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