Is the West Bank's economy on the cusp of collapse?
The seismic waves of Israel's ongoing siege of Gaza are being felt across the occupied West Bank, where Palestinians are scrambling for financial stability in a time of war
It's been nearly half a year since Israel launched its still-ongoing siege of the densely populated Gaza Strip, killing tens of thousands of people and galvanizing the world's attention on this latest eruption of violence in the region. The conflict between Israel and Hamas — precipitated by the Palestinian militant group's unprecedented attack on southern Israel on Oct. 7 — has become a major global flashpoint and threatened to spill across the broader Middle East. At the same time, there is perhaps nowhere on earth outside of Gaza and Israel where the effects of the ongoing conflict are being as acutely felt as in the West Bank by the Palestinians living under Israeli occupation there.
Of the many ways the war in Gaza is affecting life in the West Bank, one of the most pressing is the economic impact on a territory whose financial prospects are in many ways inextricably tied to its occupation. With limited avenues for unimpeded economic growth even before this past fall, the West Bank has spent several months watching its economy strained further than any time in recent memory.
With collapse a growing possibility, and long-term solutions nebulous, where does the West Bank economy stand today, and where might it go from here?
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
What did the commentators say?
Since Oct. 7, the Palestinian economy has "experienced one of the largest shocks recorded in recent economic history" the World Bank said. While much of the downturn has been in Gaza, the West Bank's GDP dropped 22% in the fourth quarter of 2023, with poverty rising due to a "marked economic slowdown and constrained fiscal capacity, which affects the effectiveness of social protection programs." Nearly a quarter of employment in the West Bank "has also been lost," U.N. Development Program Assistant Secretary-General Abdallah Al Dardari told The Associated Press. It's the "equivalent to 208,000 jobs," he said, while the West Bank is responsible for more than 80% of the total Palestinian GDP.
Produce sales are down nearly 50%, one Ramallah-area grocer told Al Jazeera in October, explaining the "great difficulties transporting produce." Shipping from Israel has become increasingly "expensive in terms of gas and the time it takes for them to arrive."
In particular, Israel's move to cancel work visas for more than 170,000 Palestinians in the West Bank has alarmed observers, including U.S. Treasury Secretary Janet Yellen. She urged Israeli Prime Minister Benjamin Netanyahu to reverse the move and ease other financial constraints on the territory in a letter late last month, and described these actions as "vital for the economic well-being of Palestinians and Israelis alike" during a press conference at a recent G20 meeting of finance ministers.
Israel has also been withholding some tax revenue funds collected from the West Bank, and traditionally "distributed back to the Palestinian Authority, which used it to fund its operating budget," The New York Times said. Israel collects the import taxes because the Palestinian Authority "does not control its own borders," said The Economist, and those funds "account for 64% of [the PA's] total revenue." Israel's current policy of withholding some tax revenue from the West Bank has dealt a "mortal blow to the PA's economy," Haaretz's editorial board said. As an occupying entity, Israel has an "obligation to maintain stability in the West Bank, as well as an interest in doing so," it continued, noting the loss of more than $800 million in domestic monthly revenue caused by the absence of Palestinian workers. Ultimately, the board argued, Israel should allow a "controlled entry of Palestinian workers" that, while mutually beneficial, will most importantly "enable West Bank Palestinians to earn a dignified living."
What next?
Looking ahead, there is hope the West Bank's once thriving IT sector can "buck the wider trend of economic slowdown across the Palestinian territories," Context said, even as firms initially saw business "grinding to a halt" in the war's early stages.
More immediately, Yellen welcomed the news that some frozen tax revenues from Palestinians in the West Bank have "started to flow" back into the territory to "fund basic services and to bolster the economy in the West Bank."
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Rafi Schwartz has worked as a politics writer at The Week since 2022, where he covers elections, Congress and the White House. He was previously a contributing writer with Mic focusing largely on politics, a senior writer with Splinter News, a staff writer for Fusion's news lab, and the managing editor of Heeb Magazine, a Jewish life and culture publication. Rafi's work has appeared in Rolling Stone, GOOD and The Forward, among others.
-
Is the Gaza war tearing U.S. campuses apart?
Today's Big Question Protests at Columbia University, other institutions, pit free speech against student safety
By Joel Mathis, The Week US Published
-
DOJ settles with Nassar victims for $138M
Speed Read The settlement includes 139 sexual abuse victims of the former USA Gymnastics doctor
By Justin Klawans, The Week US Published
-
14 recent scientific breakthroughs
In Depth From photos of the infant universe to an energy advancement that could save the planet
By Devika Rao, The Week US Published
-
Is the Gaza war tearing U.S. campuses apart?
Today's Big Question Protests at Columbia University, other institutions, pit free speech against student safety
By Joel Mathis, The Week US Published
-
'Make legal immigration a more plausible option'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Israel's military intelligence chief resigns
Speed Read Maj. Gen. Aharon Haliva is the first leader to quit for failing to prevent the Hamas attack in October
By Justin Klawans, The Week US Published
-
'Elevating Earth Day into a national holiday is not radical — it's practical'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
'Republicans want to silence Israel's opponents'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Israel hits Iran with retaliatory airstrike
Speed Read The attack comes after Iran's drone and missile barrage last weekend
By Peter Weber, The Week US Published
-
Is there a peaceful way forward for Israel and Iran?
Today's Big Question Tehran has initially sought to downplay the latest Israeli missile strike on its territory
By Sorcha Bradley, The Week UK Published
-
'A speaker courageous enough to stand up to the extremists in his own party'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published