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Investors hesitate to put money into Gaza Strip

Posted by vmsalama on February 2, 2006

Vivian Salama
Middle East Times

February 2, 2006

 RAMALLAH, West Bank —  In the shanty villages of the West Bank and Gaza, since     palestine-green-flag-gaza.jpg

 well before talk of elections or Hamas were making headlines, Palestinians have been faced with a crisis more threatening than war or fundamentalism. “I worry every day about how I am going to feed my four children,” says Ragad Al Shawey, a taxi driver in Ramallah. “It is so difficult to find a job – I am lucky, but some people here stay months and years without working. This is why Hamas won, I think, because they will give people some new opportunities.”

While community services provided by a number of domestic groups, Hamas included, are welcomed by the poorest of Palestinians, they do not meet the demand for daily basic needs, especially in Gaza.

The Gaza Strip is one of the most densely populated areas in the world with an estimated 25,400 persons per kilometer, according to the Israeli ministry of planning, and so the pressure is on to rebuild both the infrastructure and the lives of its residents.

“Gaza has its own unique environment, circumstances and players,” explains Khaled Dozdar, head of the Israel-Palestine Center for Research and Information in Jerusalem. “Violence will be concentrated in Gaza, because there, everyone is armed now. That said, entrance into Gaza, politically or economically, is equally a challenge.”

Experts agree that foreign direct investment in the Gaza Strip is crucial for ensuring the revitalization of the territory. According to Palestine’s former minister of economy, Mazen Sonnoqrot, $1.5 billion to $2 billion is needed annually for the first three years following Israel’s withdrawal from Gaza last August.

Sonnoqrot added that the Palestinian Authority (PA) was willing to give complete ownership rights to foreign firms looking to invest, emphasizing its commitment to eliminate any red tape that might interfere in the process.

“Certainly, there are advantages of investing in Gaza,” explains Ashraf Gamal, a senior advisor to Egypt’s minister of investment. “Being the first into a virgin market, improving relations between the two peoples.”

While eager to assist in the economic rebuilding of Gaza, Egyptian officials are trepid to encourage their nationals to put money in the war-torn territory, given the skyrocketing costs.

In Washington last November, just ahead of the annual World Bank and International Monetary Fund conference, Egyptian minister of finance Youssef Boutros-Ghali said that Egypt faced a continuous challenge convincing investors to set their sights on Gaza.

“The costs are higher than in India,” Ghali said. “Anyone who wants to invest there faces this problem. We have difficulties to convince investors because the costs of business are too high and the market is too small.”

“I do not think that Egyptians will start to invest in Gaza seriously now,” says Gamal. “First, the Egyptian market now is very lucrative and promising. The lack of stability, both political and militarily in Gaza is another reason. Capital usually flies away from such high risks. So, despite the high emotions by many Egyptians, this will not be enough to invest a lot of money, maybe small investments either for trial purposes or for emotional reasons.”

Further, economists stress that progress – or lack thereof – in redeveloping some of the major passages for goods, services and people in Gaza is not encouraging to investors who will desire a safe and efficient portal in and out of the territory.

Prior to the withdrawal, this had been a major point of contention for Palestinian authorities who constantly condemned what they considered suppressive security from the Israelis preventing both laborers and goods from flowing freely between Egypt and Gaza, particularly following the closure of Ashdod Harbor and Yasser Arafat International Airport.

Now, Israel says that it is willing to invest millions of dollars to reinforce border stability and promote easy accessibility for developing industries on both sides.

However, with last week’s resignation of Palestinian prime minister Ahmed Qurei and his administration, the lives of Gazans struggling to make ends-meet and rebuild their tiny territory will ultimately be put on hold for the time being.

“We are trying to find a solution for everyone, but most important are the Palestinians,” says an Egyptian delegate in Ramallah who requested anonymity. “As much as Egyptians can benefit from investing in Gaza, I don’t think we can even discuss this seriously until there is a safe passage in and out of Gaza, a free passage to the West Bank and the marina and airport is fully functional.”

“People in Gaza have to have something that they want to keep – that they will be afraid to lose,” adds Mohammed Assem Ibrahim, Egypt’s ambassador to Israel. “But they don’t want it to be destroyed again. In this regard, I will venture to say Israel has interests to do the same, not necessarily to invest directly, but to facilitate and encourage the international community to come and to take part.”


One Response to “Investors hesitate to put money into Gaza Strip”

  1. […] did a story several years ago on the lack of foreign investment in Gaza.  Click here to read […]

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