By Hala Ali /
The World Bank (WB) has historically and continuously facilitated the global capitalist colonial system. It routinely turns a blind eye to the colonial reality in Palestine and the impact of colonial policies on the Palestinian economy. It ignores the deep-rooted structural issues of the Palestinian economy under the Israeli occupation’s policies and control. It also fails to hold the Israeli occupation accountable for the economic deterioration in Palestine, and often scapegoat the Palestinian Authority (PA) for the persistent economic decline. The Bank recommend borrowing and the adoption of austerity measures, while conveniently ignoring the culpability of occupation policies. This oversight shuts down any real prospects for meaningful economic development.
The WB is a key cog in the global colonial system. It imposes economic policies that reinforce global capital powers at the expense of poor nations and the Global South, perpetuating their dependence. In a 2022 report, the WB urged several “developing” countries, including Palestine, to adopt strict austerity measures under the pretense of “economic reform,” with a niche focus on increasing national savings. When it comes to the Gaza Strip, the WB recommends that the PA ramp up tax collection, letting the PA and international bodies off the hook for any genuine commitments to the Palestinians and their rights. This recommendation blatantly ignores the Palestinian economy’s deep dependency on the Israeli occupation’s economy and its reliance on foreign aid due to the Israeli occupation policies.
The WB serves as an instrument focused on the economic interests of global capitalist colonial powers, perpetuating the dependency of “developing” countries. It disregards historical and political factors that affect these countries, particularly the colonial policies that have entrenched this dependency. These policies distort their economies, liberalizing them for resource exploitation and deepening their reliance on global colonial powers. These are facilitated by local elites and expose how their interests align with the agenda of international colonial institutions.
The devastation of Gaza
A recent report by the WB, the European Union, and the United Nations outlined the staggering economic losses and damages inflicted by the genocidal war on the Gaza Strip since October 7, 2023. It revealed that the housing sector bore the brunt of the destruction, followed closely by services, trade, and industry sectors. It underscored that the bulk of the destruction was concentrated in the governorates of Gaza, North Gaza, and Khan Younis, with particularly severe impacts in Khan Younis, Jabalia, Beit Lahia, and Rafah.
The report further indicated that the damages from the ongoing assault in Gaza are unprecedented. In the social sector alone, the losses are 90 percent greater than those suffered in the thick of the 2021 conflict, and a staggering seventeen times higher than the 2014 war. The total estimated losses from the start of the war to the end of January 2024 are roughly USD 18.5 billion.
The report highlighted that the infrastructure destruction across all sectors reached 60 percent, with the water and sanitation sector slightly lower at 57 percent. The housing sector bore a massive hit, with 62 percent destroyed, translating to approximately 290,820 housing units. As figures stand, damages in the housing sector account for 72 percent of the total damages caused by the war. In the health sector, the devastation is profound, with 84 percent of health facilities damaged, totaling an estimated USD 554 million in losses. Specifically, 659 health facilities were affected, with hospitals alone losing over USD 222 million. Health centers, clinics, and pharmacies also faced extensive damages and losses.
In the education sector, infrastructure damage is estimated at USD 341 million. According to the report, the destruction has affected 625,000 students and 22,564 teachers, with 56 educational facilities destroyed and another 219 partially damaged. The remaining schools have been repurposed as shelters for the displaced. The cultural and heritage sector has also suffered, with preliminary losses estimated at USD 319 million—approximately 31 percent of heritage sites have been reported as damaged.
Nearly four out of five establishments in the trade, industry, and services sectors have been either damaged or destroyed, racking up USD 1.65 billion in losses. This widespread devastation has crippled all economic activities, driving the unemployment rate above 50 percent. Besides, 80 percent or 39,000 facilities of the 49,000 facilities assessed suffered partial and total destruction, according to the report.
In the agricultural sector, the report estimated losses at USD 629 million, highlighting severe environmental damage to coastal areas and the soil. The most significant destruction was recorded in North Gaza and Khan Younis, with a 60 percent impact. The energy, water, and sanitation sectors faced estimated losses of USD 800 million.
However, the report failed to mention the role of the US-backed Israeli occupation. The occupation should be held to account for the substantial environmental damage inflicted by its war on the Gaza Strip in the same way that international reports unequivocally charged Russia with environmental genocide in the ongoing Russo-Ukrainian conflict.
The report underscored the human toll, with 31,000 martyrs recorded by mid-March. It also highlighted the displacement crisis, noting that 1.7 million people have been displaced. Furthermore, it stressed the war’s impact on education with all students in the Gaza Strip currently out of school.
Painting a grim picture of the war’s impact on women, children, and marginalized groups, the report estimated that there are 25,000 orphans in the Gaza Strip, with another 17,000 children separated from their families due to the conflict. It also underlined alarming levels of food insecurity, with 2.13 million people in Gaza lacking access to food. Astonishingly, the population of Gaza accounts for 80 percent of the global population facing famine or severe hunger.
Based on the damage data, the report indicated that the economic situation is poised to deteriorate further, with the Gross Domestic Product (GDP) expected to shrink by over 50 percent. Even before the war, Gaza faced high unemployment rates. By the end of January 2024, 74 percent of the workforce in Gaza have been unemployed. The report cited several reasons for this dramatic surge: 1) the destruction of physical assets, 2) injuries, 3) displacement, and 4) cessation of economic activities.
