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.