Over the course of the two-year conflict in Gaza, the repercussions have extended beyond the military sphere, significantly impacting the economic and political landscapes, leaving both sides grappling with losses beyond their abilities to sustain.
The Palestinian population has experienced severe living crises due to ongoing blockades and systematic destruction of infrastructure. Meanwhile, Hamas has suffered a decline in political support from numerous nations. On the other hand, Israel has faced an unprecedented internal crisis, leading to intense political debates and substantially increasing its military and security expenditures.
Gaza has emerged as the most adversely affected area; according to reports from the World Bank and the United Nations, the economy has lost over 80% of its value, with agricultural and industrial activities plummeting to minimal levels.
Dr. Nasr Abdulkareem, a professor of financial sciences at the Arab American University in Ramallah, characterizes the situation in Gaza as an economic annihilation, stating that economic activities in every sector have been disrupted by approximately 90 to 95%.
In comments made to a local news outlet, Abdulkareem also addressed the situation in the West Bank, emphasizing that it has not been insulated from the repercussions. There, the gross domestic product has declined by more than a third, with unemployment rates skyrocketing from 13% pre-conflict to nearly 30% currently, alongside a rise in poverty rates to a range of between 40 and 65%.
The financial crisis faced by the Palestinian Authority has worsened due to Israel withholding over $3 billion in clearance revenues, severely limiting its ability to pay full salaries. Regarding the financial burdens on Israel…
Dr. Nasr detailed that the direct and indirect costs of Israel’s war on Gaza, along with confrontations involving Hezbollah and Iran, have reached between $70 billion and $80 billion over the past two years, as estimated by international financial institutions. He added that the budget deficit has surged to 5% of the gross domestic product, while public debt has escalated from 59% to 70%.
Furthermore, he noted that international credit rating agencies have downgraded Israel’s credit rating twice consecutively, signaling a slowdown in economic growth. Politically, Egyptian analyst Osama Al-Daleel remarked that discussing ‘estimating losses’ is premature, asserting that “the catastrophe has not yet concluded; in fact, it has just begun.”
He points out that Hamas accepting former President Donald Trump’s plan might signify the end of its role and that of its supporters. Conversely, rejecting the plan could usher in a new phase of violent conflict. Meanwhile, Israel is facing unprecedented diplomatic pressures and worldwide public disapproval due to the humanitarian crisis in Gaza, which has resulted in a deteriorating image in international forums, alongside rising domestic protests over the human and economic costs of the war.