7-year-old Gaza closure key in Israel-Hamas talks

DEIR EL-BALAH, Gaza Strip -- Mohammed al-Telbani lost his life's work when Israeli shells repeatedly slammed into his four-story snack and cookie factory during the Gaza war, finally sparking a fire that engulfed vats of margarine and sacks of cocoa powder.

As he contemplated starting over, sitting near the smoldering ruins of one of Gaza's largest factories, he looked to Cairo for answers. There, negotiators from Israel and Hamas launched another attempt Monday to negotiate an end to the 34-day-old war -- and, perhaps even more crucial for Gaza's 1.8 million people, reach a new border deal for the coastal territory.

Gazans haven't been able to trade or travel freely since Israel and Egypt imposed stringent border restrictions in response to the violent Hamas takeover of the territory in 2007. The closure also deepened Gaza's separation from the West Bank and east Jerusalem, areas on the opposite side of Israel that, along with Gaza, are envisioned as part of a future Palestinian state.

The blockade was meant to isolate the Islamic militant Hamas and perhaps loosen its grip on power. Seven years later, Hamas remains rooted in Gaza, albeit weakened by a financial crisis brought on by the closure as well as thousands of Israel airstrikes over the past month.

Gaza's civilians have borne the brunt of the blockade.

Unemployment -- already at 30 percent in 2007 -- has risen to 45 percent, according to official figures. Tens of thousands of jobs have been wiped out. The main U.N. aid agency in Gaza says it provides food aid to about 800,000 Gazans, 10 times the number it helped in 2000, when Israeli travel bans linked to unrest intensified.

A ban on virtually all exports from Gaza, along with the destruction of scores of factories in three rounds of fighting, has reduced the number of manufacturing businesses from 2,400 to 400 over eight years, according to a local business association.

Al Awda, al-Telbani's snack business, was big enough to survive by shifting to local sales and he says he will likely rebuild because he needs to make a living. If the borders were open, though, he could do it better and faster.

"I could employ 2,000 workers instead of 450 if I could export," said the 62-year-old, a self-made man who grew up poor in a refugee camp. "Instead of producing 40 tons [a day], I could produce 120 tons."

Yet hopes are faint that the indirect Cairo talks, run by Egyptian mediators, will deliver a brighter future.

Israel says it won't lift the closure unless Hamas disarms. It argues that Hamas has exploited eased restrictions in the past to boost its military infrastructure, diverting cement and steel imported for schools and homes for the construction of tunnels used as staging areas for attacks on Israel.

Hamas views such a demand as an existential threat. It fears that if it disbands its 20,000-strong fighting force and hands over remaining rockets -- essentially dropping its core principle of armed struggle against Israel -- it will become indistinguishable from rival Fatah, the movement of Palestinian President Mahmoud Abbas that has tried and failed for two decades to win statehood through negotiations with Israel.

The Cairo talks might not produce more than an easing of the current restrictions.

Partial solutions could include Israel allowing more building materials into Gaza, under international supervision, for postwar reconstruction.

In any scenario, Abbas is expected to regain a foothold in the territory he lost in 2007, with some of his forces to be deployed at Gaza's crossings to allay security concerns by Israel and Egypt.

Europe wants a broader deal and has proposed a sea corridor for passengers and cargo between Gaza and Cyprus, with international inspection points at both ends. This would give Gaza its own gate to the world, independent of Israel and Egypt.

The Palestinian delegation, which includes representatives of Hamas, Fatah and other factions, has welcomed the plan. But it's not clear if Israel and Egypt would readily give up leverage over Gaza without Hamas relinquishing power.

Any partial deal could ease life in Gaza. However, economists say that real development depends on free trade and movement.

Since slamming Gaza's gates shut, Israel has repeatedly recalibrated the restrictions, and, in recent years, it has allowed more consumer goods into the territory.

The goal is to "enable civilians to earn a livelihood while not allowing Hamas to improve its terror capacities," said Maj. Guy Inbar, an Israeli military spokesman.

However, some say Israel has overstretched the security argument.

Israel's Gaza policy "goes way beyond what is necessary for security," said Sari Bashi of the Israeli rights group Gisha, which lobbies for access to and from Gaza. "Israel is pursuing political goals in restricting travel."

The closure-enforced separation between Gaza and the other two Palestinian territories might make it harder to establish a Palestinian state in all three, as envisioned in a 2012 vote by the U.N. General Assembly.

Israel withdrew from Gaza in 2005, but seeks to keep all of east Jerusalem and parts of the West Bank in any deal with the Palestinians.

Currently, Gaza's captive market imports tens of millions of dollars a year in goods either made in or imported via Israel. This means stores are flooded with yogurt, instant coffee and apples from Israel, but fewer and fewer people can afford to buy them.

At the same time, a ban on exports to Israel and the West Bank, traditionally Gaza's main outlets, remains in effect. Gaza farms and factories can sell to third countries, but complex border procedures and high shipping costs render such sales largely unprofitable.

Gisha says Gaza exports have dropped to 2 percent of the pre-2007 level.

Farmer Munther al-Bodi used to export 1,500 tons of strawberries a year, most to Israel and the West Bank. Now he sends a few tons to Europe, supported by Dutch subsidies. The shipments are trucked from Gaza, through Israel and the West Bank to an airport in Jordan.

Al-Bodi said Israel's rules make no sense, since the truck heading to Jordan, having cleared stringent Israeli checks, could just as easily unload in the West Bank. "It's collective punishment," he said.

Only about 5,000 to 6,000 Gazans cross into Israel each month for short trips, a majority medical patients or merchants. Gazans are prevented from moving to the West Bank to live.

Inbar, the Israeli official, said the continued separation is necessary on security grounds, alleging that Hamas has exploited direct contacts between Gaza and the West Bank to plan and order attacks.

Al-Telbani, the factory owner, said that if Israel allowed Gaza to flourish and reconnect with the world, most in Gaza would be busy earning a living, instead of being drawn to militant ideology. "If you allow the building of a (sea) port and of an airport, Hamas won't have anything to say," he said.

------

Associated Press writer Ibrahim Barzak in Gaza City contributed to this report.