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(photo credit: Ariel Jerozolimski)
Cutting ties with customers in the Gaza Strip will produce long-term gains for Israeli businesses despite short-term losses, according to some exporters. Companies with business ties in Gaza are being hit hard by Hamas's takeover of the region, with damages estimated to be growing by millions of dollars a day, they said.
Since Hamas seized control of Gaza last week, the crossings have remained closed to the movement of goods and produce. Israeli fruit-growers have had to destroy at least 120 tons of bananas and 40 tons of apricots that had been designated for sale in Gaza, costing Israeli manufacturers millions of dollars, as Palestinian subcontractors have not been able to ship finished products.
"Nobody knows what will happen now," said Baruch Snir, director of the Israel Association of Craft and Industry's Economic Department. "On a strategic level, exporters have two options - continue to produce goods for shipment to Gaza in the hope that the borders will soon be opened, or actively pursue other markets to sell their products."
Snir said immediate losses will quickly reach more than $1 million for the handful of exporters in the association that send goods into Gaza. He said textile and metalworks manufacturers were the hardest hit so far.
In addition to the tons of produce destroyed, 93 trucks carrying plums, apricots and bananas headed back to Israel after waiting unsuccessfully for the border crossings to open, Agriculture Minister Shalom Simhon said this week. On Tuesday he asked Defense Minister Ehud Barak to open the crossings for transporting produce.
The closure of the Gaza Strip to Israeli fruit has led to a sharp drop in prices in Israel, causing losses of close to NIS 20 million to growers, said Ilan Eshel, director of the Israel Fruit Growers Association.
About 15 percent of Israeli fruit is sold in Gaza, with approximately 1,000 tons a day sold during peak season, according to the Agriculture Ministry.
Since Hamas won the Palestinian Authority elections last winter, Israeli manufacturers have reduced the amount of business they conduct inside Gaza by about 50%, with recent events certain to exacerbate the situation, Snir said.
"Before Hamas won the election, about 70% of manufacturers in the craft and industry association had arrangements with subcontractors in the strip," he said. "Today this number stands at about 10%."
Snir said manufacturers wouldn't sign new contracts with customers inside Gaza.
"There are clear claims to further reduce any economic dependence on the Gaza Strip," he said. "Exporters and manufacturers are faced with constant bureaucratic obstacles, security threats and the daily reality that delivering goods on time is impossible."
The global marketplace was big enough to support Israeli manufacturers looking for new markets, Snir said, with those companies in the association that cut ties with Gaza now building customer bases in the West Bank, Jordan and Egypt.
According to Oded Tyrah, director of Phoenicia America-Israel, a company that exports approximately $90m. worth of flat-glass products around the world, including to the Gaza Strip, despite suffering a loss of business, isolating Gaza was an important step.
"Right now, I can't sell anything to my Gazan customers," he said, "and if this continues for another month, I will lose hundreds of thousands of dollars. However, it is a loss I am willing to take."
Israel's trade with the territories in 2006 was $2.8 billion, equalling 2% of the country's Gross Domestic Product, Tyrah said.
"Assuming that only 20% of trade in the territories goes to Gaza, halting trade to the strip will only bring about a reduction of 0.4% to Israel's GDP," he said.
"I suggest to all industrialists to bear the same price," Tyrah said. "We and the citizens of Gaza will suffer a short-term loss, but we will both gain in the end as economic isolation of Gaza will bring about the collapse of Hamas and hopefully the election of a more just government. It is much easier for Gazans to suffer three months of economic isolation than years of suffering under Hamas."