Gaza builders lead economic recovery – with some help from the black market
Booming construction industry beats Israeli blockade as materials are
smuggled in through tunnels
Harriet Sherwood Gaza City
The Observer (UK), Sunday 22 January 2012
http://www.guardian.co.uk/world/2012/jan/22/gaza-construction-boom-black-market?INTCMP=SRCH

For three years, Wael Arabeed did not do a day's work. He delved deep into
his life savings, accrued over 25 years of working on construction projects
in Saudi Arabia, Syria and Egypt, to feed his family. He sold his car. He
began to believe his working life was over.

But now the construction engineer has more work than he can handle. Tossing
yet another tender request on to his desk, he says: "I have so many offers,
I can't even look at them. I'm too busy."

Arabeed is the beneficiary of an extraordinary economic spurt in Gaza – not
just in construction, but also agriculture, the hotel and restaurant
industry, transport and manufacturing. All sectors have seen growth over the
past year, with private sector employment increasing by more than 50%,
albeit from a very low base, according to the United Nations refugee agency,
Unrwa.

But it is in the construction industry that the mini-boom is most visible.
After being starved of materials during Israel's three-year blockade of the
Gaza Strip, the territory is cluttered with the skeletons of new buildings.
Apartment blocks, hospitals, schools, hotels and mosques are sprouting all
over Gaza. The rutted beachfront road in Gaza City is being transformed into
a corniche.

Despite easing the blockade in 2010, Israel has maintained a ban on the
import of construction materials on the grounds that they could be used to
make rockets or build weapons stores or bunkers. It only allows in materials
for designated UN projects, such as schools.

But illegally imported aggregate, concrete and steel is pouring through the
tunnels between Rafah, in the far south of Gaza, and Egypt. During the
blockade, the tunnels kept Gaza supplied with everything from chocolate to
cigarettes, fridge freezers to cars, medicines to live animals. Now the
black market entrepreneurs are concentrating on demand for construction
materials.

In September, 9,100 tons of aggregate was legally imported into Gaza through
the Israeli-controlled Kerem Shalom crossing, according to Unrwa. Almost 10
times that quantity, around 90,000 tons, came through the tunnels. Figures
for steel bars show a similar pattern: 1,418 tons through Kerem Shalom;
15,000 tons through the tunnels.

Anas Najjar, shovelling aggregate hoisted from the 15m-deep, 300m-long
tunnel in which he works, said the price of construction materials had more
than halved as the market had become flooded – good news for the
construction firms; bad news for the tunnel owners.

A ton of aggregate now fetched 95 shekels (GBP 16) compared with 200 shekels
six months ago, he said. "There are around 300 tunnels now bringing in
cement, rubble and steel."

Nine men were working in his tunnel in three shifts, 24 hours a day, six
days a week, bringing out 60 tons of aggregate a day, he said as trucks
rumbled over the sandy expanse next to the Egyptian border, guarded by Hamas
security men, collecting materials for delivery to building sites all over
Gaza.

At Teba, site of the former Israeli settlement of Netzarim which was
evacuated in 2005, Arabeed was supervising 25 men building classrooms for
medical students at a hospital also under construction. The $35m hospital
was being funded by Turkey; the $2m classrooms from Gulf donors.

"The industry is very active, for two reasons," he said. "The availability
of construction materials and huge demand after the siege." Many buildings
were destroyed during Israel's war with Gaza three years ago.

Materials for his project were all being supplied through the tunnels, he
said. He confirmed that prices had fallen in recent months, but said they
were still about 60% higher than pre-blockade levels. His main headache was
the dire shortage of skilled labour: "All the construction workers are
hired, but we need twice the number. We are facing a crisis in finding the
right skills."

Anywhere else, skilled workers could be imported from abroad – Polish
plasterers in London, Indian brickies in Dubai. But in Gaza that was
impossible. The shortages had caused an explosion in wages: "There has been
a 40% increase in the past six months. A skilled man can now make 120
shekels [GBP 20] a day. That's a very good wage in Gaza."

According to Unrwa, the average daily wage in all sectors rose by 7.4% in
the first six months of 2011, compared with the same period the year before.
The effect of the upturn in Gaza's economy is palpable. The atmosphere is
less tense and edgy than a year or two ago, helped by the relaxation of the
border with Egypt, allowing Gazans to leave – and return – more easily.

But the buoyancy is not shared by everyone. Unemployment in Gaza has fallen,
but one in three of the potential job market is still without work and
poverty is widespread in the teeming refugee camps.

"Despite significant gains, unemployment in Gaza, as well as poverty,
remains among the most severe in the world," said Salem Ajluni, an economist
who compiled a report on Gaza's labour market for Unrwa.

And the mini-boom is unlikely to be sustainable. Israel still bans almost
all exports, apart from a few truckloads of strawberries and flowers.
Industries such as textiles and furniture, once mainstays of the Gazan
economy, struggle to recover without the possibility of trade beyond the
territory.

Exports stand at around 3% of their levels before the blockade, said Ajluni,
adding: "Ultimately it is export capacity that will sustain growth over the
long term."