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Gaza jobs meltdown: an ice-cream firm's tale

Some 68,000 jobs have been lost since Hamas's takeover spurred an Israeli blockade of the struggling area.

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The four core issues are the borders of a Palestinian state, a division of Jerusalem, a removal of Israeli settlements, and the fate of Palestinian refugees.

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Olmert suggested a slower pace. "I came here ... to discuss ... the fundamental issues outstanding between Israel and the Palestinian Authority hoping that this will lead us soon into negotiations about the creation of a Palestinian state," he said.

In Gaza, the blockade is already biting deep. Michael Williams, a coordinator for the UN's regional efforts, told the Security Council last week that 75 percent of factories have closed since Hamas took over. He quoted World Bank data that found that since June, 68,000 jobs have been lost in the teeming strip, home to 1.5 million people.

The rapid impact isn't surprising. Israel forbids sea traffic in and out, there aren't any airports, and Israel has shut the crossings into its territory and into Egypt to all but humanitarian traffic.

Now, businessmen like Masri express despair. Since June, Masri has laid off 150 employees – more than half of his workforce – has cut production by 80 percent, and is starting to worry about where to borrow the money to pay the bills. He said sales were about 10 million shekels ($2.5 million) last year. This year, he says, "we'll be lucky to hit 2 million." Six years ago, his business was thriving.

In addition to his Gaza factory, he and his partners owned two joint ventures in the Erez Industrial Zone on the Gaza-Israel border – one that made ice cream for the Arab-Israeli market, the other a joint venture with Jewish Israelis who made kosher ice cream for religious Jews.

Those factories were shut after the zone was closed in 2004 because of persistent Palestinian attacks in the area.

"I've always been willing to do business with Israel – I was proud of the reputation our product had in the kosher market. I was a huge investor in Erez. Now, I'm treated like a terrorist," says Masri.

Business has also suffered as checkpoints have proliferated. In the late 1960s, when the business was founded, Arusa's trucks delivered ice cream direct to West Bank stores, but those days are long gone.

The border is now completely shut. But even before that happened, ice cream had to be trucked to the Israeli border where it was unloaded, inspected, transferred to an Israeli truck, taken to the Karni crossing, unloaded and inspected again, then placed on Palestinian trucks and taken to stores. Those demands added 15 percent to the cost.

The Yazjo Group for Soft Drinks, which has produced Seven-Up and Pepsi in Gaza since 1962, has literally had the fizz taken out of its business: It can't get CO2 via Israel anymore. "No one wants flat, sweet water," says Amar Yazjo, the son of the company's founder.

He says he's laid off 150 workers so far, keeping some on for his bottled water and juice businesses. He estimates he's losing about $10,000 a day. "We appeal to the Israelis and the Palestinian Authority, but they're not interested.... It seems to me their plan is to keep us at survival level. Now, 80 percent of us rely on aid. I think they'll be happy when that is 100 percent.

"Look, I'm a businessman," he continues. "I want peace with Israel, but all we've experienced since Oslo [the 1993 agreement that set Palestinians on the road to self-government] is constant deterioration. I think what Israel doesn't understand is that what creates Fatah, what creates Hamas, is the occupation and situations like the one we're in now."

Associated Press material was used in this report.