The Israeli-Palestinian Conflict’s Economic Impact
The Israeli-Palestinian conflict has been there for decades, and despite the agreements made to establish peace between both parties, the conflicts are still present to this day, and we are here to see its economic impact on both Israel and Palestine.
It all started when the Zionists wanted to establish a homeland for the Jewish people in Palestine, and the pressure surmounted after World War II and the holocaust, which led to the establishment of the state of Israel after the 1948 war with Palestine, and the displacement of over 700,000 Palestinians from their homes. In addition, those who were not displaced were under Israeli rule and had to submit to them. The United Nations established a two-state solution in an attempt to make peace, but Israel ended up occupying more land at the expense of the Palestinians.
Israel depends on high-technology equipment and industrial manufacturing, in addition to imports of raw materials from other countries, since it lacks natural resources itself, and on immigrants to work for them, in making its economy what it was, one of the strongest. But after COVID and the ongoing current conflicts with Hamas, the Islamic resistance movement based in Gaza City, their economy is under threat as it may shrink up to 11% in the last 3 months of the year (Karakaya, 2023).
With the quarantine during the COVID pandemic, a lot of people got let off or sent to their homes with unpaid leave, which decreased the labor market for a while and led to a decrease in their GDP by 4% (Taub Center Staff, 2020)
Now with the Hamas conflict, years of oppression led to the birth of aggression. On the 7th of October, 2023, Hamas attacked Israel and breached the Gaza-Israel barrier, which was an unexpected blow to the Israelis, and they are currently retaliating by carpet bombing Gaza with weapons supplied by the US.
Now, when it comes to Palestine, with the ethnic cleansing and the majority of it being under Israeli rule, their economy has gone into shambles and has been dependent on Israel, and this has led to multiple consequences.
First of all, it affected the labor market in that the rates of unemployment increased, the wages were reduced by approximately $56 per month, and a shift in the dynamic of their economy (Decolonizing the Study of Palestine, n.d., p.290), a shift from depending on agriculture, construction and transport, to depending on Israel, especially after the making of the Israeli West Bank barrier built in 2002-2005 has taken place, which led to structural inequality and affection of almost 61% of the people in the West Bank by it, where females ended up working 54% fewer days and males, 21% fewer days (Decolonizing the Study of Palestine, n.d., p.290).
Secondly, the construction of the aforementioned barrier has limited the movements of Palestinians since they are the only ones who need a permit to cross the barrier for work, and that requires a lot of paperwork which, in turn, has affected their labor market negatively as well, and led to a limited access to universities, schools and proper medical care, thus, affecting their living standards badly.
Furthermore, with the multiple wars and the ethnic cleansing taking place, from 1948 to this day, this cycle of violence is being passed on from one generation to another and with the Palestinians living in Israel, we found that they tend to support their oppressor since they feel like they have no other choice despite the threat to their ethnicity and economy.
Finally, all that led to the rise of the shadow economy in Palestine where its size is estimated to be 43.8% of the GDP between 1998 and 2021 (Abuamsha & Hattab, 2023). To overcome that, it is best advised to create job opportunities, as well as reduce taxes on products and facilitate the licensing procedures since that makes them cheaper, therefore, all that can help immensely with the public not resorting to the black market. On top of that, any person participating in the black market, or any illegal activity should be dealt with by law to discourage such activities. Last but not least, Palestine should expand the land that originally belonged to it so Palestinians can increase employment rates and thus, improve their economy.
In conclusion, the Israeli-Palestinian conflict has always been an issue and the Palestinians suffer from the consequences from 7 decades ago to this day from all aspects. An international involvement to call for a ceasefire is essentially needed and to opt for a solution that stops the war between both parties.
Works Cited
Decolonizing the study of Palestine. (n.d.) Google Books. https://books.google.com.eg/books?hl=en&lr=&id=HR-6EAAAQBAJ&oi=fnd&pg=PA269&dq=Palestine+Israel+conflict+effect+on+economy&ots=OoTXLfJvNT&sig=w1EITw8M5cNDoAeOBFyLaEB0KZs&redir_esc=y#v=onepage&q=Palestine%20Israel%20conflict%20effect%20on%20economy&f=false
Karakaya, K. (2023, October 29). Israel's Economy Set to Shrink 11% as Hamas War Escalates: JPMorgan. Bloomberg.com. https://www.bloomberg.com/news/articles/2023-10-29/jpmorgan-says-israel-s-economy-may-shrink-11-this-quarter?embedded-checkout=true
Abuamsha, M. K., & Hattab, L. M. (2023). Shadow economy–financial sustainability nexus: the case of Palestine. Journal of Economic Studies. https://doi.org/10.1108/jes-01-2023-0026
