An Overcrowded Gaza Strip Finds Room to Dream of New Beginning : Palestinians: Leaders in the squalid occupied territory hope that the world will help them rebuild.

Lawyer Tawfeq abu Ghazaleh unrolls a Dutch artist’s rendering of an ultramodern port complex, replete with shiny high-rises, green lawns and international airport.

“This,” he says, “is Gaza in 25 years.”

If, that is, governments and investors come up with a few hundred million dollars because they agree that Gaza needs a port.

And that is an iffy proposition indeed, because when donors such as those who gathered in Washington on Friday at an international conference on Palestinian aid look at the squalor of the Gaza of 1993, they see a miserable strip of overcrowded, under-watered land that needs just about everything.

Crowding is so bad that U.N. officials believe Gaza may be the most densely populated spot on Earth, rivaled only by Hong Kong. Roads are so lousy that some central Gaza streets are nothing but strips of sand. Water is so short that faucets in many homes go dry for days; in any case, it is mostly too polluted to drink. Loose trash clogs fields and lines streets. Unemployment tops 35%; some say it reaches 60%. There is nothing for all these people to do.

“If you saw our streets, our garbage--if it were up to me, I would completely destroy the whole place and start something new,” said Abdul Latif abu Middain, a Gazan economist and consultant to the United Nations. “We are completely broken. We have to start not fromzero but from very much below it.”

Despite the gloom that Gazan reality should engender, however, this is a time of great anticipation and grand planning in this suburb-sized beehive of more than 740,000 people--85% of them Palestinian refugees.

Whether or not international donors and lenders ultimately cough up the whole $2.5 billion to $3 billion that the World Bank says is needed in the Israeli-occupied territories, Gaza stands to gain.

Because it is the focus, along with Jericho, of the first stage of the self-rule plan agreed upon by Israel and the Palestine Liberation Organization, it expects to serve as the main testing ground for the new order.

“Most of the aid is going to go to Gaza,” predicted Salah A. Shafi, director of the Gaza office of the Economic Development Group, a Palestinian credit association. “And I think not only the Israelis but the Palestinians are very interested in this, because the success of the future negotiations depends on success in Gaza.”

As the Israeli government sees it, aid money can ease the poverty and crowding that fuel the terrorism and Islamic fundamentalism that threaten Israeli security.

As Gazans see it, the aid is simply a chance to climb out of the Third World.

“Infrastructure” is the refrain of economists here. If Gaza can get better roads, phones, sewerage, water supply and electricity, it can hope to attract the investment it needs to develop and provide jobs.

But Gaza cannot yet absorb giant sums of money.

The U.N. Relief and Works Agency, which oversees the seven refugee camps in which most Gazans live, has developed a short-term plan to use about $45 million to fix up schools and clinics.

But it is early for big projects. With the infrastructure so weak, it can take more than 12 months to just break ground for a new school, UNRWA research officer Mark Taylor said.

“Just drive from (the Israeli town of) Ashkelon to Gaza, and the difference is like going from Los Angeles to Guatemala,” he said. “In fact, Guatemala is probably a lot better off than Gaza.”

Given Gaza’s current condition, the optimism among its residents now that a modicum of self-rule is just around the corner is striking.

Ahwad Mabhoh, owner of a tiny textbook store in the Jabaliya refugee camp that crams about 70,000 people into less than a square mile, is convinced that trade is going to pick up--maybe not right away, but within the next two years.

“If people have work and have more money and spend it, I’ll improve my business,” he said. “And instead of customers buying one book, they’ll buy two books.”

Abu Ghazaleh and a Gazan financial group he has put together have far more ambitious designs. They are pushing an initiative for creating the Gaza port, and are also seeking permission to found a local development bank, local insurance companies and more.

“I dream of the future of Gaza as the second Hong Kong of the world,” said Mohammed Haddad, the owner of a small fan factory and one of Abu Ghazaleh’s associates.

Shafi of the Economic Development Group sets his sights a bit lower, viewing Cyprus--a seaside economy with no real natural resources that built tourism into the country’s mainstay--as the right model for Gaza.

As important as the forthcoming aid is, Shafi said, even more important for Gaza is that the self-rule arrangement allow it to free itself from Israel’s tight hold on its economy.

Under the occupation, Israel has often blocked and limited Gaza’s exports and maintained such strict control in many sectors that, for example, a Gazan citrus grower has had to get Israeli permission to plant a tree.

Travel restrictions on Gazans and the passage of their goods, imposed mainly for security reasons, hurt Gazan business. And the general unpredictability of life under occupation added to everyday business risks.

Taylor of UNRWA said the success of international efforts in Gaza depends “not just on how much and where they put their money but also on which issues they’re willing to push the Israelis on to allow the Palestinians more economic freedom.”

Gaza must control its own foreign trade, he said, and manage its own agriculture. It is not yet clear whether Israel will relinquish much of its control in the first stages of self-rule.

“I want all the world to take his hand off my head, just leave me to work free,” Abu Ghazaleh said. “We have the minds, we have the people, we can do anything we dream.”