Home News Gaza’s wartime economy emerges under Israeli bombs

Gaza’s wartime economy emerges under Israeli bombs

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School desks and desks became shelters, and wartime vendors lined the streets with old clothes, baby formula, canned goods and rare homemade cookies.

In some cases, entire aid packages – still emblazoned with the flag of the donor country and intended for free distribution – were stacked on sidewalks and sold at prices that few could afford.

Issam Hamouda, 51, stands next to his meager commercial products: a collection of canned vegetables and beans taken from the aid cartons his family received.

“Most items found on the market have a ‘not for sale’ label,” he said.

He was a driving instructor before Israel’s war with Hamas devastated Gaza’s economy. Now Mr Hamuda feeds his family of eight the only way he can – by reselling some of the food aid they receive every few weeks.

“One time I bought 4 kilograms of dried dates and I sold a kilogram for 8 shekels,” he said, referring to about $2 in Israeli currency.

The enclave’s economy has been decimated since Israel began bombarding Gaza and imposing a siege in response to an Oct. 7 Hamas-led attack. People were forced to flee their homes and jobs. Markets, factories and infrastructure were bombed and leveled. Farmland has been scorched by airstrikes or occupied by Israeli forces.

In its place was a war economy. It’s a survival market that focuses on the basics: food, shelter, and money.

Humanitarian aid is labeled “not for resale” and looted items end up in makeshift markets. People can earn a few dollars a day by evacuating displaced people via trucks and donkey carts, while others dig latrines or build tents out of plastic sheeting and recycled wood.

In light of the growing humanitarian crisis and deep despair, queuing has now become a full-time job, whether at aid distribution sites, at the few open bakeries, or at the few ATMs or currency exchange shops.

It’s a “self-sufficient economy,” said Raja Khalidi, a Palestinian economist based in the Israeli-occupied West Bank.

“This is not like any war we have seen before, where one area is targeted and other areas are less affected and can quickly recover their economic conditions,” he said. “From the first month, the economy was paralysis.”

In the years before the war, Gaza’s economy began to improve even amid a suffocating air, land and sea blockade imposed by Israel and Egypt, economists and Gaza businessmen say. Beachfront hotels and restaurants are opening. More Palestinians are getting permits to work in Israel and receiving lucrative salaries.

All of these gains—and more—have been lost.

According to a recent report, most Palestinians in Gaza now face multiple layers of poverty, not just a lack of income but also limited access to health care, education and housing. world bank, the European Union and the United Nations. About 74% of people are unemployed, the report said. Before the war, the unemployment rate, although high by many standards, was as high as 45%.

The report said the impact on Gaza’s economy was one of the worst in recent history. In the last quarter of 2023, Gaza’s GDP fell by 86%.

Israel’s Defense Ministry said the attack on Gaza was not aimed at damaging the enclave’s economy but targeted Hamas’ “terror infrastructure.”

The current economy is driven primarily by limited supplies and an urgent need for aid. Before the war, about 500 trucks carrying humanitarian aid, fuel and goods entered the Gaza Strip every day.

After the war began and Israel imposed new restrictions, the number dropped significantly, to an average of 113 cases per day, although it has increased slightly in recent months. Even with the improvement, it’s still well below what aid agencies say is needed to feed Gazans.

Now, the flow of aid and goods has all but stopped following an Israeli attack on the southern city of Rafah and the near-total closure of two major crossing points.

Hunger is spreading across the enclave, with human rights and aid groups saying Israel is weaponizing hunger. Israel denies the accusations.

Prices have skyrocketed against a backdrop of conflict, chaos and lawlessness. Since Rafah’s invasion, goods on the market have become more expensive. For hundreds of thousands of Palestinians fleeing the Israeli offensive, transportation away from the airstrikes costs hundreds of dollars.

Even before the situation in Rafah worsened, aid deliveries were inconsistent and chaotic due to Israeli military restrictions, leading to despair and providing opportunities for armed groups or individuals to loot, according to residents.

