Hardest-hit Gazans look to new government for hope

GAZA, Mar 7 (Reuters) Zamel Wafi wakes up at dawn each morning to comb the Gaza beachfront for scrap metal that he can sell to try to feed his wife, seven children and donkey.

After a painful year of economic sanctions against the Hamas-led government, dwindling trade and factional fighting, times have never been tougher for impoverished Gaza residents like 49-year-old Wafi.

Prices for scrap metal, Wafi's livelihood, have plummeted because of frequent Israeli closures of Gaza's main commercial crossing, curbing access to markets beyond the narrow coastal strip's borders.

Wafi is wary of the future but sees a glimmer of hope in the formation of a unity government between President Mahmoud Abbas's Fatah faction and the ruling militant group.

''We have no place to work. We are unable to feed our children.

From this government, I hope to be able to earn a living,'' Wafi said as his wife pounded on a piece of concrete to extract a sliver of metal on a Gaza beach.

The Western aid boycott of the Hamas-led government has increased poverty rates, particularly in the Gaza Strip, where much of the population lives on less than 2 dollar per day, according to aid groups.

Omar Shaban, a prominent Palestinian economist, said economic conditions were the worst ever. He said 40 per cent of Gazans were malnourished, and that the unemployment rate has jumped to 80 percent from 50 per cent before Hamas came to power nearly a year ago.

Like thousands of other Gazans, Wafi used to work in Israel but no longer is allowed. His family survives by picking through the remains of abandoned Israeli settlements. Israel pulled its forces and settlers out 1-1/2 years ago.

Wafi says he makes less than 5 dollar a day on scrap metal, which he piles high in his donkey cart. He says he can't get the food he needs for his family for that amount. In Gaza, it costs about 3 dollar for one kilogram of chicken.

It is unclear whether the unity government deal between Hamas and Fatah will ease the economic embargo.

The deal does not call on the new government to recognise Israel or renounce violence, and includes a vague pledge to respect, rather than accept, interim peace deals.

That falls short of meeting the demands of the Quartet of Middle East mediators, but divisions within the group, made up of the United States, the European Union, Russia and the United Nations, have widened.

Efforts to form the unity government have taken longer than expected because of lingering disagreements between the factions, mainly over who will control the security forces.

Prime Minister Ismail Haniyeh of Hamas said he hoped to form the new government by the end of next week, though it was unclear whether that would be possible.

HARD TIMES Metal factory owners say the frequent closure of the Karni commercial crossing has driven down scrap metal prices because there is no longer a steady export market.

When the crossing was open more regularly, factories would frequently sell their compressed metal for recycling in Israel.

''We have at least 10,000 tonnes (of metal) that we are unable to export,'' said Mohammad Assawaf, who co-owns one of Gaza's metal works factories.

As a result, Assawaf said, he pays metal collectors like Wafi about 2.5 shekels for 10 kilograms of scrap. ''Those people used to have a good income. Now their income is very low,'' Assawaf said.

The scrap metal business isn't the only one suffering.

On a recent morning, a group of Palestinian fishermen sat on the shore drinking tea and fixing their nets, lamenting their financial woes. Fishermen say Israeli army naval boats limit how far out they can fish, affecting both the quantity and the quality of the fish they haul back.

The navy boats sometimes open fire, detain fishermen and seize their boats, they say.

''In other countries in the world, fishermen are being supported by their governments. We have no support at all,'' said Khail Qannan, a third-generation fishermen and father of 14.

Mahmoud Tanira, another fisherman, said the boats were literally rotting in the sun. ''Working the sea does not bring a loaf of bread to our children,'' he said.

Although many Palestinians expect the Western economic embargo to be eased by European countries, Palestinian economist Shaban sought to lower expectations for a swift turnaround.

''The siege was imposed on the Palestinians suddenly, comprehensively and in full. Now it will be lifted partially, gradually and with conditions,'' Shaban said.

REUTERS SY VC1030