Depleted resources: A Palestinian man gestures at a closed petrol station in the aftermath of Israeli strikes on the Rafah refugee camp in the southern Gaza Strip on October 25, 2023.
| Photo Credit: SAID KHATIB
The Data point published on October 23, 2023, titled ‘Five wars in 15 years stifled Gaza’s growth’ described how the Gaza Strip and West Bank lagged behind many countries on several socio-economic indicators. It showed that the long conflict between Hamas and Israel and the widespread use of violence by Israeli forces on Palestinian territories have stalled Gaza’s socio-economic growth.
This second part of the three-part series on the conflict takes a look at how dependent Palestinians are on Israel for employment and basic amenities such as water and electricity. As a result, Israel controls a significant share of the territories’ economy.
Monday’s Data Point highlighted that the share of Palestinians who are either looking for jobs or are working was among the lowest in the world. It also showed that there are record levels of unemployment in West Bank and Gaza due to lack of industries. Reports show that even among those who are employed, a significant share of them works in Israel or in its settlements. As of early 2022, more than 1.5 lakh Palestinians were working in Israel and its settlements. This is one-fifth of all the workers from the West Bank. Their income contributed a quarter of the West Bank’s GDP.
Not only are many Palestinians unemployed, but many of them are also underemployed or paid inadequately. Reports show that 83% of workers from Gaza received less than the minimum wage ($435) as of 2021. Such heavy reliance on Israel, below-par payment, and constant bombardment mean that the GDP of Palestinian territories has grown at a snail’s pace over recent decades while Israel’s GDP showed rapid growth.
Chart 1 | The chart shows the difference in the GDP growth of Israel and Palestinian territories.
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Israel’s control over Palestine’s economy is more deeply felt through foreign trade restrictions. In 2021, over half of all items imported by the Palestinian territories came from Israel and over 80% of all exports went to Israel.
Chart 2 | The chart shows the major sources and destinations, of imports and exports, from and to the Palestinian territories in 2021.
Electricity, water and fuel, which form the bulk of Palestine’s imports, are largely supplied by Israel. Over 60% of Gaza’s electricity supply is imported from Israel, while the power plant in Gaza supplies the rest. The plant in turn imports diesel from Israel. Due to gaps in supply inside the territories, water is imported from Israel at a higher cost, forcing Palestinians to spend 8% to 13% of their income on it.
Chart 3 | The chart shows that electricity, water and fuel are among the top five imports of Palestinian territories.
This dependency has potentially fatal implications for Palestine should Israel cut off access, as is the case during the ongoing conflict.
Given that Palestinians rely heavily on Israel, a war with Tel Aviv can leave them stripped of resources, necessitating foreign aid. In Gaza, 80% of people depend on international assistance. However, foreign aid, which started declining in the 2010s, touched the lowest-ever level in the 2020s. In 2021, foreign aid formed only 1.8% of Palestinian GDP compared to 27% of the GDP in 2008.
Chart 4 | The chart shows the amount of donor aid as a share of the Palestinian territories’ GDP.
Moreover, Israel controls most of the entry and exits in the territories which results in a “permit regime,” typically leading to exploitation of workers, traders and patients. Consequently, many Palestinians are unable to leave Gaza or the West Bank on time. This restricts their employment opportunities, access to health services and even their access to family.
Source: United Nations Conference on Trade and Development, World Bank, Palestinian Central Bureau of Statistics, UN Comtrade
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