The roaring truck engine was the only noise in the quiet town of Awarta near Nablus. Twice a week, Ali drives his truck to unload the vegetable products of farmers in his village to a wholesale dealer in Ramallah. That day was never like any other. The approximate two-hour trip to Ramallah took almost five hours. By the time Ali arrived at his destination, his truck’s cargo of vegetables looked as if they had been inadequately stored for days. The bright sunny day and the generated heat sped up the vegetable rotting process.
Students, teachers, workers, and employees of diverse jobs are frequently delayed at army roadblocks in what has become a routine daily procedure for them all over the West Bank. Such delays are no recipe for a healthy PA economy or everyday life for most Palestinians, including those who live in the PA-controlled areas. The Israeli army keeps the overriding security control of all the West Bank.
Israeli military barriers significantly hinder the development of the Palestinian economy by imposing restrictions on movement and trade. These barriers lead to increased unemployment, decreased investment, and reduced productivity, which are considered significant factors preventing sustainable economic development in the West Bank.
The Palestinian Central Bureau of Statistics noted that the losses of the Palestinian private sector unprecedently declined by $2.3 billion between October 2023 and January 2024. It said that the production of almost half of the private sector stopped or decreased due to “an almost total suspension in production of about 56 thousand establishments in the Gaza Strip, where internal trade constitutes more than half of the establishments.”
Estimates indicate that Israeli military barriers in the West Bank cause substantial economic losses to the Palestinian economy. According to Shaher Saad, Secretary-General of the Palestinian Federation of Trade Unions, these barriers “result in the loss of approximately 60 million working hours annually, equivalent to around $270 million.”
Furthermore, the UN and the World Bank estimate that the Palestinian economy has incurred losses of up to $50 billion since 2000 due to Israeli measures, particularly closures and barriers that impede movement and trade.” These figures underscore how significant the negative impact of Israel’s military barriers on the Palestinian economy is, exacerbating unemployment and poverty while slowing economic growth.
Moreover, Israel’s confiscation of taxes it collects on behalf of the PA and its ongoing control of the PA’s economic arteries have made such improvement nearly impossible. The confiscation of vast amounts of the tax revenues has significantly impeded any steps the PA government could take to improve its economy or the standing of its public servants, who continue to receive no more than 70% of their monthly salaries due to its financial crisis.
“Israel uses political and economic tools to pressure the PA in whichever way possible to keep it under the line of competence and disrupt its performance,” says Mu’ayyad Afaneh, a Palestinian economist and analyst. He noted that after October 7, 2023, Israel confiscated an amount of NIS 275 million shekels ($74.8 million) in lieu of money the PA used to pay for the Gaza Strip’s public services, such as education, health, electricity, and water. In 2024, this amount was transferred to Norwegian custody to pay the PA once Israel consented. Israel didn’t provide the green light after Norway recognized the state of Palestine. Furious, Israel kicked Norway out of the deal.
Withholding Palestinian revenues
Last February, the Jerusalem District Court issued a temporary freeze on approximately NIS 2.8 billion ($760 million) in funds for the PA after hundreds of Israeli victims of the October 7 attack by Hamas filed lawsuits demanding compensation from the PA. The court ruled that each plaintiff was entitled, at this stage, to at least NIS 5 million ($1.4 million) in damages. As a result, the freeze on PA assets was increased by an additional NIS 2.72 billion ($740 million), which aligns with previous decisions on similar cases against the PA and Hamas.
According to Afaneh, withholding Palestinian tax revenues came within the context of a movement led by an Israeli civil society organization called Shurat HaDin, which is mobilizing a collective process of filing lawsuits against the PA to undermine it and stifle the Palestinian people. He added that this group’s vision intersects with that of Israeli Finance Minister Smotrich and the Minister of Civil Administration, who both speak of strangling the Palestinian people and the Palestinian Authority.
According to Afaneh, the new deduction deepens the financial crisis the PA has been suffering from for many years and has intensified since the October 7 attack after Israel made two decisions. One decision was the Knesset’s to withhold 53 million shekels per month, covering the monthly stipends the PA pays to families of Palestinians killed or imprisoned by Israel. The second decision was that of the Israeli cabinet to withhold the 275 million shekels per month instead of the money the PA pays the Gaza Strip public services.
