VZCZCXRO2150
OO RUEHROV
DE RUEHJM #1455 1941356
ZNR UUUUU ZZH
O 131356Z JUL 07
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8359
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS JERUSALEM 001455 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA FOR FRONT OFFICE; NEA/IPA FOR 
WILLIAMS/SHAMPAINE/STEINGER; PRM FOR PDAS GREENE AND 
PRM/ANE; NSC FOR ABRAMS/WATERS; TREASURY FOR 
SZUBIN/LOEFFLER/NUGENT/HIRSON; BRUSSELS FOR LERNER; PLEASE 
PASS TO USAID FOR KUNDER/MCCLOUD/BORODIN 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EAID EFIN EIND PGOV PHUM KWBG IS
SUBJECT: GAZA ECONOMIC LOSSES 
 
¶1. (SBU) Summary:  According to data compiled by the 
Palestinian private sector, the closure of the 
Karni/al-Mintar crossing following the Hamas take-over of 
Gaza is causing catastrophic damage to Gaza's economy.  Since 
the June 12 closure of the crossing, 80 percent of Gaza 
factories have closed, at least 65,000 employees have been 
laid off, private sector losses have reached USD 20.6 
million, and USD 160 million in construction projects are on 
hold, according to PalTrade and the Palestinian Federation of 
Industries (PFI).  End summary. 
 
¶2.  (SBU) The Private Sector Coordinating Council (PSCC) and 
the World Bank hosted a July 12 meeting at the World Bank's 
al-Ram office on the economic situation in Gaza.  The meeting 
featured a PalTrade and Palestine Federation of Industries 
(PFI) presentation quantifying the cost to the private sector 
of the continued closure of Karni/al-Mintar crossing 
following the Hamas take-over of Gaza.  Gaza participants, 
including business association, UNSCO, and NGO 
representatives, joined the meeting via DVC.  Econoffs and 
USAID representatives also attended.  World Bank data on the 
economic situation in Gaza will be reported separately. 
 
Dependency 
---------- 
 
¶3.  (SBU) According to the PalTrade/PFI presentation, 
factories in Gaza import 95 percent of their raw materials 
from or through Israel, and 80 percent of their machinery and 
spare parts.  Gaza's 5,000 cash crop farmers are totally 
dependent on Israel for supplies such as fertilizers, 
pesticides, seeds, seedlings, and packaging material.  Gaza's 
furniture sector exports 76 percent of its production to 
Israel, the garment sector exports 90 percent, and the 
processed food sector 20 percent (mostly through Israel to 
the West Bank).  Agribusinesses and agricultural associations 
export almost all their produce to or through Israel. 
 
Losses 
------ 
 
¶4.  (SBU) Since June 12, 3,190 of the remaining 3,900 
manufacturing establishments in Gaza have closed, according 
to PalTrade and PFI.  Those factories still open are 
operating at 60 percent capacity or less.  At least 65,000 
employees have been laid off.  The furniture, garment, 
textile, and processed food sectors have lost an estimated 
USD 16 million in business in the past month.  Israeli 
garment merchants are withholding payment for completed 
orders until the raw materials they previously sent into Gaza 
are returned.  In the agricultural sector, lost sales are 
estimated to be more than USD 12 million for the remainder of 
¶2007.  PalTrade and PFI estimate that the construction sector 
has lost USD 1.6 million since June 12, and USD 160 million 
in construction projects are on hold due to lack of 
materials.  (Note:  UNRWA announced July 9 that is had 
suspended USD 93 million worth of projects in Gaza because 
cement and other building materials had run out.  UNRWA says 
its construction projects employ some 121, 
000 people.  End note.)  Total private sector losses since 
June 12 are estimated to be USD 20.6 million. 
 
Containers Blocked 
------------------ 
 
¶5. (SBU) Since Israel stopped clearing Gaza-bound cargo from 
Ashdod port June 18, 850 containers of imported goods ordered 
by companies in Gaza have been stranded at the port, 
according to PalTrade and PFI.  While demurrage fees on these 
blocked shipments continue to mount, PalTrade and PFI 
estimate that about 450 additional containers destined for 
Gaza are in transit. 
 
WALLES