As the Israeli blockade eases, Gaza goes shopping

The newest mall in Gaza City is filled with goods imported from Israel, not smuggled in through tunnels from Egypt. Donald Macintyre reports

Hila Abdul Wahad, a new graduate in commercial accounting from the Islamic University, was enthusiastic as she window-shopped her way round the eight new stores on the second floor of the shopping mall. "It's great that this is happening in the situation we're in," she said. "We should be proud. It feels that we are outside of Gaza, it's like ... [she paused briefly] ... being in Egypt."

Ms Wahad, 21, had only bought a £2 family sized stick of deodorant - which she said would have cost her £2.50 elsewhere - but admitted that she had an ulterior motive. "I've really come to ask the management for a job," she said.

Ms Wahad was among the 3,700 visitors who flocked to Gaza's first shopping mall in the eight hours after its televised grand opening, attended by the Labour Minister in the Hamas de facto government, Abu Osama al-Kurd. The Gaza Mall is small – just two floors, with a supermarket and fast food restaurant at ground level – but air conditioned. It has no lift – as yet – but above the staircase, a screen displays real-time images of shoppers from the closed-circuit security television cameras.

The stores on the floor include a pharmacy and one selling women's clothes including black abayas for the more traditional dressers that abound in Gaza. The carrier bags in each carry the same logo; and all 60 sales assistants are employed directly by the mall's owners. The mall has its own website offering home delivery. Separate quiet rooms have been included for men and women to pray.

"We want people to come here and find all kinds of products in the same building," says Hassan Nissar, the finance director of the Gaza Shopping Centre company, which owns the mall. "We are working hard to improve lives and let happiness enter the hearts of people. We want them to go to a shopping centre for a trip."

The mall has electrified the conservative blogosphere, now seething with claims that it makes a mockery of the idea that its residents are suffering from the blockade which Israel imposed on the territory three years ago and last month decided to partially ease.

But in fact the shops are selling much the same wares that have long been available in other stores and at a lower price, an important plus when unemployment has been running above 40 per cent and over 60 percent live below a poverty line of $2 per day.

The difference is that most consumer goods were previously smuggled through the tunnels from Egypt – whereas the mall's managers say 90 percent of its new stock is imported from Israel.

According to Ms Wahad, jeans going at 80 shekels [£13.50] in the mall compare with ones for 150 elsewhere. Another shopper, Lemis Baroud, 30, visiting the store with a friend, said: "We came to see how it is. The prices are good. When I first came, I thought a new mall would be expensive but it is cheaper."

Meanwhile, the children's clothes store is well stocked with Chinese-made girls dresses imported by the Taha family. Ibrahim Taha, 20, in the store to train the freshly recruited sales assistants, said that the stock, now coming through the Israeli crossing at Kerem Shalom would be slightly cheaper than in his own longer-established store elsewhere in Gaza City.

There is a widespread assumption in Gaza that Hamas, its de facto government, or at least businessmen close to the Islamic faction, are behind the venture, though Hamas denies it. In the mall's administration office, Sarraj Abu Sleem, one of the investors in the business, insisted: "The government supports this economic project but the only help it has given us has been to grant us a licence."

Mr Abu Sleem, who declined to name his fellow investors, said that the mall cost $1.5m to construct.

Echoing traders and employees in the mall itself, one prominent Gaza business figure who declined to be named because of the political sensitivity said he believed that the Islamic faction was indeed behind the mall.

He suggested it was part of a new wave of businesses, mainly in retail and leisure services which show a quicker return than manufacturing, that had been started by the regime with the help of the tunnels economy that has flourished since the blockade decimated legitimate industry.

These range from the openly Hamas-owned Asdar Media Centre, which combines film production with a livestock farm, to the Crazy Water Aqua Fun Park for children, one of whose directors is believed to be Mohammed Al-Araj, the economics minister in the first government after Hamas won the elections in 2006.

Al Bustan, another leisure complex on the beach north of Gaza city, including one of the most affordable restaurants along the coast, was also opened at a ceremony attended by, among others, the Hamas Interior Minister, Fathi Hamad, and a group of prominent elected Hamas members of the Palestinian Legislative Council.

One unconfirmed theory is that the faction may be using some of the revenues as a source of funds given that Egypt's prohibition on senior Hamas figures leaving Gaza has made it more difficult for the faction to bring ready cash across the border. "They don't want to admit who is behind these operations," the business leader said, "because whatever political change there is in the future, they don't want to be uprooted."

Meanwhile, longer-established manufacturing industry in Gaza is struggling to make the most of the easing of the embargo by bringing limited parts of Gaza's productive economy flickering back to life.

Cement and other construction materials – except, gradually, for selected and internationally supervised construction projects – are still prohibited. But though most new imports from Israel are ready-made consumer goods, some timber, fabrics, thread, industrial cocoa, packaging, along with glass, metal and plastic containers have entered through the Kerem Shalom crossing in recent days. (A few long delayed individual items for a health service seriously undermined by the three year embargo, including a CT scanner, have recently entered Gaza. However, the World Health Organisatio reports that many others are still facing long bureaucratic delays, along with its urgent requests for medical technicians to go out of Gaza for training or to enter to install and maintain equipment)

According to Gisha, an Israeli human rights agency, the number of truckloads entering Gaza has risen from 25 per cent of pre-June 2007 levels to – last week – 40 percent.

Israel has promised to increase the capacity of Kerem Shalom from 180 to 250 trucks a day, but to reach the 100 per cent level would require a major crossing like the biggest for cargo, Karni, to be fully open.

And even that 100 percent would not meet the huge backlog of construction and raw materials needed after a siege and a devastating war. Since June 2007, Gaza crossings have been closed to all exports and all imports, bar essential humanitarian goods. While the ban on imports has been partially eased, that on exports, which accounted for a high proportion of Gaza's manufacturing output, is still in force.

"Without a substantial increase in the capacity of the crossings, well beyond what Israel is promising, and without export, there will be no economic recovery," said Gisha's director, Sari Bashi.

Two companies in Gaza that used to rely 100 per cent on exports are a case in point. The Gaza Juice Factory is now on a two-day week because its embargo-caused reliance on the domestic market has been undermined by the arrival of Israeli juice among other consumer goods now flowing into Gaza.

But the Aziz factory – one of hundreds of clothing manufacturers that have closed down in Gaza – which until June 2007 was employing 100 workers making jeans for an Israeli importer has now imported enough fabric for modest production of jeans and T-shirts for the Gaza market with seven rehired employees.

Determinedly optimistic, Aziz Aziz said: "If things go on like this, I hope we can go back to where we were before"

Back at the Gaza mall, Ibrahim Taha insists that if he could buy his children's clothes from Gaza manufacturers, he would switch away from Chinese imports.

Amr Hamad, the director of the Palestinian Federation of Industries, last week explicitly welcomed Israel's undoubted change of policy, but estimated that only a few hundred of Gaza's 3,900 pre-siege factories and workshops will be able to start up again under present conditions. Which is one reason that the international community envoy Tony Blair is still pressing Israel to lift the export ban.

It may still be too early to evaluate the change fully. But Sami Abdel-Shafi, an independent business consultant, warned that "whatever goods appear in Gaza, people's lives will continue to be short-circuited for as long as they are unable to move freely or rebuild an economy which produced export-quality goods and employed hundreds of thousands of people who then became beggars for aid."

Even a bright new shopping mall cannot change that reality.