The political economy of a lasting Israel-Hamas truce.

• Author: Linetsky, Zuri
• Position: COMMENTARY - Essay

Under the terms of the ceasefire that ended the 2014 Gaza War, Israeli and Palestinian representatives were to meet in Cairo in the last week of October to discuss a framework for a long-term truce between Israel and Hamas. Both sides' terms are already known, and therefore these talks would have focused--and may yet still--on the acceptability and implementation of the existing terms (as of this writing the talks have been postponed because of instability in the Sinai).

The signing and enforcement of a sustainable ceasefire has tangible benefits for both sides. First, it can serve as an identifiable set of reference terms, which can be used as a foundation for changing the nature of relations between Israel, Hamas, and the Palestinian Authority (P.A.). Second, and potentially more valuable, a sustainable ceasefire could deliver significant economic and security benefits for all sides: economic growth brought on by a ceasefire would contribute to the creation of a self-sufficient Palestinian economy as well as a more secure Israel. Finally, an economically self-sufficient Gaza could help reinvigorate final status negotiations.

Gaza has been economically and politically blockaded by Israel since Hamas' victory in the 2006 Palestinian Legislative Elections, and its subsequent defeat of an abortive (US-backed) coup attempt in Gaza launched by Fatah in 2007. This blockade marked an increase in existing Israeli security measures around Gaza, which Israel has controlled since the 1967 War. Since then, economic and political restrictions have varied, ranging from limitations on movement from 1967-1988 to a complete blockade and heavy restrictions on the movement of people and goods. Since 2007, the blockade has been so severe that Israel has, at times, banned even the importation of pasta, tea, coffee, semolina, and milk products in large containers.

The Palestinian Central Bureau of Statistics reported that in the fourth quarter of 2013 total unemployment in Gaza stood at 38.5%, with unemployment as high as 48.1% in Rafah--by comparison unemployment in the West Bank was lower, relatively, at only 18.2% in the same period. According to the United Nations Relief and Works Agency, GDP per capita in Gaza dropped from $1,327 US in 1994 to US $1,165 in 2011. The importation of basic goods has been strictly limited, as has aid, power, and electricity. Furthermore, Gaza was unable to export any domestically produced goods between June 2007 and October 2014.

Consequently, Hamas has demanded since 2008's Operation Cast Lead, an end to the blockade of Gaza's ports, land crossings, and airspace, in exchange for a ceasefire. Following 2012's Operation Pillar of Defense, Hamas' ceasefire demands were codified in an Egyptian and U.S.-brokered ceasefire deal: both sides committed to end hostilities while Israel and Egypt agreed to open all border crossings into Gaza (thereby allowing the free movement of people and goods). The ceasefire also should have allowed Gaza fishermen to work six nautical miles off the Gazan coast.

Hamas largely met its obligations as part of the 2012 ceasefire deal, yet Israel largely avoided implementing much of the ceasefire's requirements. Nearly the exact same language was used in the ceasefire deal for Operation Protective Edge. It is important that this not be repeated.

If the blockade is lifted, and a ceasefire holds, major benefits will likely accrue to the Gazan economy, to say nothing of the humanitarian relief. It is worth stressing, though, Israel will also benefit from a more economically free and developing Gaza. From an economic perspective, a Gaza in which the Palestinian Authority presides over state (re)building as well as real economic expansion (as party of a unity government agreement) will increase customs revenues for Israel, expand the Israeli construction market, and provide more migrant labor for semi-skilled work inside Israel. These economic benefits are real and important for an Israeli economy that must accommodate the 16% of its population that is poor, as its GDP has actually contracted 0.09% in the wake of the 2014 war.

Israel will also reap several security/ strategic benefits. A Palestinian...