Hamas sanctions squeeze the life out of West Bank
By Jane Flanagan in Nablus
Afrah Jowdad, 32, toyed forlornly with her four prized bracelets for the last time before handing them over to the merchant in the ancient West Bank gold market of Nablus yesterday.
"They were given to me by my husband as a dowry on my wedding day, so to lose them is to lose my best-loved memories," she said. "But I have six children and no other way to pay for food, so I have no option other than selling my bracelets."
Outside the Star Display jewellery emporium, a line of Palestinian women, in traditional hijab dress, queued patiently to sell rings, necklaces and other finery. To sell one's dowry brings shame on Palestinian families but these are such desperate days in Gaza and the West Bank that basic needs prevail over social mores.
"I have never seen anything like this: I am averaging 400,000 shekels [£50,000] of gold purchases every day," said the merchant, Abdel Hakim Hawari, 40.
The rush to sell family heirlooms in the occupied territories is the starkest proof yet of the imminent economic meltdown faced by 3.5 million Palestinians, as sanctions against the new Hamas government begin to bite.
Even before Hamas was elected, the economy was faltering and heavily dependent on financial support from Europe and America. But the decision by Brussels and Washington to withdraw funding until Hamas moderates its militant anti-Israel stance has pushed the fragile economy to collapse.
Overnight the money has dried up as 167,000 public-sector employees, the economy's largest body of earners, no longer receive wages from the Hamas-controlled Palestinian Authority (PA). The impact is all the greater for Israel's clampdown on the territories, which has stopped thousands of Palestinians from crossing into Israel to earn a living.
With Hamas refusing to condemn a recent suicide attack, aid workers fear that the isolated Palestinian government - and the limited services available to its people - may soon collapse. Aid agencies would be overwhelmed if expected to pick up the pieces.
"All the international aid agencies put together will not be able to replace the services that the Palestinian Authority provides," said David Shearer, the head of the United Nations Office for Humanitarian Affairs.
As government coffers empty and the flow of trade and goods into the Palestinian territories dries up, medical supplies in hospitals are running dangerously low and basic food supplies are unaffordable for most families.
Last week a group of 36 aid agencies working with Palestinians, including the British groups Merlin and Save the Children UK, wrote a joint letter to Israel urging it to fulfil last November's agreement to allow trade in and out of Gaza. Israel has remained insistent on keeping tight checks on traffic to prevent terrorist attacks.
The economy of the Palestinian territories has been propped up by outside support since the early 1990s, when the PA was created out of the Oslo peace process as the future government of a nascent Palestinian state. In spite of the continued fighting that stalled progress towards creating a Palestinian state, the international community kept faith with the PA, ploughing in billions of pounds.
The World Bank estimates that only 12 per cent of the PA's economic activity was ever internally generated. The rest came from outside, either through Palestinians earning wages in Israel or foreign donor support. When Yasser Arafat, then the Palestinian leader, launched the armed intifada in late 2000, Israel closed the checkpoints to the occupied territories, reducing the income from foreign earnings to a trickle. By the time Hamas won power in January's general election, the PA was in debt to the tune of £451 million.
When aid was suspended by Brussels and Washington, Hamas asked Muslim nations for funding and won promises of tens of millions of pounds from friendly Arab nations - only to run into another problem. International banks have refused to transfer these Arab funds to the PA, for fear of being proscribed by the United States banking authorities for helping Hamas, which is on Washington's list of terrorist organisations.
They have reason to be cautious. Five years ago, when al-Aqsa Islamic Bank in the West Bank city of Ramallah was described by President George W Bush as "a financial arm of Hamas'', its global business vanished overnight. Both America and Europe agree that economic sanctions should hurt the Hamas administration, not the Palestinian people. But so far, it is people such as the Jowdads of Nablus, selling family heirlooms, who are making the painful sacrifices.
"I just don't know what is going to happen when people run out of gold to sell," said Mr Hawari, as he raked in the profits from today's high international gold prices. "This cannot go on for ever and, when it finishes, there will be trouble."