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Page last updated at 08:28 GMT, Friday, 26 June 2009 09:28 UK

Gaza industries struggle to rebuild

Yasser al-Wadiya, Chairman of al-Wadiya Group in burnt out store room
Mr Wadiya says two storerooms were completely burned out

By Heather Sharp
BBC News, Gaza City

One of the building's corners stands on a precariously buckled concrete pillar.

But the small assembly line swishes on in the middle of the vast room, spitting out blue-wrapped ice lollies.

Al-Wadiya group, Gaza's largest food manufacturer, suffered extensive damage during Israel's 22-day military operation in January.

But six months later, recycled scrap metal covers a gaping hole, and the factory is making ice-cream again. Just.

Before the conflict, Chairman Yaser al-Wadiya employed 276 people to make 127 food products. Now 45 employees produce only four items.

Al-Wadiya ice-cream factory struggles to get back to business

"They damaged everything," he says, flicking through an album of pictures of charred vehicles and pointing out a heap of rubble that was once a biscuit factory.

Recovery has been "very difficult," he says, because of the Israeli blockade, which includes a virtual ban on all exports, and on imports of raw and construction materials.

Israel imposed the restrictions in an attempt to end rocket attacks on Israel and weaken Hamas, which seized control of the Strip in 2007.

Israeli authorities say building materials can be used to make rockets, and to build the tunnels through which weapons and other goods are smuggled into Gaza from Egypt.

GAZA UNDER BLOCKADE: June 2009
40% unemployed
750,000 receive Unrwa food aid
No petrol or diesel since Nov 2008 (except UN)
Half required cooking gas allowed
Recently blocked items: light bulbs, candles, matches, books, musical instruments, crayons, clothing, shoes, mattresses, sheets, blankets, tea, coffee, chocolate, nuts
Virtually no building materials allowed in
Source: Unrwa and World Bank

Mr Wadiya has bought some materials and machinery sold off from other damaged businesses, and imported much of the rest at inflated prices through the tunnels.

He paid $65 each for bags of cement that cost $5 before the blockade, he says.

"We will fix whatever we can," says Mr Wadiya, the third generation in the family business. "We are not going anywhere, this is our land."

Even before the conflict, the blockade had devastated Gaza's industrial sector.

By June 2008, all but 90 of Gaza's 3,900 industrial enterprises had ground to a halt, laying off 97% of their 35,000 staff, according to the Palestinian Trade Center, although things improved slightly in the six-month Israel-Hamas truce that followed.

In an air-conditioned office in Gaza City, Amr Hamad has just returned from giving his latest international visitor, Norway's foreign minister, a tour of Gaza's ruined industrial zone.

The Palestinian Federation of Industries, which he heads, says many of the 324 businesses damaged in the Israeli operation were those that were still functioning.

He says the Israeli troops' destruction of economic infrastructure was "very much deliberate".

Mr Wadiya, for example, has photographs of caterpillar tracks amid the ruins of the biscuit factory, which he believes the Israelis finished off with bulldozers after hitting it from the air.

The UN's top humanitarian official, John Holmes, has accused Israel of the "systematic levelling" of Gaza's industrial area, where the al-Wadiya factory is located.

The site is close to the border with Israel, so a desirable rocket launching zone for Palestinian militants, but Mr Wadiya says his factory was surrounded by a 3m security fence.

The Israeli military says it "did not specifically target industrial premises".

They were damaged, it says, either because they were being used by Hamas, or because "there was a specific military need to do so".

The damage was "proportional", the military says, and due to Palestinian militants' use of civilian buildings for cover.

Both Israel and Hamas deny allegations that they violated international humanitarian law during the conflict.

Mr Hamad cites the case of al-Badr flour mill, Gaza's largest, the only one that was operating at the time and the only place in the Strip that can store large volumes of grain.

Mahmoud Hamada, manager of al-Badr flour mill, amid destroyed machinery
Mr Hamada says new machinery would cost $1.5m

Pigeons now fly in and out of a mess of charred machinery, open to the sky where a huge section is missing from the top two floors.

Manager Mahmoud Hamada says it was hit from both sides by F16s and helicopters on 16 January, following telephone warnings that the building would be targeted, but he insists there were no Hamas fighters in the area.

At the time of publication, the Israel military had not responded to questions about why either the flour mill or the al-Wadiya factories were attacked.

There were no casualties from the strikes, but his 35-year-old nephew, a doctor and father of five, plunged four floors to his death while trying to clear debris after the attack.

Mr Hamada says he needs 60 tonnes of iron, 200 of cement and some $1.5m worth of machinery to rebuild. But none of it is available.

He says, politically, he is neutral and simply cares about "how to bring bread for the people of Gaza".

View from damaged part of al-Badr flour mill, Gaza Strip
A large section of the top two floors of the al-Badr mill was completely destroyed

This is typical, says Amr Hamad, of much of Gaza's business community - who he says tend to be either politically unaffiliated, or supporters of the West Bank-based Palestinian Authority rather than the more militant Hamas.

"These people are very keen on good relations with Israel, because for them, peace means money," he says.

He says the business community is losing influence in Gaza, as it is replaced by black marketeers who run the tunnels, on which Hamas is widely thought to levy taxes.

An Israeli government official recently admitted to the BBC that the blockade, which is currently under review, may inadvertently benefit Hamas - but pointed out that easing it might be taken as a victory for the Islamic movement.

Mr Hamad is concerned that if things do not change soon, Gaza's industrial sector will be beyond recovery, leaving isolation, aid-dependency and unemployment that he believes would be "dangerous":

"I have grown up to know other people - Jewish, Muslim and Christians. The coming generations don't mix with Western people. They will not be able to accept others unless they mix with them."



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