UN Reports Billions Needed to Revitalize Collapsing Palestinian Economy

The Palestinian Economy in Dire Straits

Astonishing Decline in Gaza’s Economic Output

According to the United Nations Trade and Development (UNCTAD) report, the Palestinian economy is experiencing an unprecedented collapse. The economy of Gaza has shrunk to one-sixth of its pre-conflict size. The situation has worsened following Israeli military actions in response to the Oct. 7 attacks.

The Troubling Situation in the West Bank

The economic decline isn’t confined to Gaza alone. The West Bank’s economy is also deteriorating due to expanded Israeli settlements, land confiscations, demolition of Palestinian structures, and violence by settlers.

Unprecedented Unemployment

Gaza already had a fragile economy, with unemployment nearing 50% even before the war. The conflict has brought economic activity to a standstill. The situation has displaced roughly 90% of the territory’s population, who now live in squalid conditions depending solely on international aid. Furthermore, over 300,000 jobs in the West Bank have been lost, pushing unemployment rates up to 32%, a significant increase from the pre-conflict rate of under 13%.

Immediate Impact of Work Permit Cancellations

Following the Oct. 7 attacks, Israel revoked work permits for 150,000 Palestinians who worked in Israel. This action eliminated a crucial source of income for many families. The ensuing military crackdown has further impeded economic activity, making daily life increasingly challenging due to frequent army raids and military checkpoints.

The Way Forward: International Support and Comprehensive Plans

Pedro Manuel Moreno of UNCTAD emphasized the immediate need for international intervention to stop the economic free fall. The international community is urged to establish a “comprehensive recovery plan” for Palestinian areas, including more international aid, lifting Israel’s blockade on Gaza, and releasing withheld funds.

Financial Aid and Long-Term Goals

Mutasim Elagraa from UNCTAD elaborated on the enormous amounts required to rehabilitate Gaza, estimating tens of billions of dollars and decades of investment. The ultimate goal is sustainable development, a vision demanding sustained financial commitment and strategic planning.

Financial Constraints and Revenue Issues

Since the 1990s, Israel has managed the collection of import duties for Palestine, controlling around two-thirds of all Palestinian tax revenue. Israel has withheld or suspended these funds multiple times, accusing the Palestinian Authority of inciting violence and taking hostile actions against Israel within international forums. From 2019 to April this year, Israel withheld or deducted over $1.4 billion, affecting the Palestinian administration’s capacity to deliver public services, pay salaries, and manage debts. Last month, the European Union stepped in, contributing $43 million to help the Palestinian Authority cover salaries and pensions in the West Bank.

Damage to Agriculture and Businesses

By early this year, 96% of Gaza’s farming assets were decimated, including livestock, orchards, machinery, and storage facilities. More than 80% of businesses were damaged or destroyed, exacerbating an already desperate situation.

Stakeholders	Key Contributions
UNCTAD	Reporting and advocacy for international aid
International Community	Required for comprehensive recovery plan
Israel	Expected to lift blockades and release withheld funds
European Union	Financial aid for paying public salaries and pensions

The Human Toll

The humanitarian crisis is grim. Israel’s offensive in Gaza has resulted in at least 41,084 Palestinian deaths and 95,029 injuries, according to the territory’s Health Ministry. The casualty count includes both civilians and militants. This offensive was launched to dismantle Hamas after the militant group’s deadly assault on southern Israel on Oct. 7, which killed approximately 1,200 people and led to the abduction of 250 others.

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Contributions to this report were made by Associated Press journalist Josef Federman in Jerusalem.