Gaza

- The Russian war on Ukraine threatens to collapse the reconstruction process of what was destroyed by the recent Israeli war in the Gaza Strip, and local contracting companies are facing the threat of bankruptcy, as a result of what it describes as the "crazy rise" in the prices of building and construction materials.

The Palestinian contractor, Hatem Hassouna, fears that he will not be able to deliver schools that were destroyed in the Israeli war in May 2021, which he had contracted to rebuild and hand over before the start of the new school year next September.

Hassouna told Al Jazeera Net that he applied about 3 months ago to win a contract for the reconstruction of these schools, based on prices for building materials completely different from the current prices, which witnessed a high jump estimated at 35%, and this constitutes a huge loss.

bankruptcy risk

Because of these losses as a result of price differences, Hassuna expects that if the current crisis continues for a longer period of time, some contracting companies will declare bankruptcy and exit the labor market permanently, which will result in a deepening of the unemployment crisis and an increase in poverty rates in Gaza, which suffers mainly from a serious deterioration in living conditions.

According to the records of the Contractors Union in Gaza, 250 companies working in the contracting and construction sector directly employ more than 30,000 workers, in addition to their contribution to providing about 20,000 other job opportunities in professions related to this sector.

Hassouna has 98 employees working in his company with fixed monthly salaries, supporting families of about 600 people, and he says that the contracting sector has been suffering from complex crises for several years, interspersed with obstacles related to the Corona pandemic and the Israeli war, and the repercussions of the internal division, so that the Russian war comes and deepens these crises.

Hassouna warns of a "real catastrophe" that will affect all aspects of life in Gaza when the construction sector collapses. Preventing this catastrophe requires urgent intervention from all concerned parties.

This intervention is determined by the contractor, Osama Kahil - for Al Jazeera Net - with 3 options, namely: stopping the projects temporarily while paying the administrative expenses to the contractors, until the crisis ends, or rescinding the contracts and paying compensation to the contractors for the consequences.

The third option, which Kahil prefers, is to continue to work with the government, in principle, and donors as well, to bear the price differences, to prevent the collapse of companies, layoffs and cause a severe unemployment crisis.

Kahil, who has held for many years the position of captain of contractors, supports his position on adopting this option that there are strategic projects that cannot be stopped, such as the construction of hospitals and schools, and the reconstruction of homes that were destroyed in the war, and this calls for concerted efforts to prevent “the collapse of the system of life and work entirely in Gaza.

About 100 contracting companies at least are at risk of bankruptcy in Gaza (Al-Jazeera)

complex crises

The head of the Contractors Syndicate in Gaza, Engineer Alaa Al-Araj - told Al-Jazeera Net - that construction projects face "the risk of forced cessation", due to the rapid rise in the prices of building materials, the values ​​of which greatly exceed the profit rates of contracting companies.

Al-Araj estimated that at least 100 contracting companies are at risk of bankruptcy, if the current efforts of the union with international operators and donors do not result in the intervention and bearing of the huge price differentials resulting from the “stark effects” of the Russian war.

In the opinion of Al-Araj, the repercussions of this war were more severe on Gaza than other countries of the world, due to what it suffers mainly from the fragility of the economic system, as a result of the long years of siege, restrictions and Israeli wars.

These restrictions, as well as the repercussions of the Corona pandemic in the past two years, caused the exit of more than 100 companies from the labor market, leaving behind - according to Al-Araj - thousands of outstanding issues and financial problems that are destroying society, warning of a “more severe and greater catastrophe” that may lead to complete collapse. .

He said that the contracting sector is the most affected by the repercussions of the Russian war and its impact on the prices of building and construction materials, which witnessed a 36% increase in the price of iron, 60% on the price of asphalt mixture "bitumen", 40% on the price of aluminum, and 35% on the price of copper. 35%, and all other materials.

In addition, the shipping fare for shipping construction materials coming to Gaza increased from two thousand dollars to 17,400 dollars, and Al-Araj says that this fare increased after the Corona pandemic to about 5 times, and increased more after the outbreak of the Russian war, so that the transportation fare became more than the prices of some Mainly contained building materials.

Construction companies in Gaza face the risk of bankruptcy and collapse due to the repercussions of the Russian war on prices (Al-Jazeera)

restrictions

This crisis necessitated the formation of a joint committee composed of the Ministry of Public Works and Housing and the Contractors Union, to discuss with donors, in order to "contain the situation."

The Undersecretary of the Ministry, Engineer Naji Sarhan, told Al Jazeera Net that this committee had not yet reached a mechanism agreed upon with the concerned authorities, for several reasons, most notably "the limitations of the financing conditions."

Sarhan stressed that the reconstruction process, which did not witness a "real start" after about 10 months of the Israeli war, will be seriously affected by the repercussions of the Russian war and the rise in prices.

Sarhan attributed the very slow pace of reconstruction to what he described as “exaggerated preparations” on the part of the financiers, and the delay in the arrival of funds, estimating that only 5% of the reconstruction projects that were destroyed by the war have been completed so far.

The Ministry of Public Works and Housing estimates the value of the reconstruction at more than 400 million dollars, as direct losses of the Israeli war, which resulted in massive destruction of thousands of homes, housing units, infrastructure, and commercial and industrial facilities.