“Food aid is thrown away or brought in and stolen by armed elements such as gangs,” said Majeda Abu Eisha, a 49-year-old mother of 10.

She said her son and nephew were shot and wounded by Israeli soldiers while trying to get aid. They did not manage to get any assistance.

“The winner of this battle is the armed man who can get whatever he wants from the aid,” Ms. Abu Aisha said. “Anyone unarmed or not strong enough to fight and advance will go home empty-handed.”

The Israeli military said it would “never intentionally target aid convoys and staff.” It added that it would continue to respond to threats “while insisting on mitigating harm to civilians”.

If there is not enough aid, residents must turn to makeshift markets. Items there can be sold at any price the seller chooses. Prices often accompany the escalation of conflict.

Sugar recently sold for 7 shekels, less than $2, in the Rafah market. The next day, Hamas fired more than a dozen rockets at Israeli forces near the Kerem Shalom crossing between Gaza and Israel, causing the crossing to close. A few hours later, the price rose to 25 shekels. The next day, the price of sugar fell to 20 shekels.

“The same item can be sold at different prices in the same market,” said Sabah Abu Ghanem, 25, the mother of a surfer. “When the police are present, the vendors will sell things at the price determined by the police. When the police leave, the prices immediately increase.”

Residents say officials and ministries linked to the Hamas government are present in some capacity, particularly in the south.

While some Gazans say police are trying to force war profiteers to sell goods at inflationary prices, others accuse Hamas of benefiting from looted aid.

Hammouda said his family occasionally receives aid from the Hamas-run Ministry of Social Development, which oversees welfare programs.

He said items were often missing from packages, especially food items such as sugar, dates or cooking oil. Other times, he said, they only received canned vegetables in black plastic bags. Food missing from aid packages ends up being sold at high prices in the market, he said.

Ismail Tawabt, deputy director of the Hamas government media office, said the ministry receives about a quarter of the aid shipped to Gaza and then distributes it. “Allegations that the Gaza government is stealing aid are absolutely false and incorrect,” he said.

Tawabt said the looting of aid was the work of a small number of people who were cornered by Israel. He said the Hamas government had tried to crack down on such looting, but its police and security personnel had been targeted by Israeli airstrikes.

The Israeli military said it targeted police and commanders as well as stations and vehicles in an attempt to “disrupt Hamas’s military and administrative capabilities.”

With most jobs gone and the war creating new needs, people found new ways to earn a few dollars.

Many of Gaza’s displaced residents live in tents, so building temporary shelters and bathrooms has become a cottage industry.

People in Rafah say tents made of thin plastic sheets and wooden boards can fetch 3,000 shekels, or $800. Unable to pay, others cobbled together their own tents out of tarps and salvaged wood.

“I paid a lot of money for these coverings,” Mr. Hamuda said, referring to the tarps he used to build a shelter for his family. “We bought a second-hand toilet for 250 shekels and paid the plumber 50 shekels to install it.”

Costs were more than double what they were before the war, he said.

Even using their own money to pay for the war’s soaring prices allowed some to take advantage of the crisis.

There are few ATMs still operating across Gaza, and those that do are often crowded with people trying to withdraw money. Often, armed men guard the ATMs and collect fees for their use. Money changers allow people to exchange their own money for high commissions.

“I could only get wages from some people, and they took 17 percent of the total amount,” said Ekrami Osama al-Nims, one of seven displaced people. My father is also a civil servant.

He tried several times to get a bag of flour from an aid truck — despite the risk of being shot by Israeli soldiers, he said — to avoid buying it on the black market. But he never had any success.

“My salary used to cover our food and other basic needs for the entire month,” he said. “Now my salary can’t even buy half a bag of flour.”

Abu Bakr Bashir, Aaron Boxerman and Iyad Abu Hewila Contributed reporting.

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