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Cablegate: Gaza Private Sector Struggles; Humanitarian Needs

VZCZCXRO9846
OO RUEHROV
DE RUEHJM #1687/01 2261518
ZNR UUUUU ZZH
O 141518Z AUG 07
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8683
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS SECTION 01 OF 02 JERUSALEM 001687

SIPDIS

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
GOLDBERGER/SHAMPAINE/BELRADE; PRM FOR PRM/ANE; NSC FOR
ABRAMS/SINGH/WATERS; TREASURY FOR
SZUBIN/LOEFFLER/NUGENT/HIRSON; BRUSSELS FOR LERNER; PLEASE
PASS TO USAID ANE

E.O. 12958: N/A
TAGS: ETRD ECON EAID KWBG KPAL PHUM IS
SUBJECT: GAZA PRIVATE SECTOR STRUGGLES; HUMANITARIAN NEEDS
ARE MET

REF: JERUSALEM 1455

1. (SBU) Summary: While food and other basic essentials
continue to flow into Gaza, the Gaza private sector is being
significantly impacted by the continued closure of the
Karni/al-Mintar commercial crossing. Contacts report that 85
percent of industrial establishments have shut-down
operations, at an estimated cost to the private sector of USD
35 million. Gaza's farmers have been forced to sell their
produce locally, resulting in over supply in the market, low
prices, and little profit. Local farmers have decided to
cultivate only one-sixth of last year's farm land for next
year's harvest. End summary.

Through-Put At Crossings
Limited Mostly To Food
----------------------

2. (SBU) The Karni/al-Mintar commercial crossing has remained
closed since June 12 to all shipments except grains and
animal feed, which have averaged 60 truckloads per week.
According to the August 14 report provided by the Palestine
Trade Center (Paltrade), daily through-put in July at Sufa
and Kerem Shalom crossings was 98 and 21 truckloads,
respectively. Roughly 20 percent of all shipments into Gaza
are humanitarian food stuffs delivered by UNRWA and the World
Food Program (WFP), with the remaining 80 percent being
commercial shipments of food and daily essential non-food
items, such as soap and diapers. According to the WFP, Gazan
mills are maintaining approximately an eleven-day stock of
wheat flour. The same report notes that wheat prices were
running approximately eleven percent higher than pre-June 12
prices.

3. (SBU) The Rafah crossing point has been closed since June
12. Erez crossing has been used for medical evacuation cases
and limited pedestrian traffic. Nahal Oz fuel transfer
station has been open and has continued to supply fuel to
Gaza.

4. (SBU) UK colleagues, who have resumed routine trips into
Gaza through Erez, report that food, fuel and medicine are
entering Gaza in sufficient, albeit, lower quantities, and
there are no serious shortages at present.

Economy Winding Down
--------------------

5. (SBU) As a result of Karni/al-Mintar's closure, 85 percent
of industry establishments have shut down, while the
remaining companies have been operating at 50 percent
capacity, according to the Palestinian Shippers' Council
August 2007 trade report. The report estimated that, as of
August 6, losses as a result of the closure have been USD 4
million in the furniture sector; USD 12 million in the
textile sector; and USD 3 million in the processed food
sector. The report states that 95 percent of construction
projects in Gaza have been halted since June 12, as
aggregates, concrete, and steel have not been imported (see
ref). Roughly 70,000 industrial workers have been laid-off
in Gaza since June 12, according to the report.

6. (U) Total losses for the Gaza private sector are now
estimated at USD 35 million, according to the Shipper's
Council report. The Association of Palestinian Businessmen
predicted this week that 120,000 Gazans could eventually lose
their jobs, if the closure continues.

7. (SBU) Gazan businessmen report that there are now more
than 1000 containers of goods destined for Gaza that are
stuck at Israeli ports and paying demurrage. Gazan importers
complain that West Bank businesses are taking advantage of
the situation by buying the goods at discounted prices from
Gazans unwilling or unable to pay continued demurrage.

No Export Market For Gaza
Fruits, Vegetables, And Fish
----------------------------

8. (SBU) Palestinian Agribusiness Partnership Activity
(PAPA) Gaza-based project manager Salem al-Raiz (protect)
said that Gaza fruits and vegetables are selling at 40-60

JERUSALEM 00001687 002 OF 002


percent of pre-June 12 prices because products grown for
international export have had to be sold inside Gaza.
Al-Raiz stated that tomato prices in Gaza markets are 70
percent lower than pre-June 12 prices. According to the
Shippers' Council report, Gaza's 5,000 farmers, whose
businesses depend on imported fertilizers, pesticides,
sterilization gas, seeds, seedlings, and packaging materials,
have lost profit incentive and do not plan to cultivate their
plots of land for next year's harvest. Al-Raiz said that
last year Gaza farmers cultivated 3000 dunums; this year,
however, only 500 dunums of land have been planted.

9. (SBU) The export freeze has resulted in an over-supply of
fresh fish in Gaza markets and, subsequently, lowered prices
and profits. According to WFP's Campbell, the fishing sector
experienced estimated daily losses of USD 32,000 from June
12-August 6 due to the closure of Karni/al-Mintar crossing.
PAPA's al-Raiz said that fish prices are 30 percent less than
previous years.

This Isn't The Sudan
---------------------

10. (SBU) OCHA Gaza representative Hamada al-Bayari told
econoff August 13 that Gazans are receiving sufficient
amounts of basic food items, but that economic activity will
continue to stagnate with the closure of Karni/al-Mintar.
However, he cautioned against comparing Gaza to the "poorest
parts of Africa" and noted that Gazans compare their standard
of living first and foremost to their brethren in the West
Bank.
WALLES

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