Israel Targets the Palestinian Economy

OIC infograph

27-02-2025 - The Palestinian economy has been experiencing a catastrophic collapse since the Israeli assault on the Gaza Strip on October 7, 2023, and its repercussions on the West Bank. According to the latest estimates of the Palestinian Center for Statistics, the Palestinian economy has contracted by a third compared to its pre-war status. The policy of the occupying power is fundamentally based on imposing a new reality through methods of genocide and scorched-earth tactics to eliminate Palestinian existence across all occupied territories and establish a Greater Israel on its ruins.

According to the OIC Media Observatory on Israel's Crimes Against the Palestinians, one of the key methods employed in this strategy is the economic suffocation of Palestinians, plunging their economy into successive crises to weaken and ultimately dismantle it. Among the most prominent tactics are the deliberate delays in transferring tax revenues to the Palestinian Authority, rendering it unable to pay public sector salaries. Additionally, Israel has revoked work permits for Palestinian laborers, replacing them with foreign workers, while tightening trade restrictions and imposing severe movement restrictions through checkpoints and the apartheid wall.

General Economic Conditions

According to a World Bank report published in December last year, the crises experienced by vital sectors led to an economic contraction of 23% in the West Bank, during the first half of 2024, compared to the same period of the previous year. During this period, the trade and services sectors, considered the main catalysts for growth in the West Bank, declined by 22% and 23%, respectively. As for the construction and manufacturing sectors, they suffered the biggest declines, with a recession of 42% and 30%, respectively.

On the other hand, and according to data from the Palestinian Ministry of Finance, Israeli deductions from compensation funds, under the name of allocations to the Gaza Strip, amounted to 2.83 billion shekels (US$797 million), since the beginning of the war on the Gaza Strip on October 7, 2023, and until August 2024, with an average of 257 million shekels per month (US$72 million). Indeed, Israel is deducting these funds as a punitive measure for the Palestinian National Authority’s refusal to suspend the payment of allowances to the Gaza Strip, particularly the salaries of government employees, primarily health and education workers. In total, approximately 7 billion shekels (US$1.97 billion) in compensation funds are being withheld by the Israeli occupying Power. These funds consist of tax revenues, duties and customs fees imposed on goods and merchandise imported into Palestine, or through Israel, crossings and borders, in accordance with the Oslo Agreement, and which are collected monthly by the staff of the Israeli Ministry of Finance on behalf of the Palestinian Authority, before being transferred to the Ministry of Finance and the Palestinian Treasury.

Economic Reality for Palestinian Workers

With regard to the situation of the Palestinian labor force in Israel, the occupying power has begun to impose retaliatory measures since the outbreak of the aggression, significantly reducing the total number of Palestinian workers from 177,000 to just 27,000, according to the World Bank report. This has resulted in an unemployment rate of 80% in Gaza and 35% in the West Bank, bringing the total unemployment rate in Palestine to an unprecedented 51%, as per the Palestinian Central Bureau of Statistics.

Palestinian Minister of Labor Dr. Enas Al-Attari stated that the dismissals of Palestinian workers from the Israeli labor market had a negative impact on the Palestinian economy, resulting in a monthly financial loss of approximately 1.5 billion shekels ($423 million).

In another context, the Palestinian Policy Network published a report entitled: “Israel’s Exploitation of Palestinian Labor: A Strategy to Erase Existence,” and identified four key strategies used by Israel to enforce Palestinian labor dependency. First, Palestinian workers are employed in low-wage jobs exclusively when needed to fill workforce gaps in Israel. Second, the focus on hiring Palestinians in agriculture, industrial, and construction ensures a severe labor shortage in these sectors within Palestine, hindering economic self-sufficiency. Third, continued expansion of illegal settlements in the West Bank fosters Israeli economic growth while simultaneously shrinking the Palestinian economy through land confiscation. Fourth, Israel arbitrarily revokes work permits when Palestinian labor is no longer needed or as a form of collective punishment, forcing workers back into the already weakened Palestinian job market and replacing them with foreign laborers.

Israeli Checkpoints 

Israeli collective sanctions have not been limited to the direct damage caused to the Palestinian economy. According to the report of the UN Office for the Coordination of Humanitarian Affairs (OCHA), there are 793 checkpoints and obstacles that control the movement of Palestinians in the West Bank. These obstacles include 89 checkpoints with 24-hour security personnel; 149 checkpoints partially manned by security personnel (46 of which have barriers); 158 earth piles; 196 roadblocks (of which 122 are usually closed); 104 concrete blocks and 97 closures of one or more roads, such as roadblocks, earth walls and ditches. At least 40% (316 out of 793) of these barriers directly obstruct access between Palestinian towns and villages, averaging nearly one closure per kilometer. These obstacles divert Palestinian traffic to longer secondary road networks, disrupting the movement of hundreds of thousands of Palestinians and negatively affecting their daily lives. 

It is worth mentioning that 85% of the separation wall passes inside the West Bank, which hinders access to occupied Al-Quds and the so-called “seam zone” between the wall and the 1949 armistice line. The impact on agriculture has been severe, with 150 Palestinian communities owning land isolated by the wall, which was previously accessible through 69 Israeli-controlled agricultural gates. However, since October 2023, these gates have been largely closed, preventing farmers from tending to their land, leading to significant income losses, particularly from olive groves and seasonal crops.

Thus, it is evident that Israel, the occupying power, is trying to liquidate the Palestinian presence by all means, by practicing the scorched earth policy, this aligns with the findings of Francesca Albanese, the UN Special Rapporteur on the situation of human rights in the occupied Palestinian territories. In her October 2024 report to the UN General Assembly, she stated: “The State of Israel is predicated on the goal of Palestinian erasure; its entire political system is directed towards this goal.” – OIC News