Donald Macintyre: An assault on the peace process

Israel devastated the Strip's production capacity as well as destroying homes

Israeli forces used aerial bombing, tank shelling and armoured bulldozers to eliminate the productive capacity of some of Gaza's most important manufacturing plants during their 22 days of military action in the Gaza Strip. The attacks – like those which destroyed at least 4,000 homes, left some residential areas resembling an earthquake zone and more than 50,000 people in temporary shelters at their peak – destroyed or severely damaged 219 factories, Palestinian industrialists say.

Leaders of Gaza's business community – who have long stayed aloof from the different Palestinian political factions – say that much of the 3 per cent of industry still operating after the 18-month shutdown caused by Israel's economic siege has now been destroyed.

Chris Gunness, chief spokesman for the UN Relief and Works Agency (UNRWA), said that widespread destruction of "civilian economic infrastructure" was a strike "at the heart of the peace process" because "economic stability is an essential component of a durable peace."

While the main impact of the destruction is likely to be on the already politically fraught prospects of medium to long-term reconstruction in Gaza, it it is unlikely to make efforts to help its many stricken and displaced residents any easier. It is those humanitarian relief efforts for which the main British aid agencies are appealing for help in the advertisement so far barred by the BBC. Meanwhile, the UNRWA is separately pressing donors for $345m for immediate repairs to homes still standing and to its own damaged premises.

The destroyed factories include: Alweyda, the biggest Palestinian food-processing plant and the only one still operating in Gaza until the war; Abu Eida, the largest, and now flattened, ready-mixed concrete producer; and the 89-year-old Al Badr flour mills, which have the biggest storage facilities anywhere in the Strip. The owners of all three said yesterday they were proud of their close and long-standing contact with Israeli partner firms and suppliers. Dr Yaser Alweyda, owner and engineering director of the demolished food-processing plant, estimated the total damage to his plant at $22.5m and accused Israel of wanting "to destroy the weak Palestinian economy". He added: "They want to ensure that we will never have a state in Palestine."

Tawfiq Abu Eida, the owner of the concrete factory, said he had been preparing just before the war to supply the Beit Lahiya sewage works, a key project of the Middle East envoy Tony Blair.

The air and ground strikes have compounded the impact of the trade embargo, which Israel imposed in June 2007 after Hamas's enforced takeover of the Strip. Amr Hamad, the executive manager of the Palestinian Federation of Industries, said: "What they were not able to reach by the blockade, they have reached with their bulldozers." He added: "Businessmen are not connected at all to Hamas and are very pragmatic and open-minded.

"They are the the last layer in Palestinian society who believe in peace and the importance of the economy. They also believe that the only economic link should be with Israel," Mr Hamad said.

The Israeli Prime Minister, Ehud Olmert, told his cabinet that with "typical moral acrobatics", the "terrorist organisations" were trying to lay the blame on Israel, and that "the State of Israel did everything in order to avoid hitting civilians." Israel would ensure that soldiers and officers who took part in the operation would be safe from any tribunals investigating them, he said.

At the Al Badr mills in Sudaniya, north of Gaza City, owner Rashed Hamada, 55, said his company had been making flour for bakeries right up until the attack on 10 January. He strongly denied that his compound, which was locked at night and had a security guard, had been used by Hamas gunmen, and said it was clear the production line itself had been the target.

"It seems that the father of the commander had owned a flour mill," he commented ironically. "He knew exactly where to hit. The Israelis ... used to encourage me to expand production here. Now they have destroyed it. I don't understand why."

Standing beside mangled and incinerated refrigeration vans and the burned-out ruins of his food factory and warehouses, located for ease of access to Israel between the eastern Gaza City district of Shajaia and the border 650 metres away, Dr Alweyda said that, as well as the production lines, 26 vehicles had been destroyed. The company, sole Gaza agent for Tnuva, an Israeli milk-products company, had managed to keep biscuit production going up until the outbreak of war. The Israeli military said yesterday that it was still investigating allegations of civilian casualties and property damage but that it "does not target civilians or civilian infrastructure, including factories, unless it is being used by Hamas for terrorist purposes."

But Amr Hamad said that he believed the two purposes of the strikes was to make Gaza's economy dependent on Israel's, and to stimulate popular pressure on Hamas to agree to certain compromises as a precondition to a reopening of the crossings – such as allowing the Ramallah-based Palestinian Authority control of the crossings and also the release of Israeli corporal Gilad Shalit, abducted two-and-a-half years ago by Hamas and other militants.

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