Two years ago, Israel completed its unilateral withdrawal from the Gaza Strip. We all remember the intense media campaign shamelessly portraying the settlers as dispossessed victims of a bold move for peace. Among others, Harvard economist Sara Roy argued that Israel’s version of disengagement would bring disaster to an already desperate Gaza. Today, we are witnessing emergence of an unparalleled economic catastrophe in the Gaza Strip and with it, the evaporation of the last remaining hopes for a Palestinian state.
Disengagement and control
The original draft of Israel’s disengagement plan intended to create a situation in which “no permanent Israeli civilian or military presence” would remain in the evacuated areas and there would “be no basis for the claim that the Gaza Strip is occupied territory.”  The reference to Gaza’s legal status as “occupied territory” inferred the termination of Israeli responsibility for Gaza’s population. Yet, because Israel never officially recognized the Gaza Strip as occupied,  this phrasing was excised, leaving the definitive draft stating (somewhat ambiguously): “completion of the plan will serve to dispel the claims regarding Israel’s responsibility for the Palestinians in the Gaza Strip.”  That Israel planned to release itself from any legal responsibility for the Palestinians in Gaza is uncontroversial; Ariel Sharon stated as much on multiple occasions, specifically stressing the need for international recognition of the occupation’s expiration.
After the evacuation of Jewish settlers in Gaza Israeli soldiers finally left the strip on 12 September 2005.  Before exiting through the gates of Kusufim Crossing, the head of Israel’s mission in Gaza, Brigadier General Aviv Kochavi, remarked, “The responsibility for whatever takes place inside falls upon the [Palestinian] Authority.”  Later that evening, Major-General Dan Harel signed a declaration nullifying the 6 June 1967 decree, which had established Israeli military rule in Gaza. With this final act of legislation, Israel wanted the world to believe that its 38-year occupation of Gaza had come to an end.
However, Israeli control in Gaza two years after disengagement is total; indeed, the very text of the disengagement plan explicitly provides for much of the current strangulation, ensuring that “Israel will guard and monitor the external land perimeter of the Gaza Strip, will continue to maintain exclusive authority in Gaza air space, and will continue to exercise security activity in the sea off the coast of the Gaza Strip.”  In this way, Israel has fired upon Palestinian fishermen, has blocked the reconstruction of Yasser Arafat International Airport, and continues to exercise authority over all border regimes (upon which a blanket closure has been in effect since June 2007). Beyond this level of control, there is an abundance of academic and legal evidence indicating the continuation of Israel’s “effective control” in Gaza and thus, a continuation of the occupation under international law.
Yet the greatest evidence of Israeli power in Gaza lies in its power to wreak economic devastation as a matter of policy. Despite the disengagement plan’s pretensions to improve the Palestinian economy, its intentions to the opposite are all too clear. Two years after disengagement, the already abysmal economic conditions in the Gaza Strip have deteriorated in virtually all aspects — in large part because of the economic boycott imposed by the Quartet and spearheaded by the US after Hamas seized control of the strip last June. Since that time, any semblance of a manageable economy attempting to break through unfavorable conditions has been killed by the total closure of Gaza’s borders imposed by the Israeli authorities.
Israeli influence over Gaza’s economic development prior to the disengagement was total in virtually all aspects. Palestinian reliance upon Israeli employment, favorable standards of trade, dispersal of tax revenues and permission to enter trade markets, conduct business, or travel outside of the occupied territories rendered Gaza vulnerable to the whim of Israeli bureaucracy. Sixty-five percent of Gaza’s population lived under the poverty line at that point and 35 percent of the workforce was unemployed. Israeli military actions had fragmented any emergence of semi-functional economic structures prior to the second intifada and virtually erased domestic private investment. The Palestinian Authority was dysfunctional and weak, suffering from internal divisions and external challenges to its authority — most immediately the Islamic-nationalist movement. It was upon this backdrop of deterioration, intractable economic depression and “de-development” that Israel withdrew its presence from the Gaza Strip in 2005.
