April 14, 2006

Gloom stalks Gaza as crisis worsens

By Nidal al-Mughrabi

GAZA (Reuters) - At the main market in Gaza City, some
sellers doze on their vegetable stands. Others call out their
prices, but only half-heartedly.

There are few buyers as cuts in foreign aid and Israeli tax
transfers to the new Hamas-led Palestinian government bite
deeper, especially in the impoverished Gaza Strip.

Having swept the Islamic militant group into power in
parliamentary elections in January, partly in the hope that
living conditions would improve, some Palestinians are asking
if it was worth it.

"People ask about prices and then leave. Only a few are
buying," said fruit seller Munir al-Rifi.

"Nobody has received his salary and employees are in debt.
If this situation continues, chaos will spread."

Palestinian Prime Minister Ismail Haniyeh earlier this
month said the new administration, which took office on March
29, was broke. Officials have said they do not know when March
salaries for 140,000 government staff will be paid.

The finance minister on Thursday warned of economic
collapse within months.

On top of that, internal violence has worsened. Israeli
aircraft and artillery have been pounding sites in northern
Gaza to stop militants from firing rockets into the Jewish

But what hurts many Gazans most is their empty pockets.

Taxis cruising Gaza's streets are empty. Shops and
restaurants say business is down.

Supermarket owner Anwar Abu Al-Kass said his revenue had
shrunk by half, with government workers buying only basic food
and cigarettes -- which they could not pay for in hard cash on
the spot anyway.

"I have no idea how long this will go on for but I am too
embarrassed to refuse them credit," Abu Al-Kass said.

"If salaries are not paid there will a big crisis and the
government could collapse."

Gaza economist Omar Shaban said things would get worse.

"Chaos will be the natural result," he told Reuters.

Senior Hamas leaders say they are doing everything they
can. On Friday, Foreign Minister Mahmoud al-Zahar travels to
Middle Eastern countries to try to drum up aid.

The United States and the European Union have cut off
funding to the Palestinian Authority, although Washington has
promised more humanitarian aid.

Israel and the United States have called on other nations
to boycott Hamas until it disarms and recognizes the Jewish
state. Hamas, whose charter commits it to destroying Israel,
has refused.


Defiance by Hamas does not change economic reality for
Gaza's 1.4 million people. Unemployment hovers at nearly 50
percent and Palestinians live on an average $2 a day.

Ordinary Palestinians had mixed reactions when asked if
Hamas should bow to international demands to reform and
recognize Israel.

"I support the government negotiating with Israel to get us
out of this crisis. We have always depended on Israel in terms
of work and goods," said vegetable seller Omran Al-Rahel.

House painter Abu Ahmad laid blame with Hamas's
predecessors. "The bad situation resulted from the previous
corrupt government," he said.

Few expect Hamas to move aside.

"This government has only one choice and that is to
succeed. Whoever bets the government will collapse is a loser,"
Hamas spokesman Sami Abu Zuhri said.

The situation could "explode" unless international pressure
eased, he added.

For government worker Hamdi Rajab, compromise was about
what to buy at the vegetable stand. He chose the cheapest

"We even have to make concessions over what we eat," the
father of five said.