The report predicted a rise in poverty levels, driven by the destruction of arable land, ports, and physical assets; shortage of water, food, and fuel; and widespread displacement. Current estimates indicate that Palestinians in Gaza are living in poverty, as consumer price inflation in Gaza has skyrocketed by 33 percent, spurred by supply chain disruptions from the war and acute shortages of basic commodities. Fueled by diminished food access, soaring transportation costs, and a drastic reduction in aid, food prices have also soared by 39 percent. The complete halt of fuel supplies has triggered a 143 percent surge in transportation costs.
Palestinian economy under the US-backed Israeli occupation
The devastation of Gaza since October 2023 is unprecedented. But Palestine’s economy has been withering for decades under the US-backed Israeli occupation. Palestinian economic growth, when measured by the global GDP standards, is artificial and unsustainable. This situation is largely due to the lack of development in the industrial and agricultural sectors due to blockades and occupation-imposed restrictions. Making up 54.9 percent of Gaza’s GDP, the services sector dominates the GDP contributions in both the West Bank and Gaza Strip. Government dependence on foreign aid also inflates government demand for goods and services, while failing to foster real, sustainable growth. The economic structure lacks diversity, and does not rely on productive sectors due to dependency on the Israeli economy. This entanglement is starkly evident in the payment of public sector salaries, which are tied to clearance revenue transfers from the Israeli occupation, along with the myriad restrictions imposed on the Palestinian economy by the occupation and its dependency agreements.
Evaluating economic growth solely through GDP without considering equitable distribution, taxation, and colonial interventions and policies from both the occupation and donors who impose economic restrictions presents a misleading picture of economic realities. It conceals the factors that contribute to the deteriorating economic structure, providing a false representation of the actual economic conditions.
While the report clarifies that it does not aim to identify or assess the needs of various sectors, it does outline initial considerations for early recovery interventions. It offers early planning that includes the removal of debris and explosives, provision of shelter and reconstruction, and restoration of social and energy services, with a particular focus on food and the environment.
The proposed interventions attempt to address an unprecedented genocide through a superficial prism and indicators that fail to capture the colonial context. This approach keeps the economic system entrenched in dependency without tackling the real issues that underlie the severe economic decline. These critical issues include lifting the total blockade on Gaza, mobilizing the necessary funds for reconstruction without conditions that reinforce dependency, halting the ongoing military aggression on Gaza, and ensuring that Palestinians in Gaza can access the West Bank and vice versa to rejuvenate and stimulate economic and social life.
It is imperative to critically re-evaluate any proposals from the WB and other international bodies, focusing on developing a reconstruction plan that comprehensively addresses the Palestinian economic situation and recognizes its intricate challenges. The Palestinian economy should be approached as one under occupation, with a particular focus on removing obstacles to sustainable national economic development. Key actions include lifting the blockade, resolving political divisions, and devising an emergency plan to revitalize the national Palestinian economy, not just in Gaza. The objective should be to foster a sustainable national economy that can break free from dependency on the Israeli economy, build national economic policies that support this independence, and strengthen productive sectors once the effects of the genocide on the soil, groundwater, and other resources are mitigated.
The report conspicuously omitted any reference to the occupation as a cause of the ongoing economic decline, which has been worsening since before the war. Moreover, it persisted in framing the situation as a “conflict” and “hostilities” and, in certain instances, mentioned settlers when discussing human casualties. Treating Gaza as a party in a conflict between equal forces, this narrative ignored that Gaza is part of a state under occupation, subjected to an ongoing genocide.
While the report highlighted human losses as the most significant impact, it failed to address their economic effects, particularly the increase in poverty rates resulting from numerous families losing their primary breadwinners and the rise in orphaned children, which further exacerbates poverty rates. Despite utilizing savings rates to evaluate the economic impact on the GDP as part of its methodology, the report neglected the depletion of savings during the war and the subsequent financial deficit. The spending of savings during wars has a significant impact on the economy, leading to a shortage of financial resources and a multifaceted inability to secure basic needs, fund vital establishments, and mitigate some of the severe economic repercussions once the war is over.
The World Bank’s complicity in the genocide is glaringly apparent in its refusal to hold the US-backed Israeli occupation accountable for the devastation it has wrought, including bearing the costs. This report absolved international institutions of their responsibilities by failing to explicitly acknowledge their roles or interventions. In a blatant contradiction, the WB disclaimed any responsibility for the report findings ab initio. We assert that any international reports or efforts to analyze Palestine’s economic reality that fail to hold the occupation primarily accountable, followed by international policies – are complicit in perpetuating these harmful practices. The WB is particularly culpable for pushing economic policies that bolster the neocolonial order, and for being a major enabler of the genocide in Gaza. This perpetuates ongoing economic decline and dependency. Standing up to these policies is essential to breaking the shackles of colonial dominance. We urge concerted efforts to expose these policies and provide a thorough analysis of the economic impact of the genocide on the Palestinian economy, especially in Gaza, as a foundational step towards developing a robust developmental strategy to counteract these policies.
Hala Ali is a researcher at the Stars of Hope Society (SHS), and is a research associate at Al Marsad – the Social and Economic Policies Monitor. She holds a bachelor’s degree in Sociology and a master’s degree in Gender and Development Studies. She has worked on preparing several studies, research papers, and reports focusing on various social, rights-based, and developmental issues.