As Israel was preparing to evacuate its forces from the Gaza Strip in 2005, the World Bank issued a report predicting that the economic benefits for Gaza post-disengagement would be “very limited” without a change in Israel’s control over border regimes. The mild adjustments derived from increased freedom of movement within Gaza and the return of land formerly occupied by Israeli settlers, the Bank reported, “would not deliver significant economic benefits” to the Palestinians.  In comparison, Israel’s disengagement plan promised “a better security, political, economic and demographic situation” in declaring Israel’s support for “the reform process, the construction of institutions and the improvement of the economy and welfare of the Palestinian residents.”  It is unclear how the plan intended to address these economic developments. Addendum B10 reads, “In general, the economic arrangements currently in operation between the State of Israel and the Palestinians shall remain in force.” These arrangements include “the entry and exit of goods,” “the monetary regime,” “tax and customs envelope arrangements,” and “the entry of workers into Israel.”  In fact, the plan’s only alteration of Israeli economic policy in Gaza was the gradual reduction of “Palestinian workers entering Israel to the point that it ceases completely.”  The intentions of the plan then become painfully obvious, allowing Israel to maintain the status quo in Gaza, while ignoring the centrality of its own repressive policies in creating Gaza’s economic crisis.
Studies considering the collapse of Gaza’s economy after Israel’s withdrawal often ignore the great deal of effort aimed at revitalizing Gaza’s economy in the aftermath of the disengagement. The World Bank, leading a team of economists and various experts, met with Palestinian and Israeli officials in 2004 to discuss the potential “modernization” of military checkpoints to better accommodate trade activity. A Middle East Quartet Special Envoy for Gaza Disengagement was appointed by US Secretary of State Condoleezza Rice, for which purpose world leaders pledged a substantial budget at the 2005 G8 summit in Gleneagles, Scotland. International businesses began to take interest in Gaza’s market potential — especially investment in land recently evacuated by Israeli settlers. The subsequent collapse of Gaza’s economy would seem counterintuitive in this context; scholar Mohammed Samhouri observes, however, that the animus to revitalize the Gazan economy was primarily external and little motivation to capitalize on the pull-out plan could be found among the Palestinian and Israeli parties. 
Any possibility of economic recovery on Gaza’s behalf, according to the World Bank, was ultimately contingent upon two crucial factors: (1) the easing of Israeli closure policies by implementing technologically advanced border trade strategies and (2) unobstructed access to international markets.  Neither of these factors were discussed in the disengagement plan and neither were implemented; rather, there is evidence to suggest that Israel was and is actively working against these factors by obstructing the travel of labor and goods and frequently disturbing the normality of Palestinian life by launching regular military incursions. These policies will ultimately spell Gaza’s economic and political isolation from the West Bank (virtually already the case today), posing serious challenges for the realization of a contiguous Palestinian state in these territories.
Beginning of the End
The status of Gaza’s economic decline since the disengagement has been described as the “worst economic depression in modern history”  and standards of living have similarly suffered. Life in Gaza is now described as “miserable and dangerous,”  “intolerable, appalling and tragic”  — even “heading down the tubes.”  Unemployment, after having stabilized in 2003 has increased dramatically; estimates by a Harvard 2005 study predicted that 135,000-162,000 new jobs would have to be created to substantially reduce unemployment within Gaza.  Everywhere I go in Gaza, it seems there are scores of recently-graduated students unable to find work, yet barred from leaving Gaza to seek work elsewhere.
