Over the course of two years of conflict in Gaza, the fighting has extended far beyond just the military realm, significantly impacting both the economic and political landscapes, leading each side to face losses that are hard to bear.
Palestinians have experienced severe economic hardships due to the blockade and systematic destruction of infrastructure, while Hamas has lost political backing from numerous countries. Simultaneously, Israel is grappling with an unprecedented internal crisis, sparking intense political debate, and burdening its economy with overwhelming military and security expenses.
Gaza has borne the brunt of these consequences, with reports from the World Bank and the United Nations indicating that the region’s economy has lost over 80% of its value, and agricultural and industrial activities have diminished to alarming lows.
Dr. Nasr Abdelkarim, a professor of finance at the Arab American University in Ramallah, characterizes the situation in Gaza as an economic extermination, pointing out that all economic sectors have been disrupted by 90% to 95%.
In an interview, Abdelkarim also highlighted the plight in the West Bank, stressing that it has not been immune to the fallout. The local GDP there has contracted by more than a third, unemployment rates have soared from 13% before the conflict to around 30% currently, and poverty levels have doubled, ranging between 40% and 65%.
The financial crisis faced by the Palestinian Authority has worsened further due to Israel withholding over $3 billion in customs revenue, crippling its ability to pay full salaries. Regarding Israel’s losses, Dr. Nasr explained that the direct and indirect costs of the war on Gaza, along with conflicts involving Hezbollah and Iran, have amounted to between $70 and $80 billion over the past two years, according to estimates from international financial institutions. He added that the budget deficit has risen to 5% of GDP, with public debt increasing from 59% to 70%.
Additionally, international credit rating agencies have downgraded Israel’s credit rating twice in succession due to signs of slowing economic growth. Politically, Egyptian analyst Osama Al-Dail sees discussing “quantifying the losses” as premature, asserting that “the catastrophe has not yet concluded; it has only just begun.”
He suggests that Hamas’s acceptance of former U.S. President Donald Trump’s plan could signify the end of its influence and that of its supporters. Conversely, rejecting the plan may instigate a new chapter of violent conflict. Meanwhile, Israel is facing unprecedented diplomatic pressures and global public opposition due to the humanitarian catastrophe in Gaza, which has negatively impacted its image on international platforms along with rising internal protests regarding the human and economic toll of the war.