UN Highlights Severe Decline in Palestinian Economy, Urges Action

The Palestinian economy is experiencing a severe downturn, according to a United Nations report released on Thursday. Production in Gaza has plummeted to one-sixth of its previous level following Israel's military response to the October 7 attacks. The UN Trade and Development (UNCTAD) report also highlighted the rapid economic decline in the West Bank due to expanded Israeli settlements, land confiscations, demolition of Palestinian buildings, and violence by settlers.

Pedro Manuel Moreno, UNCTAD's deputy secretary-general, stated, "The Palestinian economy is in free fall." He urged the international community to intervene to stop this economic collapse, address the humanitarian crisis, and establish a foundation for lasting peace and development. This would involve a comprehensive recovery plan for Palestinian areas, increased international aid, lifting Israel's blockade on Gaza, and releasing revenues and withheld funds for Palestinians retained by Israel.

Impact on Gaza's Economy

Before the conflict, Gaza's economy was already fragile with unemployment nearing 50%. The war has exacerbated the situation, bringing economic activities to a near halt. The UN estimates that around 90% of Gaza's population has been displaced, many now living in poor conditions in tent camps and relying heavily on international aid.

Economic output in Gaza dropped significantly to just over $221 million in the half-year covering the last quarter of 2023 and the first quarter of 2024. This figure represents only 16% of the total for the same period in 2022-2023 when it was just over $1.34 billion. Additionally, more than 80% of businesses have been damaged or destroyed, with ongoing damage worsening the situation.

West Bank Economic Decline

The West Bank has also suffered economically due to the conflict. Following the October 7 attacks, Israel revoked work permits for approximately 150,000 Palestinians who worked inside Israel. This action deprived many families of a crucial income source. The military crackdown aimed at militants has further disrupted daily life with frequent army raids and checkpoints making it difficult for people to work or move around.

As a result, over 300,000 jobs have been lost in the West Bank, home to about 3 million Palestinians. Unemployment rates have surged to 32%, up from under 13% before the conflict began. The economic decline has severely affected public services and the ability of Palestinian officials to pay salaries, pensions, and debts.

International Aid and Revenue Withholding

Since the 1990s, Israel has collected import duties for Palestinians, controlling about two-thirds of all Palestinian tax revenue. Israel has frequently withheld or suspended these payments, accusing the Palestinian Authority of inciting violence or taking hostile actions against Israel in international forums. From 2019 through April this year, Israel withheld or deducted over $1.4 billion.

The European Union recently contributed approximately $43 million to help the Palestinian Authority pay salaries and pensions in the West Bank. However, this aid is insufficient to cover all needs given the scale of economic challenges faced by Palestinians.

Humanitarian Crisis

The ongoing conflict has resulted in significant casualties. According to Gaza's Health Ministry, at least 41,084 Palestinians have been killed and another 95,029 wounded since Israel launched its offensive. The ministry's figures do not distinguish between civilians and militants.

Israel initiated its campaign with the aim of dismantling Hamas following an attack on southern Israel on October 7 that resulted in around 1,200 deaths and 250 abductions by militants.

Mutasim Elagraa from UNCTAD noted that restoring Gaza to its pre-October 2023 state would require tens of billions of dollars and decades of effort. He emphasised that achieving sustainable development for Gaza will demand even more time and resources.

The situation remains dire with little indication of any recovery plan being implemented soon amidst continuing violence. Immediate international intervention is crucial to halt further economic decline and address the humanitarian crisis affecting millions of Palestinians.