Israel Is Orchestrating an Economic Collapse in the West Bank

Hebron, the West Bank-Since the beginning of the Israel War-Hasmas in October 2023, Rove, a Palestinian building worker from the West Bank, returned to his job in Israel once, in July 2024. Entry without permit. He is now returning to the West Bank, prohibited from Israel until 2027.

Rove, who did not want his last name, who was used to protect his identity, canceled his statement when he attacked Hamas on Israel on October 7, 2023, as is the case with about 115,000 Palestinians from the West Bank who also hold work permits. Nearly two years after the war, only about 8,000 declarations were repeated.

With hundreds of thousands of Palestinians exiting the work, unemployment increased to more than 30 percent in the West Bank, as of the last time unemployment data was collected in September 2024 – which led to a high level of this. (A month before the war began, it reached 12.9 percent.)

Compared to the continuous flow of work he received in Israel, Rove has not found a permanent job in the West Bank. Instead, he managed to manage a strange job here and there, such as cleaning the streets for a daily wage of 50 Israelis (NIS), about $ 15. Work is not only rare in the occupied territories, but the economic restrictions imposed by Israel in place before the war-such as blocking Palestinian tax revenues-strangled the labor market in the West Bank.

In the first year of the war, a survey conducted by the International Labor Organization found that more than 50 percent of the West Bank employees have decreased, more than 60 percent have decreased their income, and 65 percent of companies reduced the workforce.

The lack of jobs available in the West Bank with legal options to work in Israel is cut off that more workers are at risk of their lives only to earn a livelihood.

“We risk crossing into Israel and work in any possible way to support our families,” Rove said. “But many pay a heavy price because they are wounded, shot, or drop him while crossing.”

The result of the unemployment that approaches the record is to double the average poverty of the West Bank after one year of the war, according to the Palestinian economist Nasser Abdarim, who said that a third of the families there now live in poverty.

“The source of the money for the Palestinian economy, especially the West Bank, was wages of Palestinian workers in Israel,” said Abdarikim. Foreign policy.

Although it is important, job losses are only one factor in the equation that leads to a decrease in the West Bank economy.

Even before the Israel-Hamas war, Israel blocked the tax revenues that were allocated to the West Bank. Since 2019, given that the penalty of payments made for the families of Palestinian and Palestinian prisoners who were killed by Israeli forces, Israel has blocked nearly 8 billion New (about $ 2.3 billion) of tax revenues due to the Palestinian Authority (PA), which is the ruling body of the West Bank. (As part of the Oslo Agreement – the temporary peace agreement signed in the nineties between Israel and the Palestine Liberation Organization – the Ministry of Finance in Israel gathered tax revenues on behalf of the Palestinian Authority and transferred money monthly.)

After October 7, 2023, when Hamas attacked Israel, the Council of Ministers decided to block the additional tax revenues used specifically to pay the salaries of the public sector employees of the Palestinian Authority in Gaza, on the pretext that the money may end in the hands of Hamas. Hamas runs the Gaza Strip, while the Palestinian Authority is largely running as ministerial salaries in social affairs, health and education.

In protest, the Palestinian Authority refused to accept any of the remaining tax revenues from Israel. Therefore, in January 2024, Israel decided to put Gaza’s funds in a Norwegian trust fund that will be issued with the permission of Israeli Finance Minister Bezallil Smotrich. The regime worked until May 2024, when Norway admitted a Palestinian state, angered Sottic, who ended the deal after that. Despite many payments since the deal is over, tax revenues have been withheld over the past four months.

Even when some money has been transferred, the government can pay only about 50 percent to 70 percent of salaries. Without the money due, the Palestinian Authority is forced to borrow from banks to pay wages.

“For this reason, the public debt increased to nearly 13 billion dollars, which is more than 130 percent of the gross domestic product of Palestine.”

The exacerbation of the economic crisis also ordered Smotrich in June to abolish the protection of Israeli banks that run business with the financial institutions of the Palestinian Authority, hours after the United Kingdom, Australia, Canada, New Zealand and Norway imposed joint sanctions on Smotrich. Emit annually, this compensation protects Israeli banks from possible legal measures if the Palestinian Authority is accused of financing terrorism. Without this, these Israeli banks are likely to cut their relations with their Palestinian counterparts, which caused the emergence of the monetary economy and the black market.

