How the Israel-Hamas war has created “mini Gazas”
How the Israel-Hamas war has created “mini Gazas”
“Marketplace Morning Report” is spending time this week looking at the economic reality behind the war between Israel and Hamas and what war has meant for the Palestinian and Israeli economies. We started with some context: what the Palestinian economy looked like before the current war. Now, we’re taking a look at the economic disruption and changes caused by the conflict.
Marketplace’s Sabri Ben-Achour spoke with Raja Khalidi, director general of the Palestine Economic Policy Research Institute. We reached him in Ramallah in the West Bank. Below is an edited transcript of their conversation.
Sabri Ben-Achour: When it comes to talking about the economic situation of Palestinians, there’s the obvious destruction in Gaza, which I’m going to ask you about. But I’m curious how the West Bank, where Israel has launched some raids, but obviously nothing like in Gaza, how has that economy been affected by the war?
Raja Khalidi: The West Bank communities and cities have not suffered, certainly not like the sort of destruction rained upon Gaza. However, that should not obscure the fact that in certain places, in fact, they have been termed “mini Gazas.” That aside, there have been basic waves that hit the West Bank economy consecutively, the first of which was the return of around 180,000 Palestinian workers, who were bringing in about 20% of national income every year from working in Israel and in the settlements. Very few have gone back. So that is a blow in itself.
There have been major disruptions, you know, from 550 checkpoints and gates and other obstacles Israel has placed around the Palestinian cantons that it rules in the West Bank. The number has risen to close to 800. So that has imposed mobility restrictions affecting trade, internal commerce, people getting to work. You know, this idea that the war of Israel is only against Gaza is a bit, unfortunately, not accurate.
Ben-Achour: The Israeli government has authority over Palestinian tax revenue and customs duties. How has that changed since the war started and what’s that meant for the economy?
Khalidi: Well, that has always been a major Achilles’ heel. Trade taxes that are collected by Israel amount to around $250 [million], $300 million a month in good times. Before the war, Israel had already instituted a policy of unilateral deductions. So it was cutting money that it thought the PA [Palestinian Authority] owed. Since the war, they’ve imposed new deductions. The first one was deducting yet another $75 million per month approximately, which is equivalent to the PA’s expenditures on salaries and pensions, which they put in an escrow account with the Norwegians because of American pressure.
Now, given the most recent political developments, Israel is now beginning to apply collective punishment to the PA and Palestinians again — yet another one, and this time financial — by an announcement by the minister of finance that he will not transfer any of the money that PA supposedly is entitled to. So I think it is now a ludicrous, absurd situation. We are so far beyond what was agreed in ’95 and reagreed up to 2005. You cannot fix this. You need a totally new system.
Ben-Achour: The most obvious question when it comes to the Palestinian economy is around the utter destruction in Gaza. How does an economy recover from that?
Khalidi: Yeah, the numbers are staggering. Firstly, you know, a political result from this war would make people want to recover. And we’re going to have a major problem with mass trauma of 2 million Palestinians that will need more than just a little bit of money and a good plan. This is gonna require a collective effort on behalf of the Palestinian people. So money, a political horizon, political unity, and fourthly, innovative schemes. I mean, there’s something, for example, called universal basic income. So I would say we start there in the sense, $3.34 billion, which is what you’re spending on aid every year anyhow, and relief, and let people rebuild communities, rebuild lives, rebuild their occupation. You’re gonna have to do something like that if you want a decent, humane recovery. Otherwise, it’s going to be in fits and starts, and it’s going to take years and years and years if those conditions that I mentioned are not in place.
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