Palestinians Hunker Down As Cash Runs Out [Aw Jeez Alert]

BEIT LAHIYA, Gaza Strip - He's overdrawn at the bank, owes $400 to the grocery, can no longer afford baby formula for his youngest and is trying to sell his 16-year-old car for half its value to raise cash for food.

After two months without his government salary, Abdel Hakim Abu Samra, 47, is fast running out of options. "It's the worst time we've had," he said, comparing the deepening crisis since Hamas rose to power in March to previous periods, including two bloody uprisings against Israel.

And there's no end in sight. The West won't lift crippling economic sanctions and Hamas refuses to moderate its violent anti-Israel ideology, even though its government is broke and unable to pay 165,000 employees.

There's also internal fighting, some say even the threat of civil war. Gunmen from Hamas and the defeated Fatah Party have exchanged fire repeatedly as their leaders wrangle for power.

The Palestinians' strong social bonds, a mesh of extended families governed by tradition and tested by repeated crisis, have helped stall an economic collapse. But for how long?

Maybe only another couple of months, warned Naser Abdelkarim, an economist at the West Bank's Bir Zeit University. "Choices become limited as time passes," he said.

That's true for Abu Samra, who earned $500 a month as a researcher at the State Information Service, a department in President Mahmoud Abbas' office, plus $150 from outside jobs. He used to get by, barely, supporting 16 people, including his wife and five children, and the family of his unemployed younger brother.

The stubborn standoff between Hamas and the West has left one-third of Palestinians, including Abu Samra, without a paycheck since mid-March. It has sucked $120 million a month out of an already shaky economy, meaning the other two-thirds of the population are also making a lot less.

Landlords won't evict delinquent tenants, utilities keep services going despite overdue bills. Neighbors share meals and some of the wealthy grant loans. But the stores are empty and streets deserted.

Abu ran up $400 in debt at the corner grocery, and has been cut off. He's reached the limit of his bank overdraft, equal to twice his salary.

He's told his boss he needs to cut his work week to three days because he can no longer afford the daily $3 in gas for the 12-mile roundtrip between his home in Beit Lahiya, near Israel, and the office in Gaza City. Abu Samra's wife, Sanna, rarely buys fruits or vegetables these days. Their 5-month-old son now gets regular powdered milk, rather than more nutritious baby formula.

Abu Samra wants to sell his 1990 Subaru, valued at $2,000, to raise cash, but the market is flooded by others trying to do the same. So he expects to get maybe half of that.

Women are parting with their dowry of gold jewelry, a sign of desperation since it's their only financial security in the event of divorce.

Many gold shops are no longer buying because business is dead. "I tell them, sorry, ... I don't have any cash to buy," said gold shop owner Yakoub Hakoura, 54, in Gaza City.

A few have resorted to theft. There are signs of an increase in petty crime, such as stealing car radios, or anything made of metal, in high demand in China. In the West Bank's Al-Ein refugee camp, all the iron sewer covers have been snatched, said Dorgham Al-Sahli, head of the residents' aid committee.

The U.N. Relief and Works Agency, which distributes oil, sugar, rice, flour and other staples to 765,000 refugees in Gaza and the West Bank every month, has seen a fivefold increase in demand. It can't meet the surge because of budget shortfalls, said Adnan Abu Hassna, an UNRWA spokesman. Israeli closures of border crossings make it harder for food to come in, he said.

Wajih Al-Haj, who owns six apartment high-rises in the West Bank city of Ramallah, said 60 percent of his tenants are two months behind on the rent but he'll not try to collect now.

"As long as there is a crisis, I will keep silent. I will never throw anyone out of his apartment," he said. "I know some of them have savings, but they need these savings for food."

Even before the crisis, tenants were rarely evicted, because of a chaotic legal system.

Ali Sakarneh, who runs the Transportation Ministry's branch in the West Bank town of Jenin, has distributed $110 loans to most of his 24 employees, using money he had set aside for building a home. "I knew how much my colleagues were suffering," he said.

Informal loans were also given to dozens of government employees living in the West Bank's Al-Ein camp, with the camp committee using a $15,000 emergency fund of donations.

