TAKING A BEATING

The recent wave of Palestinian terrorism in Jerusalem has caused growing alarm and serious repercussions in the city's business community.

By Robert Sarner, The Jerusalem Post, Oct. 10, 1997

The physical damage from the two recent suicide bombings in Jerusalem may have since been repaired, but the economic toll continues to mount. According to local business leaders, the pervasive fear and anxiety triggered by the explosions in the Mahaneh Yehuda market and the Ben-Yehuda mall, coupled with warnings of possible new terrorist attacks in Jerusalem, have left city commerce reeling. Many businesses have had to lay off employees and, if the crisis continues, may be forced to close.

"Without exaggerating, the local business community is facing a disaster," says Ezra Atia, head of the Jerusalem branch of the National Federation of Commerce (NFC), whose Jaffa Street office represents more than 1,600 businesses in the capital. "The past two months were the worst since the Yom Kippur War in 1973, even worse than the Gulf War period in 1991."

From a business standpoint, the attacks and security alerts couldn't have occurred at a more inopportune time, coming as they did during the period leading up to the High Holidays. What is traditionally one of the most lucrative periods on the retail calendar was this year a resounding failure. According to revenue figures for several stores downtown, sales during this year's pre-holiday season dropped drastically - on average 50% - compared to the same period last year.

As a result, the NFC recently appealed to both City Hall and the national government for financial aid. Last week, in response to a request that the local property tax be canceled for the last three months of 1997 as a form of emergency assistance, Jerusalem Mayor Ehud Olmert promised the NFC in writing that he would help, without saying precisely how. Olmert's office told the Jerusalem Post that the mayor plans to seek assistance from the government, especially from the Interior Ministry, which has jurisdiction over matters of local property tax.

At the same time, the NFC also contacted Industry and Trade Minister Natan Sharansky, Tourism Minister Moshe Katzav and various Knesset members to lobby for help. They are asking for low interest loans, analogous to those extended last year to communities on the northern border with Lebanon that suffered from Katyusha rocket attacks during the Grapes of Wrath campaign. The NFC argues that their financial hardship will contribute to unemployment, with grave economic consequences for Jerusalem - already one of the poorest cities in Israel.

The decline in business is apparent to all. Downtown and at the Malha Mall, the crowds are thinner and the atmosphere is unusually subdued. There's little of the traditional holiday season animation and buzz. Virtually everyone - with the exception of supermarkets and travel agents - is hurting.

Avraham Zakaim, owner of Jerusalem Window, was in his Ben-Yehuda Street Judaica shop when the Sept. 4 bombings destroyed much of his store and compounded an already dismal summer season.

"In the past two months, business has been terrible, down 75%," says Zakaim. "It's by far the worst season in the eight years I've been on Ben-Yehuda.

He says however that his business is not at risk because he owns the premises, but feels badly for neighbors who, due to their high rent ($5,000 - $6,000 a month) may have to close down if business doesn't pick up soon.

Up the street, Jerry Stevenson, owner of the well-known Mr. T. army surplus emporium, says unequivocally that August and September were the worst period he's experienced during his 19 years downtown.

"We're doing half our normal business," Stevenson explains. "After the Mahaneh Yehuda bombing, business was terrible. The Ben-Yehuda attack put the nail in the coffin. Local residents, foreign tourists and youth groups are staying away in droves. You see more border police walking around here than tourists."

Liora Tal, a sales clerk at the nearby Steimatzky Bookstore, echoes the gloomy assessment. "People are afraid of the next attacks," she says. "They come downtown only when they need something specific, not to hang out like before. And even those who do come are buying less than usual."

Across town at the Malha Mall, merchants have a similar lament. In previous years, during the week leading up to Rosh Hashana, up to 50,000 people each day would enter the shopping center. In recent days, it attracted barely a third of that.

"Quite simply, people are afraid to come here," says Moshe Batner, manager of Tzam-Tzam photo store. "Many of those who do come are much less in the mood to buy. Who can blame them when they hear in the media about possible new attacks, and see so many security checks and soldiers patrolling the place? I even have customers who call me, saying they won't come and ask what's the latest situation at the mall."

Batner, who estimates that sales are down 50-60% since last year, says it's the worst period he's seen since he opened the store in the new mall in 1993.

Across from Batner's store, the usually bustling Kapulsky's café is quiet. "We've never experienced such a drop in business before," says Oren Levy, who has managed the café since it opened four years ago. "People are nervous. They don't want to linger here. Over the past month, we've lost a third of the traffic we normally have at this time of year. As a result, I've had to lay off several part-time employees."

Ironically, the more the mall tightens security, the more people sense the potential danger. The sight of soldiers and border policemen with automatic weapons and sniffer dogs, along with increased inspection of customers's cars and bags may reassure people, but it's also a disconcerting, inconvenient reminder of the ominous threat, and serves to keep many people away.

While admitting that the mall is a choice target for terrorists, its manager, Eric Arad, insists that it's the safest shopping center in the country. To ensure shoppers's safety, he says he spends 500,000 shekels a month on security.

"If I do more, "he says, " the mall will start to resemble an army base."

Arad also insists that contrary to media reports, the Jerusalem terrorist cell recently captured by police was not arrested one day before planning to carry out an attack on the mall. The real story, he says, is that last winter, on two or three occasions, Palestinian extremists came to survey the mall's security measures.

Arad discounts statements by his tenants that their business is down as much as 50%. "Merchants are always crying, especially in Jerusalem," says Arad, who claims that overall the mall's business has fallen on average no more than 10%. "Sometimes they also complain to the media as a way to put pressure on me to lower their rent."

Jerusalem residents are the not the only ones staying closer to home. Tourism officials say that both foreign visitors and Israelis are spending less time in Jerusalem. They attribute the decline to the wave of attacks last year, saying that the two recent bombings and security warnings have only worsened an already dismal situation.

"In general, tourism has suffered over the past 18 months," says Shabtai Shay, Senior Deputy-Director General of the Ministry of Tourism. "The recent events have merely caused a further deterioration. Tourists are still coming to Israel but are changing their habits in Jerusalem, spending less time in the city, avoiding commercial areas or crowded places."

Jonathan Harpaz, head of the Jerusalem Hotel Association, confirms that the downward spiral triggered by the 1996 bombings has worsened in recent months. Based on preliminary figures, he says the occupancy rate at the city's 65 hotels in September was only 45%, and predicts that in October it will fall further to 40%, leading to even more layoffs.

Despite the current malaise, Arad is optimistic that things will turn around in the coming weeks. "Israelis have short memories," he says. "And assuming there are no more attacks, business will return to normal."

The only problem is that this prediction is based on a mighty big assumption. For now, Jerusalem merchants are crossing their fingers, hoping Arad is right, and that the worst is behind them. A sentiment obviously felt by all Israelis.