While the Palestinian monetary authority works like the central bank, it is unable to print its own money and depends greatly on its links to Israeli banks. Cutting the financial relationship between the West Bank and Israel will disrupt trade in the occupied territories and isolate Palestinian banks from the global financial system. Smotrich’s decision will not enter into force until November, when the waiver is renewed.

“If Israeli banks cut ties between correspondents with Palestinian banks, the economy will not be unable to import energy and food, pay the price of services, or even cover public sector salaries,” Ihab Mahaarmeh, a researcher at the Arab Center for Research and Politics in Doha, in an email to to Foreign policy.

Palestine’s monetary problems multiplied by Israeli Chiops in the Palestinian market. As part of the Oslo agreements, the Paris Protocol for Economic Relations, signed in 1994, the number of customs, trade and tax relations between Israel and the Palestinian Authority, and the assignment of the Israeli Shekel as the currency that will be used in the occupied areas.

With this protocol, Israel accepts the transfer of Chiccom from Palestinian banks to the corresponding Israeli banks, which amounted to 18 billion New annually. However, in the past decade, the Palestinian market has acquired a surplus of these funds.

“The surplus came from the fact that the Palestinian economy has grown 10 times since 1995,” said Raja Khaldi, Director General of the Palestinian Economic Policy Research Institute. “But also because there are different flows that enter the economy today more than there was in 1995, such as money that flows from Arab Israelis and Palestinian workers.”

“Shekels are not trading in the economy, so they end up in banks,” Abdarim said. “Banks do not accept huge deposits, and for this reason the Palestinians find it difficult to cover their checks and carry out transportation, due to the restrictions imposed on deposits. The banks also find it difficult to finance trade exports from Israel because they simply do not have a sufficient balance in their accounts.”

With the war, the Israeli army intensified its raids on currency exchange centers in the West Bank. When claiming that these raids are necessary to prevent terrorist financing, the Israeli army has seized millions since October 2023 of these funds. (The Biden Administration said in 2023 it believes that Palestinian banks were committed to combating global money laundering and facing terrorist standards.)

Mahaar explained that Palestinian workers and West Bank institutions deeply depend on these centers to address the deferred checks, send payments, and receive funds from abroad, which have become especially vital given the countless financial restrictions imposed by Israel on Palestinian banks.

“These stores are necessary because they revolve the US dollars and the Jordanian dinar, and the favorite savings currencies on the Israeli shekel, and their turmoil creates a severe critical shortage that makes daily transactions increasingly difficult.” “The restriction of these stores amounts to targeting the same daily life, and turns an essential necessity to survive into another tool to pressure the Palestinians towards migration.”

As the economic path of the West Bank is dropped, there is likely to be a little that can be done to prevent complete collapse.

“On the technical level, the Palestinian politician cannot do anything, except for the budget cuts and increase revenues,” Abdarim said, which confirms these methods either to be already used by lowering salaries, or cannot be imposed, as is the case with raising taxes on residents who are increasingly lacking.

Therefore, experts who have been interviewed argue that the only solution to the continuous financial crisis of Palestine is a political: it means ending the Israeli occupation and establishing Palestinian sovereignty, instead of the existence of an intertwined leadership with the economy of Israel.

“We cannot expect the Palestinian economy and the Palestinian people to restore at least part of their wealth, income, ability to spend, and live, at least appropriate, without the basic political conditions,” Abdarim said. From his point of view, this means ending the war first in Gaza and allowing the movement of goods to the besieged pocket – then negotiating a peaceful solution to end the violence contracts between Palestine and Israel.

For Rauf, many other Palestinian workers like him, no solution appears to be on the horizon or even closed.

“The situation seems hopeless and does not end, especially with the current Israeli government … I do not see them allowing Palestinian workers to return to Israel,” Rove said. These feelings apply to the fact that the government of Israel is now carrying out plans to replace Palestinian workers with hundreds of thousands of migrant workers.

“Things do not change, and instead there is a kind of despair,” Rove said.

This despair may appear in the wall climbing and the risk of arrest, only to earn daily bread.