The government's two costliest departments, health and education, are most vulnerable to the West's economic sanctions. Medicines are running low, and hospitals have warned of an epidemic of preventable deaths. Most schools stayed open, with the unpaid teachers determined to keep going until the start of the summer break at the beginning of June.

In some areas, children can no longer afford to bring a sandwich to school. By contrast, in Ramallah, the West Bank's commercial center, restaurants still are packed. Many government employees in Ramallah hold a second job, working for private advocacy groups, or as salespeople or waiters.

For now, most Palestinians blame the U.S., Europe and Israel, not Hamas, for their woes. Abdelkarim, the West Bank economist, said the mood could turn if the crisis drags on.

The West is seen as hypocritical for pushing democracy, but refusing to accept the outcome of the parliament election that swept Hamas into power. Many Palestinians say they cast a protest vote against the corruption of Fatah, the former ruling party, but didn't endorse Hamas ideology. They'd like Hamas to become more moderate, but fume over what they perceive to be Western arrogance.

"I think Hamas should soften a little bit, and they will soften a little bit," said Samy Najar, 38, who owns a supermarket in the southern Gaza town of Rafah and has seen daily sales drop from $1,125 to $225. "Let us give them a chance to see what they can do for us."

AP reporters Ibrahim Barzak in Gaza City, Mohammed Daraghmeh in Ramallah and Ali Daraghmeh in Nablus contributed to this report.

You are correct, but there are several stumbling blocks. The first and most obvious is that no outsiders are going to invest in Gaza while it is at war with Israel and itself. They will never attract capital other than grants and aid, so there can be no private sector economic development.

A second problem is the uncertainty of how they will manage a private sector economy. For example, even if they did "make peace" if they turn to sharia law there will be no economic incentive for foreign capital because women won't be allowed to drive or eat out with others, locals can't go to bars, and heck, no tourists will go to a place where there are no bars, no women, no good entertainment, no attractions, and the threat of death if you happen to violate some arcane law you aren't aware of (i.e. talking to a woman on the street).

A third problem is the corruption, but this is also mired in a clannish society. There are strong clannish ties - some heavily armed clans - that control everything within a number of city blocks. But if you pay them off, you still need to pay off everyone en route to your "safe zone" or else you can't get to your investment.

When President Bush demanded an end to violence, financial transparancy and the implementation of democratic principles he was 100% correct, but it's not going to happen anytime soon. There is no civilian oversight over the police force - heck, there are already like a dozen different police forces. There isn't a well functioning judicial system... if a clan member is arrested for a crime his clan buddies will burst into court, guns ablazing, and "liberate" him. Lawyers and judges are blackmailed or threatened.

They are so indoctrinated against Israel they cannot see how Israel can benefit them in so many ways. Israel would be their most natural ally, their biggest trading partner, one of the biggest employers, and has decades of experience in running a functional, capitalist democracy from which they can model their own country/society. Sure Israel isn't perfect and the Palestinians aren't Jews, there are cultural differences that will require alterations but there are several principles they must hold sacrosanct in order to succeed.

The only theocracies/dictatorships that are successful in the world are those that have tremendous natural resources like Saudi Arabia, Kuwait, even perhaps Iran to a degree. The Palestinians don't have natural resources to live on, so they have no choice but to develop a skilled workforce and exploit (in the good sense) what they do have. They have access to the sea to develop fisheries, ports of trade, and seaside tourist resorts. They have farmland and can export exotic fruits, vegetables and flowers to Europe. In conjunction with Israel/Jordan/Iraq they could develop a trade route to bypass the Suez (which is too small anyway) from Europe to the far east.

But so long as the lust to "avenge" their myths of past "loss" persist they are sacrificing their present and their future. And to think, Clinton put $30 billion in economic incentive on the table if Arafat would have accepted the Clinton plan (97% of the West Bank/Gaza, land swaps, share of Jerusalem). Imagine what it would be like today if they had accepted that deal 6 years ago. No Palestinian media will put that into perspective. I believe in fact the proposal never got to the Palestinian people - their media kept it from them (controlled by the PA of course). If they had the chance to know about the offer they might have risen to demand acceptance of it.

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