In March 2006, adding to the depth of the crisis, Israel began to withhold tax revenues from the Palestinian Authority in protest of the Hamas government and halted much of the bilateral aid, grants and loans provided by the IMF, World Bank and other international institutions. Recently, Israel has called upon the World Bank to cease operations entirely in the strip. Actively working against the recommendations of international experts, Israel has maintained strict control over all border regimes in place prior to disengagement, ignored a US-backed plan to ease restrictions on movement, and began construction of a new perimeter fence around Gaza’s border. Moreover, numerous economic development projects have withered on the vine. Israeli bulldozers and Palestinian looters destroyed the remaining sections of the Eretz Industrial Estate, which had previously earmarked for renovation, and frequent closure policies caused the much-touted Palestinian greenhouse project to end in failure.  Today, all border crossings but the Erez Checkpoint on the Israeli-Gazan border have been sealed, blocking the transfer of all but “essential” goods. Given that only a handful of Palestinians are permitted to leave Gaza through Erez, the closure has effectively imprisoned 1.4 million people. Israeli policies have deliberately counteracted many of the hopes for economic recovery in Gaza.
The normality of Palestinian life has also been jeopardized by intense episodes of Israeli assault since the disengagement, prolonging the economic crisis with unfavorable periods of unpredictability. The chronology of military events cannot be interpreted in isolation and should be considered in coordination with two significant events that occurred soon after the disengagement plan was implemented, namely the ascent of Hamas to the Palestinian Authority in January 2006 and the cross-border abduction of an Israeli soldier by Hamas-affiliated militants the following summer. Over the course of five months, Israel launched Operation Summer Rains, firing 200-250 artillery shells into Gaza daily and launching over 200 air strikes, which killed over 400 Palestinians combined.  In contrast, Palestinians fired an average of nine homemade rockets into Israel daily during the same period, killing four Israeli soldiers and six Israeli civilians.  Despite a tentative ceasefire in December 2006, fighting continued sporadically and eventually culminated in Israel’s reinvasion of the strip in May 2007 and the persistence of almost daily incursions ever since. The recent decision to brand the Gaza Strip an “enemy entity” would have been laughable, had it not so appallingly revealed Israel’s intentions for the Gaza Strip.
Prior to this, the High Court of Israel approved the controversial “targeted killings” of Palestinians affiliated with terrorist organizations; because Israel classifies Hamas as such an organization, the ruling effectively granted permission to target any member of the fledgling Palestinian government.  In its effort to topple Hamas, Israel has detained 60 Palestinian Authority officials for being “members of a terrorist organization,” i.e. Hamas.  These policies, along with American and Israeli support for the Fatah movement during the internecine clashes Gaza experienced last June, served to eliminate Fatah’s presence in Gaza and created the environment for Hamas to seize control. The instability this has caused further diminishes Gaza’s hopes for economic recovery by encouraging serious elements of unpredictability and providing Israel with a pretext to enthusiastically continue its draconian policies. Again, all of this acts counter to Israel’s professed desire — as stated by the terms of disengagement — to promote economic growth in Gaza.
Implications for the community
Israel’s assault on the Hamas government’s stability coupled with the stark reality of Gaza’s economic downturn has prevented the local authorities from operating basic infrastructure facilities, e.g. sanitation and sewage treatment. In one instance, the Beit Lahia sewage treatment plant “reached a critical point” in 2005 and flooded neighboring areas with sewage, affecting 800 households. When members of the Coastal Municipal Water Utilities attempted to clean up contaminated areas, they were prevented by IDF artillery fire. The same sewage treatment plant overflowed again in 2007, killing five people.  The lack of public money has led to strikes among sanitation personnel, causing garbage to literally pile up in the streets of Gaza City; it is not necessary to describe the immediate health risks of this situation. Energy shortages have adversely affected Gaza’s hospitals, which have now ceased vital immunization services in three of Gaza’s districts. The danger to public health in Gaza is compounded by the fact that the Gazan Ministry of Health (MoH) no longer possesses the funds to acquire critical medicines and other medical supplies; the MoH currently lack 140 essential medicines and essential medical items (syringes for example). Households experienced recurring power shortages — at least one of which was caused by the IDF having targeted a Gazan power station with artillery fire — which then impeded water supplies.  Even as I write this, Israel is launching a series of gradual cuts in Gaza’s fuel supplies — a “diet” as some in Israel have gleefully described it.
