Sunday, September 30, 2012

Free (Trade) Gaza!

There's a more practical way
The idea of setting up a free trade zone between Gaza and Egypt seems almost too sensible to ever happen in the contorted logic of the Middle East. Development in the Gaza Strip is hampered most immediately by political restrictions, but also from being pegged to the macro economy of Israel, influencing everything from currency valuation to utility, commodity and consumer product prices that are measured against an industrialized market instead of a developing one. Still, Gaza receives hundreds of millions of dollars annually in funds from international donors, and increasingly from Gulf countries, fueling a mini-boom in an area with a well-educated and young population.

Meanwhile, bordering Gaza is northern Sinai, Egypt’s most restless and most neglected region, encumbered by tribalism, a lack of investment and prioritizing of security over economics.  Yet it has massive potential, attributable to its location and the country’s relatively low cost structure. Common sense would suggest the flow of goods and services would adjust for this imbalance, and partly it has, with more than half a billion dollars said to transfer between Egypt and Gaza annually, but only through illegal, underground tunnels

Gaza City...if only in north Sinai
Israeli policies targeting the often violent Hamas government, internecine rivalries between Hamas and the Palestinian Authority and outright corruption by trade lords seeking to protect lucrative tunnel monopolies, all serve to restrict normal trade relations with Gaza.  Egypt too has been instrumental -- if not decisive -- in limiting trade with Gaza, not the least because of meddling by Hamas designed to drag Egypt into an unwanted confrontation with Israel.  But the central premise of Egypt’s stated concern with fostering trade with Gaza is particularly spurious, equating the normalizing of trade relations with somehow transferring the Gaza “problem” from Israel to Egypt.  The fear of Egypt being overrun by Palestinians is similarly distorted (if any, labor movement is far more likely to be in the opposite direction). Apart from being morally questionable, viewing Gaza solely through a tainted and limited "strategic" prism is fundamentally wrong.

Whatever the merits of the concerns, Morsi should be seriously considering the facilitation of trade with Gaza, and beyond, to boost development in Sinai. The fact that he is not -- whether because he does not want to or cannot -- speaks to his limits, and more generally to those of post-“revolution” Egypt.


  1. Ironically, what you call for would be "less free" trade than what exists now through the tunnels where goods and humans pass seamlessly. In fact, the setting up of the suggested "Free Trade Zone" somehow implies some kind of regulation that is currently absent. I do encourage the promotion of legitimate trade between Egypt and Gaza, but that requires political will (currently absent on the Egyptian side as evident by their refusal of a Hamas request last week to establish such a FTA) and more importantly, whether we like or not, Israeli approval. An added risk to such a FTA is the potential to enchrine the divide between Gaza and the West Bank, making any future settlment between Israel and the Palestinians even more difficult.

  2. Osman, those are legitimate points, especially on the need for political will, though squeezing goods and people through tunnels controlled by local mafias is not the type of "seamless" passage to which Egypt or the Palestinians should aspire. The Gaza-West bank divide issue seems more of a red-herring used by the PA to settle scores with Hamas, but in any case, trade with Egypt hardly is going to be the deciding factor in a future settlement between Israel and the Palestinians. Egypt should be doing what makes sense for Egypt, especially where it has the promise of immediate and tangible benefits for its citizens and Palestinians alike.