Arafat Focuses on Kick-Starting Gazan Economy

At the Palestinian Office for Customs and Taxation, the old Hebrew sign has been tossed ingloriously aside on the front porch and replaced with a new hand-lettered Arabic banner in patriotic red, green and black.

But not much else is going on. The clerk windows stand empty. All but two of the employees had gone home by 1:30 Sunday afternoon, and why not? With international imports from Egypt at a trickle, there aren’t many customs duties to collect, and with most production blocked by delays in getting raw materials from Israel, the value-added tax is more of a wishful theory than a revenue source.

And there still are no functioning computers in the office.

“The Israelis took everything: computers, disks, cars, everything,” complained Salim Abdullah, a tax inspector who has reclaimed the job he resigned during the Palestinian uprising against the Israeli occupation. “And when we asked them to return the computers, the ones they returned were broken down.”

Palestine Liberation Organization Chairman Yasser Arafat has made kick-starting the Palestinian economy a major theme of his return trip to the Gaza Strip, ordering government economic departments up and working on an urgent basis, issuing clear authorization to commence the collection of taxes and urging Palestinians to rely on themselves at a time when international donations for the new Palestinian self-rule authority are flagging.

Arafat spent more of Saturday night meeting with foreign diplomats and his Cabinet trying to get the economy rolling than he did greeting the hordes of Palestinian dignitaries who filed in to welcome him; on Sunday, one of his most prominent appearances was opening a new, Italian-funded juice factory in Gaza City.

“There are a lot of very specific questions--the failure of the donors to give us the money they promised, the World Bank’s hesitancy to carry out the instructions of the international community, our own need to be self-reliant--and we have to find answers quickly to all of them,” said Freij abu Midan, justice minister in the new Palestinian Authority.

He said Arafat has been trying to shift the focus from political and security issues to economic development.

“Our people need work; their stomachs are growling, and growling stomachs are an ugly sound,” Abu Midan said. “What Arafat is telling us, and what we ourselves know, is that we have to succeed in Gaza--or there is no hope for the peace process.”

Nasser Sarraj, secretary general of the Gaza Union of Industrialists, has spent most of the past two days in meetings with Arafat and his Cabinet, pointing out problems and urging the new Palestinian Authority to start making the decisions needed to get things rolling.

“I’ve got 700 members now in the Union of Industrialists, and many of them haven’t even been told what’s in the economic agreement (with Israel). I don’t need to talk about politics. I need financing, I need marketing, I need material and technology,” Sarraj said.

Factory owners are complaining about the difficulty of importing raw materials, the lack of any banking system to transfer cash and the fact that the Palestinian Authority’s new economy minister--Ahmed Suleiman Khoury, also known as Abu Alaa--hasn’t even arrived yet.

“The problem is with the PLO. It isn’t with us,” Sarraj said. “Until now, even though Arafat’s back, we don’t know what’s happening. Since Oslo (where the initial peace agreement was negotiated with Israel last year), we should have been preparing for this, but they didn’t work, not on the police, not on the economy, not on anything. And so now there’s nothing.”

Nabil Shaath, the new planning and foreign relations minister, admits that economic development has been moving slowly. “I think we were a little late in moving our ministers here. Abu Alaa should have been here from the first day.”

He said Palestinian business people and the new ministers are urging development of a new investment law, a clear tax law and a better definition of how the Palestinian autonomous zones will relate economically to Israel and neighboring Egypt and Jordan.

“Arafat in the last week before he came gave a push for our institutions, with his full authorization to get them running, and now that he is here, I think there will be more of an incentive to do so,” Shaath said. “We can’t wait until we have a new investment law in place. I’ve been telling everybody to use whatever system has been developed by Israel and change it as you go along, as you find better ways of doing things.”

Some business people complain that doing business with Israel was actually easier than with the new Palestinian Authority. Getting a permit to import raw goods for manufacture from Israel under occupation required only about a day, for example. Now, going through the joint Palestinian-Israeli civil committee takes a week to 10 days, and often the application comes back marked “refused,” meaning another week’s delay.

“The Israelis are doing psychological pressure and diminishing our ability to actually function” by delaying approvals, Sarraj said. “Then later they can say, ‘See, they can’t do it on their own.’ And people think twice about going to the Israeli authorities to facilitate things. . . . So it’s a psychological war.”

Israel is also making the situation worse, PLO leaders say, by failing to live up to its commitment to allow 70,000 Palestinian workers to hold jobs in Israel. So far only about 50,000 Palestinians are commuting into Israel from Gaza and the West Bank, and Israel has also delayed hand-over of pension funds due the new Palestinian entity, Shaath said.

And overwhelmingly, the Palestinians complain that it is the international community’s failure to quickly make good on pledges of $2 billion in aid that has been the real stumbling block in getting Gaza going economically.

Arafat has hammered on the theme repeatedly in the past days.

“It is my right to ask the international community to give us what they have promised. We intend to adhere to all the agreements we made with Israel. The question is whether the donors will honor the agreements they made with us,” Arafat told a delegation from Israel’s Arab Democracy Party over the weekend.

“What right do they have to impoverish our workers and government employees?” he fumed. “Why are they blocking us from paying the salaries to our civil servants? Who is trying to strike down the peace agreement? Some of the donor countries--actually, the World Bank--are slapping us around.”