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Thursday Oct. 14, 2010 3:00 PM (EST+7)
West Bank firms encounter new laws in Gaza

Read more: Hamas, economics, business, blockade, closure

RAMALLAH, West Bank, Oct 14 (Ali Sawafta/Reuters) - Palestinian firms in the West Bank say the Hamas group which governs the Gaza Strip is planning new business regulations that will deepen an economic and political chasm between the territories. In the last few months, West Bank-based firms have begun to rediscover the market in the Gaza Strip, home to a third of the Palestinian population, as Israel has eased restrictions on goods allowed into the territory.

But they say they are encountering new Hamas measures, including a demand that they register their businesses -- a step they said indicated the Islamist group planned to levy new taxes on their operations.

A source close to the Hamas government said some companies had been asked to register in Gaza. No action has been taken to force companies to do that, said the source, who declined to be identified.

The complications faced by firms seeking a slice of the Gaza market underline the deepening divide between territories where the Palestinians hope to found their state.

Hamas has been in full control of Gaza since 2007, when it defeated forces loyal to President Mahmoud Abbas. Hamas sees itself as a legitimate government because of its victory in 2006 legislative elections -- the last held by the Palestinians.

The Palestinian Authority (PA), which is based in the West Bank, said measures imposed by Hamas in Gaza aimed to divide the Gaza Strip economically from the national economy.

Hamas is listed as a terrorist group by Western states because it will not renounce the use the use of violence against Israel. It does not recognise Israel and opposes Abbas's strategy of seeking a negotiated peace deal.

The group governs Gaza in the face of tight economic and financial sanctions. But it has built a bureaucracy and security services which employ some 35,000 people.


Though supported by Iran and Syria, getting funds from abroad is no easy task for Hamas. It is banned from using the international financial system. Earlier this year, it began raising taxes on goods to develop sources of revenue in Gaza.

The source close to Hamas said the PA had made companies once based in Gaza register in Ramallah, depriving Gaza of tax that can be used to upgrade infrastructure and other public services. The PA was trying to destroy the Gaza economy.

Businesses in the West Bank already pay taxes to the Ramallah-based Palestinian Authority. They warn that being taxed by authorities in both Gaza and the West Bank will force them to pass on increased costs to the consumer.

Hamas has notified my company verbally of the need to register in the Gaza Strip officially so that it can send goods from the West Bank to the Gaza Strip, one businessmen said. Two others said they had received similar notifications.

They declined to be named out of concern it would affect their business interests. They have given us until the end of November to do so, the businessman said. Gaza's economy, battered by the impact of the blockade and war, grew by 16 percent in the first half of this year as more goods were let in, according to an International Monetary Fund report. However the growth is from a very low base, it added.

For businesses in Gaza, the West Bank and most other markets beyond the coastal territory remain off limit due to tight Israeli curbs on what is allowed out.

A ban on exports remains firmly in place, according to Gaza Gateway (, a site set up by Israeli human rights group Gisha.

By contrast, the West Bank economy has enjoyed strong growth in recent years which Western-backed Palestinian policymakers attribute to generous donor support, relative stability and improved law and order. (Additional reporting by Nidal al-Mughrabi in Gaza; Writing by Tom Perry; editing by Noah Barkin)







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