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Debt lands hundreds in jail as Gaza economy tanks

Palestinian children sit by sacks of food provided by the United Nations Relief and Works Agency in the Gaza Strip where 40 percent of the two million population are dependent on aid
SAID KHATIB (AFP/File)
Much of the world has dropped the policy of imprisoning debtors, but in Gaza it is still common.

Sameh al-Madhoun's eyes fill with tears as he recalls his fall from successful businessman to prisoner in a Hamas jail in Gaza.

Once the owner of a flourishing car dealership, he is one of more than 40,000 Gazans charged in the last year with failing to keep up debt payments as the economy in the Palestinian enclave collapses.

Madhoun, a 40-year-old father of four, has sold most of his possessions, including his house and some of his cars, in a bid to pay back the $3 million (2.4 million euro) debt that dragged his business into bankruptcy.

"I have paid off half of it until now. I don't know how I will pay off the rest," he told AFP from his jail cell. 

"I don't own anything else now except these debts."

A decade-long Israeli blockade and a dispute between Gaza's Islamist rulers and the West Bank-based Palestinian Authorities have brought the coastal territory's economy to its knees.

MOHAMMED ABED (AFP)

Some 42,500 people were arrested in the past year for failing to pay debtors, according to Hamas police.

At least 600 are currently in jail on similar charges.

Madhoun has been detained since September, but is allowed to leave two days a week to see his young children and search for the money to pay back his debtors.

AFP met him both in prison, after being granted access by Hamas, and during one of his leave days at his former company -- now just a few cars gathering dust.

"The market collapsed. Even though prices fell there were no customers," Madhoun said.

"If it continues all the businesses in Gaza will fail."

- Economy 'all but dead'-

The economy of Gaza, a Palestinian enclave of two million people sandwiched between Israel, Egypt and the Mediterranean, is "all but dead," said Maher Tabba, an official at the territory's Chamber of Commerce.

As Gazans' buying power has collapsed, the amount of goods being imported into the Strip has more than halved in just seven months, according to border officials.

Tabba said some $112 million-worth of cheques bounced in 2017, up from $62 million in 2016.

That, he said, is "clear evidence of an economic collapse".

SAID KHATIB (AFP/File)

Tabba estimates that several hundred of those currently in prison are owners of struggling or failed businesses.

In an attempt to contain the crisis, the Public Prosecutor's Office in Gaza recently announced it would give people an extra month to find the money to service their debts.

Much of the world has dropped the policy of imprisoning debtors, but in Gaza it is still common.

Israel has maintained a blockade of Gaza since 2007 which it says is necessary to isolate Hamas, with which it has fought three wars since 2008.

Rights groups and UN officials say it amounts to collective punishment and strangles the economy in the enclave, where unemployment is around 40 percent.

But the Palestinian Authority has also sought in recent months to harm Hamas by damaging Gaza's economy, including by cutting the salaries it still pays to civil servants there despite Hamas taking over the territory in 2007.

Hamas has also largely stopped paying civil servants after an attempted reconciliation with the Fatah movement of president Mahmoud Abbas stalled.

SAID KHATIB (AFP)

- 'Market collapsed' -

The United Nations' top official for Israel and the Palestinian territories says Gaza is facing a "full collapse."

Even Israelis are publicly raising the alarm.

The head of the army reportedly warned Israel's cabinet recently that a conflict could break out if humanitarian conditions continue to worsen in the Strip.

Another trader jailed in November, who didn't want to be named, said 35 people had been laid off when his company went bust.

"Everything I have built since I set up the company in 2002 was lost in the last year. My debt reached more than a million and a half dollars," he said. 

"I was selling property to service the debt, but I wasn't able to pay it fully."

The trader said Gaza's financial woes are a result of the political situation -- and that nothing less than a solution will enable the economy to recover.

"The market collapsed because of the siege and the crisis with PA salaries," he added.

"While there is no political stability, there will not be economic security here and the market will not rise again."

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