 April 2006 — In Gaza’s business hub, shopkeepers extend credit but trade is dying, and middle-class Palestinians are unable to afford luxuries with the Hamas government in financial crisis and foreign aid slashed. In the once bustling Sheikh Radwan in Gaza City, customers no longer cross the threshold of the haberdashery run by Saber Abdelatif and his wife, despite the heaving racks of fashionable clothes imported from Europe or Turkey. In the past, shoppers used to fall over themselves each spring fighting for the latest in chic attire for the wedding season.
Today, the area has been deserted by civil servants, the only people in Gaza who had a regular salary in a territory ransacked by unemployment, and where private firms have been suffocated by closure and isolation from the world.
The coffers of the Palestinian Authority are empty. The government can no longer pay the salaries of its some 140,000 civil servants, whose payroll accounts for a total pay check of $118 million. “The salaries of people who worked in Israel used to keep us afloat. But since Israel closed the borders we have been depending largely on the salaries of civil servants,” said Saber Abdelatif.
Cutting him short, his wife, Um Hanin, cites the problems of increased credit that threatens to shake the foundations of the economy still further. “We are asked more and more for credit. It’s hard for business. We are losing money,” she said. Despite efforts to secure replacement funding from Arab countries, the Hamas government is still far short of making up for the loss of direct EU and US aid and customs duties that Israel once collected for the Palestinian Authority. The lack of government salaries in the West Bank and Gaza Strip is estimated to affect around a quarter of the overall population of 3.8 million. All sectors of the economy, on the point of death for the past five years of Middle East violence, are hit.
Ayman Al-Nirb, the owner of a car showroom is equally bleak, charging that banks are no longer extending credit. “Our business was poor anyway these last weeks, but today it’s on the point of death. The economic and financial situation is very difficult, especially for civil servants,” he said, elegantly dressed in a grey three-piece suit. “The economy is destroyed. Each day is worse than the last and we are heading toward a serious disaster if no steps are taken,” he said.
Speaking on condition of anonymity, one banker concurred that there could be a day when banks, swamped by demand and fears of non-repayment, simply stop offering credit. “Demand for credit is on the increase and we expect still more demands in the days to come. But the banks are imposing more and more conditions in order to safeguard repayments. “I cannot rule out the idea that we will stop offering credit,” he said. Household goods are another casualty.
“Business depends on government salaries and sales have collapsed,” said washing machine seller, Ashraf Al-Akawi. “People don’t even come anymore to get their machines repaired because they just can’t pay,” he said, surrounded by dozens of unwanted, brand-new washing machines.