VZCZCXYZ0027
OO RUEHWEB

DE RUEHJM #3439/01 2191354
ZNR UUUUU ZZH
O 071354Z AUG 06
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4030
INFO RUEHXK/ARAB ISRAELI COLLECTIVE IMMEDIATE
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS JERUSALEM 003439 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA FOR FRONT OFFICE; NEA/IPA FOR WILLIAMS/WATERS/WAECHTER; 
PRM FOR PDAS GREENE AND PRM/ANE; NSC FOR 
ABRAMS/DORAN/LOGERFO; TREASURY FOR NUGENT/ADKINS 
 
E.O. 12958: N/A 
TAGS: PHUM ECON EAID PREL KWBG IS
SUBJECT: LIVING CONDITIONS IN GAZA CONTINUE TO DECLINE 
 
REF: A. JERUSALEM 2611 
 
     ¶B. JERUSALEM 2201 
     ¶C. JERUSALEM 2068 
 
¶1.  (SBU) Summary:  Anecdotal reports collected by ConGen FSN 
and USAID staff resident in Gaza indicate that living 
conditions in Gaza continue to decline.  Electricity and 
water are in short supply, in addition to food, fuel, credit 
and overall economic opportunity.  Electricity imports from 
Israel only meet 50 percent of demand, and Gaza water pumps 
are delivering reduced levels of water to residents.  Fuel 
shortages have forced most professionals in Gaza to downgrade 
from private cars to public buses and/or walking.  The 
unemployment rate hovers at 45 percent, as private industry 
continues to cut work hours and lay off employees.  End 
Summary. 
 
------------------------------- 
ELECTRICITY AND WATER SHORTAGES 
------------------------------- 
 
¶2.  (SBU) The Israeli bombing of the transformers of the Gaza 
power plant on June 28 resulted in major electrical shortages 
throughout the entire Gaza Strip, since the power plant had 
produced half of Gaza,s electricity supply.  According to 
USAID Gaza-based staff, the Gaza Electricity Distribution 
Company is forced to rotate available electricity, imported 
from the Israeli Electric Company (IEC), in six to eight hour 
intervals.  Each zone gets six to eight hours of electricity 
followed by roughly six to eight hours of black-out. 
 
¶3.  (SBU) The lack of electricity to power water pumps has 
caused problems in the distribution of water.  Due to the 
difficulty synchronizing water and electricity schedules, the 
average water availability is two or three hours of water per 
day. 
 
--------------------------- 
LIMITED PRODUCT AVAILABILITY, 
LACK OF REFRIGERATION 
AND A RISE IN PRICES 
--------------------------- 
 
¶4.  (SBU) Frequent closure of the Karni/al-Mintar commercial 
crossing into Gaza has greatly reduced the amount of food 
products on store shelves and in markets, according to USAID 
Gaza-based staff (see ref B).  The lack of electricity makes 
dependable refrigeration impossible.  Flour, rice and sugar 
are available on the market.  Current private sector stocks 
of flour amount to less than one week's consumption; rice, 
sugar, and cooking oil stocks in the private sector are 
sufficient for three weeks' consumption.  According to an 
August 3, 2006 statement by UN agencies, the World Food 
Program reported that flour and sugar prices have risen 15 
and 33 percent, respectively, since January 2006. 
 
¶5.  (SBU) Due to crossing closures and insufficient 
electricity and water supply, there is a severe supply 
shortage of both imported and local fresh foods in the 
marketplace.  Locally-produced watermelons and apples are the 
only fruits readily available, according to USAID Gaza-based 
staff.  Supplies of fresh fish are sparse due to IDF 
restrictions on fishing (see ref C).  In general, the 
population has stopped consuming milk, cheese, and meat - 
products that require refrigeration.  Gazans are buying 
mostly canned and dry goods and small amounts of fresh 
vegetables. 
 
¶6.  (SBU) USAID Gaza-based staff report that product prices 
have risen over the last month.  Fresh vegetable prices have 
risen 150 percent and fruit prices have doubled since June 28 
as a result of a lack of water for agricultural use, the 
destruction and subsequent looting of greenhouse facilities, 
and the increased demand in the market for staple foods. 
Prices of canned goods have also risen slightly in the last 
month. 
 
------------------------------ 
DEVASTATING EFFECT ON INDUSTRY 
------------------------------ 
 
¶7.  (SBU) USAID staff report that the private sector lacks 
sufficient supplies due to frequent closures of 
Karni/al-Mintar commercial crossing.  Israeli officials have 
also denied entry for certain products including asphalt and 
cement.  Many construction and renovation projects have been 
discontinued.  Many stores have reduced by half their 
employees' working hours in order to keep them on the 
payroll.  Since April, job announcements in newspapers for 
the construction field have dropped to zero.  Since June, 
several local construction companies have reported that they 
are making plans to leave the area to go to the Gulf, Egypt 
and Jordan (see ref A). 
 
¶8.  (SBU) The Palestinian Central Bureau of Statistics 
reported the unemployment rate at the end of March at 40 
percent.  USAID staff estimate the unemployment rate now to 
be closer to 45 percent.  These unemployment estimates do not 
reflect the economic impact of the non-payment of salaries to 
government employees or the reduction in the number of hours 
(and salaries) to those in the private sector. 
 
------------------------ 
MORE WALKERS AND BEGGARS 
------------------------ 
 
¶9.  (SBU) Fuel prices are fixed by the PA and no price 
increases have been reported, despite severe fuel shortages. 
Taxi fares have increased by 25 percent since May due to 
limited gasoline supply.  USAID Gaza-based staff report that 
fewer cars are on the street now than two months ago.  In 
general, Gazans who used to drive their own vehicles are now 
taking public transportation, and those who took public 
transportation are now walking. 
 
¶10.  (SBU) USAID staff in Gaza estimate an increase in the 
number of beggars since May, with many of the women veiling 
themselves to make it difficult for people to recognize them. 
 Almost two-thirds of Gaza's residents depend upon food 
assistance, either from UNRWA or the WFP. 
WALLES