Two years after disengagement, the Gaza Strip is poorer, more isolated, and more disillusioned than ever before. My own attitude will remain one of profound cynicism as long as the international community tolerates Israel dealing with Gaza as a zookeeper would his animals. With the West Bank isolated from Gaza and Gaza isolated from the world, the situation looks depressingly dismal. As we fast approach the Annapolis summit next month, it seems to me that Palestinians are at their weakest politically since Oslo — and we all know how that went.
Kris Petersen is a graduate student currently conducting research in the Gaza Strip. He runs a news/commentary blog at www.harmonicminor.com. Jonas Ecke contributed to this article.
- BY TOPIC: Israel declares Gaza “enemy entity” (19 September 2007)
- BY TOPIC: Coverage of the Gaza “Disengagement” process (August 2005)
- BY TOPIC: Background: Sharon’s “Gaza Disengagement Plan” (early February 2004)
 Sections of the original draft were published in “The Sharon Unilateral Disengagement Plan,” Journal of Palestine Studies 33, no. 4 (2004): 85-107. See also: BY TOPIC: Sharon’s “Gaza Disengagement Plan”.
 Historically, Israel has preferred to refer to the territory as “administered” and not “occupied.”
 Israel, Office of the Prime Minister, “Cabinet Resolution Regarding the Disengagement Plan,” 6 June 2004, Addendum A1.
 BBC, “Israel Completes Gaza Withdrawal,” 16 August 2005 (http://news.bbc.co.uk/2/hi/middle_east/4235768.stm).
 Aviv Kochavi cited in Yuval Shany, “Faraway, So Close: The Legal Status of Gaza After Israel’s Disengagement,” International Law Forum of the Hebrew University of Jerusalem, Research Paper no. 12-06 (2006): 3.
 Israel, “Cabinet Resolution,” add. A3.
 World Bank, sec. 2, par. 14-15
 Israel, “Cabinet Resolution,” add. A1. Emphasis added.
 Ibid., add. B10.
 Mohammed Samhouri, “Gaza Economic Predicament One Year After Disengagement: What Went Wrong?” Middle East Brief 12 (2006): 3.
 World Bank, sec. 3
 Sara Roy, “The Gaza Strip,” Counterpunch, 4 October 2006, (http://www.counterpunch.org/roy10042006.html, accessed 30 October 2007).
 John Ging cited in Samhouri, 1.
 John Dugard cited in Haaretz, “UN Human Rights Envoy Says Gaza a Prison For Palestinians,” 26 September 2006, (http://www.haaretz.com/hasen/spages/767510.html, accessed 19 May 2007).
 John Ging cited in Samhouri, 1.
 Program on Humanitarian Policy and Conflict Research (HPCR), “Population Projections For Socioeconomic Development in the Gaza Strip,” Working Paper no. 1 (2006): 15. Total employment would require the creation of 166,000-197,000 new jobs.
 The project had originally promised to create 3,000 new jobs and raise $50 million annually. See Office of the Special Envoy for Disengagement, “Periodical Report,” 17 October 2005, par. 6.
 United Nations Office for the Coordination of Humanitarian Affairs in the Occupied Palestinian Territory (OCHA), “Gaza Strip: Situation Report,” 27 July 2006, 2.
 Daniel Izenberg, “Supreme Court Allows Conditional Targeted Killing,” The Jerusalem Post, 14 December 2006, (http://www.jpost.com/servlet/Satellite?
pagename=JPost%2FJPArticle%2FShowFull&cid=1164881889047, accessed 12 April 2007).
 Anne Barnard and Sa’id Ghazali, “Israeli Arrests Hamas Officials,” Boston Globe, 30 June 2006, (http://www.boston.com/news/world/
middleeast/articles/2006/06/30/israelis_arrest_hamas_officials/ accessed 30 October 2007.
 See Haaretz, “Flood of Sewage in Gaza Strip Village Kills at Least 5 People,” 27 March 2007 (http://www.haaretz.com/hasen/spages/842574.html accessed 30 October 2007).
 OCHA, 2.