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Gaza businesses in tatters, struggle to rebuild

Even before the recent Israeli offensive, Gaza's economy had been limping along. Now, it is virtually comatose.
Yaser Alwadeya points Wednesday to the tracks left by a bulldozer or tank that he says drove onto his food factory's roof, causing it to collapse, in Beit Hanoun, Gaza Strip. Alfred De Montesquiou / AP
/ Source: The Associated Press

Not long ago, Yaser Alwadeya's factory was the largest food maker in the Gaza Strip, producing cookies, ice cream and other treats for residents of the blockaded territory. Today, the sprawling 47-acre complex lies in ruins.

The heavy damage is testament to the scale of destruction caused by Israel's three-week military offensive, and illustrates the challenges Gaza faces as it tries to rebuild.

"Beyond the human losses, the economy is the other great victim of this war," said Amr Hamad, Gaza's executive manager for the Palestinian Federation of Industries.

Israel launched the offensive in response to years of rocket attacks by Islamic militants in Gaza. The fighting left 1,284 Palestinians dead, according to the Palestinian Center for Human Rights, along with 13 Israelis. Hamad says some 215 factories and workshops were destroyed or seriously damaged, in addition to an estimated 20,000 homes left uninhabitable, according to a West Bank-based economic think tank.

Even before the fighting, Gaza's economy had been limping along, subject to more than a year of punishing Israeli sanctions that severely limited the flow of industrial goods into the area. Now, it is virtually comatose.

"What hadn't been destroyed by the siege (Israeli sanctions) was finished off by bombs and tanks," Hamad said, adding that 60 percent of Gaza's cement plants are now inoperable and a third of all metal workshops were destroyed. Airstrikes also targeted the territory's largest flour mill, wiping out 10,000 tons of wheat, as well as its Pepsi-Cola bottling plant and the locally made rival, Mecca Cola.

'Systematic' destruction
During a visit this week to the industrial zone in the northern Gaza town of Beit Hanoun where the Alwadeya factory is located, U.N. humanitarian chief John Holmes said the extent of the wreckage was "shocking," especially the "very systematic" destruction of industry.

Holmes and other U.N. officials, along with most international aid groups, have called on Israel to reopen Gaza's crossings not only to increase the flow of humanitarian supplies but also to allow in desperately needed construction and other raw materials. The crossings have been largely closed since Hamas seized power in Gaza in June 2007.

Israeli Cabinet Minister Isaac Herzog says the crossings are already sufficiently open.

"Humanitarian aid is entering Gaza at a rate of 150 trucks a day, which is the maximum amount of aid that the Palestinians can absorb at this time," Herzog, who oversees what is allowed into the territory, told The Associated Press.

However, that's only about a third of the daily traffic into Gaza before the embargo, according to Hamad. Now, he said, Gaza urgently needs building materials of all kinds, including 3.2 million square feet of glass to fix broken windows, along with 2,000 tons of aluminum and "thousands of tons" of cement.

Struggling to stay in business
Before the offensive, Alwadeya's factory was by far the largest food producer in Gaza.

The family firm, started as an ice-cream shack by Alwadeya's grandfather in 1962, grew to $10 million in annual sales before Gaza's embargo, employing 350 workers to produce cookies, potato chips and dairy products. More than half the sales came from exports to Israel.

Alwadeya struggled to stay in business after the blockade, cutting his staff to 190 and buying supplies smuggled through tunnels under the Egyptian border. He was at home in Gaza City during the Israeli offensive and returned when it ended to find a scene of devastation.

"What strikes me is how deliberate this was," Alwadeya said Wednesday, pointing at the earth dug up next to one of his assembly plants by an Israeli army bulldozer, apparently to create a ramp so it could then roll onto the factory. Bulldozer or tank tracks were still visible on the collapsed roof.

He estimated the damage at $22 million. He doesn't expect to recover any of that since his insurance company says it doesn't cover acts of war. Among the losses: 300 tons of powdered milk imported from Israel to make ice cream.

"It's soon the beginning of the season, and there'll be no more ice-cream in Gaza," Alwadeya said as a strong smell of rotting barbecue-flavored chips filled the air.

Israel denies targeting businesses
Israeli military spokeswoman Maj. Avital Leibovich said the army never intentionally targeted Palestinian businesses, but that militants often used civilian infrastructure as cover to carry out attacks.

"Sometimes the owners of factories and houses were not aware they had weapons stashed in their basements or tunnels under their houses," she said. "We only targeted places used by Hamas to attack Israeli civilians."

At Gaza's largest private fish farm, owner Sohail Kehel was in tears Wednesday as he sifted through some of the 20,000 dead fish now rotting in the six destroyed artificial ponds where he once raised red snapper.

There was no trace of explosives or any ammunition casings in the open stretch of farmland where his enterprise was based along the coast in central Gaza. Large expanses of bulldozer tracks and shoveled earth left by Israeli military vehicles were all that remained.

Like Alwadeya, Kehel was holed up at home when the destruction occurred. However, both men insist gunbattles were highly unlikely because their businesses lie on open ground where militants would find no cover for fighting and in areas that were occupied early on by Israeli ground forces.

Both also note the fact that the destruction of their infrastructure was a lengthy process involving bulldozers.

Struggling to make ends meet
Even before the latest destruction, the United Nations said some 80 percent of Gaza's 1.4 million people lived below the poverty level and some 800,000 were receiving U.N. food aid. Only 23 of Gaza's 3,500 industrial firms were still functioning and of the 35,000 industrial workers employed before the embargo, 33,000 had already been laid off before the offensive, according to Hamad.

The remainder are now also out of work, because none of the factories still standing have raw material to work with, he said.

Faiga al-Masri is among those struggling to make ends meet. The mother of 10 runs a tiny shop from her house thanks to a $2,000 micro-credit loan from the U.N., earning about $150 a month for the family to live on. She says many products can't be brought in anymore, and those available often double in price depending on whether the smuggling tunnels are open with Egypt.

Neighbors in her derelict alley inside the Jebaliya refugee camp now ask her to open up packets of food so they can buy reduced portions for only 25 cents, al-Masri said.

"I don't even have enough money to buy new products," she said, surveying the single cupboard shelf that holds all of her stock — a dozen bottles of sunflower oil, a few bags of rice and flour, a handful of jam jars, and small amounts of powdered milk and soap.

Of the 6,000 businesses started up by similar loans since 2006, only 2,500 are still running, said Nasser Jaber, the U.N.'s microfinance manager in Gaza.

Both Alwadeya and Kehel vowed to rebuild their businesses, despite the difficulty of finding financing or even securing building materials.

"The only sure thing is that I'll rebuild my ponds," said Kehel. "I just don't know how."