Conflict leaves Gaza reeling from economic toll

For nearly four decades, Al Awda Co. has stocked Gaza’s shelves with sweets and snacks, starting as a humble refugee-camp bakery and growing into a 180,000-square-foot factory with 600 workers. On Wednesday, all that was left was a faint whiff of chocolate amid the sour smell of a fire that burned for three days.

A barrage of Israeli artillery turned Al Awda into a charred graveyard of machinery and material. The $1.3 million German control panel that powered the place became a metal cabinet of fried wires. Some 300 tons each of sugar, flour and margarine — gone. Metal roofs collapsed, cinder-block walls had gaping holes, floors were carpeted in rubble.

During Israel’s monthlong air-and-ground assault on the Gaza Strip, the world’s attention has focused on the more than 1,800 Palestinians killed and the more than 30,000 homes destroyed or damaged.

But as a temporary truce held and talks toward a longer-term cease-fire began Wednesday, business leaders said that 175 of Gaza’s most successful industrial plants had also taken devastating hits, plunging an already despairing economy into a deeper abyss.

Ali Hayek, head of Gaza’s federation of industries, said these factories directly provided perhaps 5,000 of the most stable jobs in this impoverished Palestinian sliver, where the latest estimates of unemployment are as high as 47 percent. The collateral damage is exponential,  Hayek said.

Legions of drivers will be without cargo. Rebuilding anything is that much harder with 63 construction companies offline, including several cement makers.

The destruction of Al Awda alone threatens its suppliers of milk, plastic wrapping, flour and cardboard boxes. Then again, Hamada, a huge flour mill in Gaza City, and Khozendar, Gaza’s only carton-maker, are also gone,  Hayek said, along with 21 food companies, 10 clothing manufacturers and the entire industrial zone in the northern town of Beit Hanoun.

“After 30 days of war, the economic situation has become, like, dead,” said  Hayek, whose group represents 3,900 businesses employing 35,000 people. “It seems the occupation intentionally destroyed these vital factories that constitute the backbone of the society.”

Lt. Col. Peter Lerner, a spokesman for the Israeli military, said Wednesday that he did not have a specific explanation for the attack on Al Awda, but that “categorically, we do not target factories.” “We target facilities that have been involved in rocket manufacturing,” he said, “or locations that rockets have been launched from.”

Palestinian officials plan to ask international donors for $6 billion to rebuild Gaza this fall. But after Israel’s 2008-9 Operation Cast Lead, in which more than 1,000 small businesses and workshops were wiped out, a promised $4.7 billion never materialized, people in Gaza say.

Omar Shaban, an economist who lives in the central Gaza town of Deir al-Balah and has known Al Awda and its owner since childhood, has long been talking about the structural dysfunction in Gaza. Israel severely restricts imports, exports, farming and fishing. The government payroll is bloated and a black market had thrived, fueled by hundreds of tunnels to Egypt, used for smuggling goods.

Exacerbating the crisis, the new Egyptian government closed most of those tunnels last summer, idling even internationally funded construction projects. The Hamas-run government lost millions in tax revenue, its employees lost paychecks, and prices for diesel, cars and consumer products shot up.

Now, after the loss of the factories,  Shaban said, “The condition of our society needs new terms that do not exist in any textbook.” “We should stop asking about the percentage of unemployment and start talking about the percentage of employment,” he said. “I try hard to draw the boundary of the problem - it’s borderless. It’s a long list of cause and result; this will lead to that, which will lead to that. It’s a circle of impacts that will cause another problem.”

Though he is wealthier than all but a few of Gaza’s 1.7 million residents,  Telbani’s story is Gaza’s story. Like some two-thirds of the population, he is classified as a refugee, his family having lost its home in Beersheba at Israel’s founding (his company’s name, Al Awda, means “return”).

Like many men of his generation, his first jobs were inside Israel, in restaurants and construction projects. But after years of exporting its snacks and sweets to the United States, Europe and the United Arab Emirates, Al Awda has only managed to get a few trucks of inventory to the West Bank over the last decade because of Israel’s blockade.

Symbol of resilience

In Gaza, Al Awda is more than a staple of pantry shelves and party platters. Schoolchildren take factory tours as field trips. It is a symbol of Palestinian resilience and entrepreneurial possibility. Telbani said the company had more than $1 million in sales each month for its dozens of products — the classic Family Wafers in strawberry, lemon and other flavours, along with biscuits, pretzels, chocolate-covered marshmallow creams, corn puffs, ice cream and juice. He estimated it would take $20 million to rebuild the factory.

Eyad Mohammed Telbani, 37, the oldest of  Telbani’s 12 children and deputy chief of the business, said that when the war began, during the Muslim holy month of Ramadan, he and three brothers-in-law had slept at the factory’s entrance and taken their pre-dawn breakfasts and post-fast iftar dinners there.

A few shells hit the six-building factory, just east of the main Saladin Street in Deir al-Balah, 10 or 12 days ago, the younger Telbani said. Then, on Thursday — exactly a year after his brother Alian, 26, was killed at the factory during a robbery — the real assault came, at about 8 a.m. More shells came while firefighters tried to extinguish the flames, he said. The next day, even more.

Above the administrative office, the third-floor apartment where one of the elder  Telbani’s three wives lived with her three small children is in ruins. Metal pots lie amid the broken tiles in what was the kitchen; a standing fan is half buried in a small bedroom. A red fire extinguisher sits in the doorway.

On the second floor, Telbani’s own grand quarters are intact: A woman mopped the broad tile floor under faded ceiling friezes and chandeliers. But his bedroom overlooking the shipping area reeks of smoke.

The minarets of the mosque next door, which  Telbani paid to build six years ago and named Al Awda, were also hit. Two containers of medicine that the Red Crescent society had stored in the ice cream factory when it ran out of refrigerator space were destroyed, along with 40,000 treats.

On Wednesday, the second day of a promised three-day halt in hostilities, a couple of dozen men were on site, sliding boxes of “The First Wafers” down a makeshift metal chute and onto trucks. But even these may be unusable because of smoke damage.

Ahmad Tawashi, 30, has been working at Al Awda as a technician for five years, making the minimum rate, about $250 a month. His wife is about to deliver their fourth child, and he wonders how he will pay the hospital bill. If his home had been destroyed, Tawashi said, he could work to earn enough money to rebuild it. But without the factory, he said, “I don’t know what will happen.”