Though 192 Palestinians have died in Gaza as a result of week-long armed conflict between Hamas and Israel, Tel Aviv is a bigger loser on the economic front.
While rockets fired from Gaza have injured ten Israelis with no deaths recorded, the Israeli cabinet has agreed to the Egyptian proposal for a ceasefire while Hamas has rejected it.
Counting economic costs of the conflict is not easy, but it seems that Hamas has a plan: “Hamas calculates that by expanding the range of its rockets, it can impose significant economic damage on Israel by forcing its civilians into shelters, ports to shut down for fear of ships being hit by wayward rockets, and airports to close, while at the same time disrupting the mid-year tourism season,” says Firas Abi Ali, Head of Middle East Analysis at IHS Country Risk. “This, in Hamas’s view, compensates for Israel’s disproportionate ability to inflict damage on infrastructure and private properties, as well as its ability to impose a very high number of casualties, both military and civilian.”
He goes on to add that “Hamas is extremely unlikely to have taken the escalatory steps of launching a raid on Ashkelon and firing rockets at central Israel without assurances from its allies”.
For Palestinian territories, the economic situation is bleak to say the least. The economic growth in the West Bank and Gaza (WBG) has been on a steep downward trajectory over the past few years, says International Monetary Fund. “Growth was strong during 2007–11, buoyed by large inflows of donor assistance and some easing of Israeli restrictions on movement and access.”
“Growth started to decelerate sharply in 2012, reflecting lower donor assistance and the lack of further easing of restrictions. Amid increasing fiscal difficulties at the start of 2013, rising political uncertainty, and a sharp deterioration of economic conditions in Gaza, growth declined further in 2013 to around two per cent, the lowest in six years, accompanied by steadily rising unemployment,” it says.
According to the Palestinian Finance Ministry, about $182 million in aid has arrived from abroad since the beginning of 2014, a 65 per cent decrease from the first quarter of 2013. And since the latest conflict began, Saudi Arabia says it’s sending $53.3m to treat victims of Israeli air strikes in Gaza. The UAE has pledged $25m and Qatar has announced $20m.
On the political front, this conflict is a double-edged sword. Ofer Zalzberg, senior analyst for Israel/Palestine at International Crisis Group, says: “Prime Minister Netanyahu is caught between Realpolitik and electoral considerations. Realpolitik dictates a controlled escalation followed by a renewed ceasefire, but competitors to his right, who advocate a more extensive campaign and more ambitious objectives in Gaza, will use any concession he makes to Hamas against him.
The answer does not lie in eradication of Hamas as the organization continues to enjoy support not only in Gaza but also in the West Bank. A new Palestinian government dominated by independents and technocrats – endorsed by Fatah and Hamas – was sworn in on June 2, 2014.
“The policy of trying to topple or weaken Hamas was misguided when designed and remains so,” says Robert Blecher, Middle East and North Africa Acting Program Director at International Crisis Group. “The sooner it is reversed, the sooner Gazans can resume something like a normal life, Israelis can come out of bomb shelters and Palestinians can repair their internal affairs and prepare to enter a reformed peace process.”
In its latest briefing, “Gaza and Israel: New Obstacles, New Solutions”, the International Crisis Group examines scenarios that could result from the fighting and outlines the conditions necessary to ensure a more stable cessation of violence.
The report’s major findings and recommendations are:
1) Anchoring a ceasefire in a political framework is the only way to prevent it from unraveling as fast as previous ones. No lasting arrangement can be reached without Egypt. Despite Hamas’s poor relations with Egypt, the sooner Cairo accelerates its role, the sooner the conflict can end.
2) Israel should give the reconciliation agreement signed in April by Hamas and the Palestine Liberation Organization (PLO) a chance to work. If implemented, it offers the best chance of alleviating Gaza’s misery and therefore reducing Hamas’s incentives to fight. The US, along with the European Union and regional allies, should encourage the Palestinian Authority (PA) to return to the Gaza Strip and assume the responsibilities of governance.
3) Hamas should ensure, in tacit cooperation with the new government, acceptance and maintenance of the ceasefire by all Palestinian factions in the Gaza Strip.
The PA should help arrange for payment of the roughly 43,000 Gaza government employees hired under Hamas who are not receiving their salaries. PA security forces should be deployed at border crossings to facilitate the movement of goods to Gaza and of people to Israel and Egypt.
4) The US should continue to support the reconciliation government, and Israel should cooperate with it to resolve Gaza’s most pressing problems, including energy, water and sanitation.