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Israel

Gaza's Economy Imploding After Egypt Closes Smuggler Tunnels

A smuggling tunnel in Rafah, southern Gaza Strip
A smuggling tunnel in Rafah, southern Gaza Strip
Daniel Rubinstein

TEL AVIV While we talk about a certain economic stability in Ramallah, the economy in Gaza is in free fall, which is due in no small measure to the massive closing of the tunnels used to smuggle in products across the border from Egypt.

The Palestinian economy, at least in the West Bank, is not influenced by events in neighboring Arab countries. In Ramallah, we have even recently begun to talk about bona fide economic stability.

Palestinian Authority Prime Minister Rami Hamdallah has good reason to believe that his government will be able to pay its workers before the end of the year.

This comes after two years when a much talked-about crisis in the Ramallah government raised fears that the Authority wouldn't be able to pay its salaries. Meanwhile in Gaza, people were talking about the economic situation as something of a boom — thanks to the partial removal of the Israeli blockade, $500 million given by Qatar for development, and the expansion of the smuggling tunnels.

But now, the situation has been reversed, and the Gaza economy is in free fall. This is primarily because of the new Egyptian government’s closing of the smuggling tunnels, which have accounted in the past for up to 50% of imported goods in Gaza. If three years ago there were hundreds of tunnels (some even have estimated as many as 1,200) actively being used at the Rafah border, now there are only 30 in operation.

Egypt closed all the other tunnels in June after realizing most of the terror attacks in the Sinai Peninsula came from Gaza through these tunnels. On Aug. 23, the Egyptian Army halted all the movements in tunnels. One of the most immediate results is a massive gas shortage in Gaza, which has produced long lines at gas stations throughout the region.

A tunnels economy

The Gazan people rely mostly on salaries from the government in Ramallah, the Hamas authorities and international aid. Although these salaries have always been proportionally very low, the purchasing power was stronger when cheaper merchandise was coming in from Egypt.

The most obvious example is gas. In Egypt, thanks to government subsidies, gasoline is sold at just $0.28 per liter. When it was smuggled into Gaza, it could be sold at four times that price, after Hamas taxes were added. The case is the same for many other goods like food and raw materials for industry and agriculture.

There is little doubt that without the tunnels, Gaza’s economy could implode. The Palestinian economics commentator Adel Samara wrote last week in thePalestinian Independece Party newspaper that even if the Kerem Shalom crossing with Israel operates at full capacity, it won't be enough.

According to Samara, what officially comes through this crossing from Israel represents only 30% of what Gazans need. Samara and many other Palestinians challenge the Egyptians: If there is a security factor to the closing of the tunnels, you can open an official commercial crossing. It might be contrary to your treaties with Israel, but it is in your own interest too.

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Economy

Lex Tusk? How Poland’s Controversial "Russian Influence" Law Will Subvert Democracy

The new “lex Tusk” includes language about companies and their management. But is this likely to be a fair investigation into breaking sanctions on Russia, or a political witch-hunt in the business sphere?

Photo of President of the Republic of Poland Andrzej Duda

Polish President Andrzej Duda

Piotr Miaczynski, Leszek Kostrzewski

-Analysis-

WARSAW — Poland’s new Commission for investigating Russian influence, which President Andrzej Duda signed into law on Monday, will be able to summon representatives of any company for inquiry. It has sparked a major controversy in Polish politics, as political opponents of the government warn that the Commission has been given near absolute power to investigate and punish any citizen, business or organization.

And opposition politicians are expected to be high on the list of would-be suspects, starting with Donald Tusk, who is challenging the ruling PiS government to return to the presidency next fall. For that reason, it has been sardonically dubbed: Lex Tusk.

University of Warsaw law professor Michal Romanowski notes that the interests of any firm can be considered favorable to Russia. “These are instruments which the likes of Putin and Orban would not be ashamed of," Romanowski said.

The law on the Commission for examining Russian influences has "atomic" prerogatives sewn into it. Nine members of the Commission with the rank of secretary of state will be able to summon virtually anyone, with the powers of severe punishment.

Under the new law, these Commissioners will become arbiters of nearly absolute power, and will be able to use the resources of nearly any organ of the state, including the secret services, in order to demand access to every available document. They will be able to prosecute people for acts which were not prohibited at the time they were committed.

Their prerogatives are broader than that of the President or the Prime Minister, wider than those of any court. And there is virtually no oversight over their actions.

Nobody can feel safe. This includes companies, their management, lawyers, journalists, and trade unionists.

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