In the six months since Hamas rose to power, the world has detached itself from the Palestinian Authority (P.A.). Donor countries stopped providing money and, as a result, the Palestinian economy is on the verge of collapse. Simply put: The Palestinians are broke.

And yet, official figures show that Israeli merchandise keeps flowing to the P.A. at the same rate as before. How is that possible?

First let’s look at the figures as provided by Israel’s Central Bureau of Statistics. In the fourth quarter of 2005, Israel exported $501 million worth of goods to the Palestinian Authority. In the first quarter of 2006, which included one month of Hamas rule, Israel exported to the P.A. exactly the same amount of merchandise — $501 million. In the second quarter of 2006, the level of exportation grew to $510 million plus.

When the results from the Palestinian parliamentary elections on Jan. 25, 2006, became known, the world was amazed. Hamas won almost three quarters of the seats and formed a Fatah-free government. The United States and the European Union immediately stopped transferring economic aid to the P.A., which was now controlled by what they considered a terror organization. Israel stopped transferring Palestinian tax money, which it collected on the P.A.’s behalf. From that moment on, 165,000 P.A. officials, who comprise about 70 percent of the Palestinian workforce, stopped getting paid their salaries.

While the figures are accurate, reality dictates its own story.

“If you have about 160,000 people who have not been paid for the past six months, that means you are talking about $240 million which has been drawn out of the market,” Sa’ad Al-Khatib, a senior official in Palestine Trade Center (PALTRADE) told The Media Line. Al-Khatib states that as this amount was disposable income, “obviously in a small market like the Palestinian market, $240 million would make a major impact.”

So how can the figures be correct, The Media Line asked Al-Khatib, to which he gave a simple solution: “The reason why it seems that trade has actually increased is because of the wall [the security barrier currently built between Israel and the West Bank], and the border-crossing points which are now functional. Because of this, all trade is now registered trade.”

According to Al-Khatib, a lot of trade between Israel and the West Bank was not registered properly before the wall was built.

There is no doubt about the decline in Israeli merchandise going through to the Gaza Strip, and we shall return to this issue later. The overall figures then, must point to an increase of trade toward the West Bank. Despite his explanation, Al-Khatib himself does not sound convinced.

“I am not sure if there is a clear-cut decline,” he says.

Speaking to the Israeli army’s head of the Economic Branch in the Civil Administration of Judea and Samaria, Lt. Col. Doron Segal, one gets a different picture. Segal does not deny the fact that the economic situation in the Palestinian territories has deteriorated in the past few months; On the contrary. However, according to Segal, the Palestinian economy is not an open economy with regular characteristics.

“The most influential element in this regard is the fact that during the past few months there were hardly any military closures in the West Bank.”

He explains that because there was relative quiet from the security point of view, Israel did not have to impose many closures. This in return, allowed for more merchandise to cross to the Palestinian side.

“If workers of the P.A. will not receive their salaries for much longer, this will become a more significant element.”

But for now, Segal says, the open terminals are the main reason for the increase in trade. He also adds that more Palestinian workers are allowed to work today in Israel.

“This is a very stabilizing element,” Segal explains, as salaries in Israel are much higher than in the Palestinian territories.

Almost 1.5 million Palestinians are living in 360 square kilometers known as the Gaza Strip. It is one of the most densely populated regions in the world. Qassam rockets fired toward Israel and tunnels dug beneath the ground entail stricter security measures on Israel’s part.

The Karni terminal, which is the main cargo crossing point between the Gaza Strip and Israel, was closed this year alone for 81 days. The effect on trade was dramatic. During the year 2005, almost 114,000 trucks crossed through Karni, whereas in the first eight months of 2006, fewer than 36,000 trucks crossed.

The math is simple. When Karni is closed, merchandise is destroyed.

“Since the beginning of the year, I had to get rid of almost two $400,000 worth of goods because of the closures on Gaza,” Avshalom Hertzog, owner of Sea Of Galilee Fruit, told The Media Line. Hertzog has a Palestinian partner, Khalid Othman, who is living in Beit Lahiyya in the Gaza Strip. Othman is considered the biggest merchant of fruit and vegetables in the Gaza Strip. According to Othman, Palestinians living in Gaza have very little purchasing power.

“They do not get paid; the world does not help; Karni is not functioning properly,” he explains. Othman is convinced that if a government acceptable to the international community would arise, things would get better.

Othman’s Israeli partner also blames the Hamas government.

“Hamas’ minister of agriculture has limited the transfer of Israeli fruits and vegetables to three days a week only.”

Having to cope with both the Israeli and Palestinian limitations in Karni, Hertzog and Othman are understandably frustrated.

With an estimated decline of 20-30 percent in Israeli goods sold to the Palestinian in the Gaza Strip, the result is severe.

“Every day Karni is closed, it costs the Palestinians approximately $600,000,” says PALTRADE’s trade development manager of the Gaza Strip, Ali Abu Kumail.

“Most of the imports [into Gaza] are cement, fruits and vegetables, which all come from the private sector. So the only losers from what is happening now in the terminals are the Palestinian and Israeli private sectors,” Abu Kumail asserts.

Blaming the political situation, Abu Kumail expresses a notion that by now many Palestinians share: “The private sector on both sides would like to see the [Karni] terminal [operating] away from politics. They would like to see commercial areas that are not redundant and fluctuating in reflection of what is happening in politics.”

As always, when the government fails to provide, non-governmental organizations and foreign elements come into the fore.

Talks between Fatah and Hamas aiming at the establishment of a unity government were launched a few weeks ago. Nevertheless, the U.S. has made it clear that if the new government will not recognize Israel and cease all terror activities, nothing in the diplomatic and economic realms will change. Hamas, for its part, has so far refused to make any changes in this regard.

“There is tremendous pressure from Israeli businessmen to sell, and a dire need on the Palestinian side to buy,” says secretary-general of Israel’s International Chamber of Commerce, Baruch Mazor. “Hamas now has two choices: It can join sides with Hezbollah and Iran, or else it can go toward an internal compromise. Its own people will not let this situation continue. Politicians want to convey ideas, but most of all they want to survive,” Mazor maintains.