Afaneh explained that clearance revenue “represents 68% of government revenues, and with this data, we have lost 40% of the Palestinian people’s income. Given the 35% decline in Palestinian GDP and the unemployment of approximately 205,000 workers in the occupied territories, with the unemployment rate reaching approximately 50%, the situation has become catastrophic for the Palestinian economy.”
Afaneh didn’t only address the crisis but also suggested solutions. He said, “We must begin by transforming ourselves into a Palestinian resistance producer and investing in all economic sectors. This requires legislation from the Palestinian government, along with a culture among the people of choosing national products and staying away from Israeli products, or at least products that have Palestinian alternatives on the shelves of local supermarkets.
The Palestinian economy is bonded with that of Israel that it seemed to have been annexed to Israel since the beginning of the Israeli occupation in June 1967. Throughout all those decades, the Israelis kept the lid on the Palestinian economy. After the Oslo Accord was signed, Israel continued its control of this economy. It solidified its grip by signing the Paris Economic Protocols with the PLO in 1995.
During the last 30 years, the Palestinians have repeatedly demanded a revision of the Paris Protocol. Israel never agreed. Why should it agree to a move that would end up giving the Palestinians better leverage in handling their economy?
Some Palestinian economists argue that even if re-negotiating the Paris Protocol brought no results, the PLO still has the chance to seek international arbitration over Israel’s economic measures and policies that continue to impede every attempt to improve the Palestinian economy. Although the arbitration idea sounds valuable, some decision-makers seem uncertain of its success. They are worried that focusing on the economic complexities might distract world attention from the ongoing Israeli war in the Gaza Strip. Some even believe there is no point in concentrating Palestinian efforts on revisiting previous interim agreements with Israel when the current war in Gaza requires an immediate international intervention to end the war and move directly to the political two-state solution along the 1967 lines. What else can end the war if the Gaza disaster isn’t enough for all sides to take brave decisions?
Before and after the Oslo Accord was signed in 1993, Israel has consistently enforced its basket of customs on the Palestinian economy. This was solidified in the Paris Protocol, which, in due time, heavily impeded the PA’s capability to promote a prosperous economy. For instance, a gallon of petrol costs the same in Tel Aviv and Ramallah, although the average Palestinian income is much less than the average Israeli income.
The PA government has repeatedly failed to import oil directly from oil-rich Arab countries at preferential prices because of Israel’s rejection. Talks were held in the past to allow the PA to import oil directly from countries like Iraq and Saudi Arabia, but they never led to tangible results. Israel either rejected the Palestinian demand or placed conditions that the PA could not accept.
Palestinians and Israelis across the divide share almost identical prices for most commodities purchased on both sides of the 1967 line, yet the GDP differences between that of the PA and Israel’s are too profound to bridge. By the end of 2020, the Palestinian GDP was estimated at $14 billion. In 2022, it increased to $19 billion, compared to Israel’s $525 billion.
The PA economy suffers annual losses of approximately $2.5 billion due to the ongoing Israeli occupation. These estimates are based on the United Nations Conference on Trade and Development (UNCTAD) reports, which indicated that total losses between 2000 and 2017 amounted to approximately $47.7 billion, equivalent to around $2.5 billion annually.
UNCTAD secretariat report
A report prepared by the UNCTAD secretariat on the economic costs of the Israeli occupation for the Palestinian people said that throughout history, colonization and occupation have always had economic dimensions, also in the case in the Occupied Palestinian Territory, where the occupation “imposes heavy economic costs on the Palestinian people and their economy.” It noted that the estimation of these costs “is an essential first step for reversing the damage caused by the occupation, achieving the Sustainable Development Goals in the Occupied Palestinian Territory and forging a just and lasting peace in the Middle East.”
Previous studies have suggested that the Palestinian economy could be twice its current size, probably even more, had the occupation not occurred. A study prepared by the Applied Research Institute – Jerusalem showed that annual Palestinian losses resulting from the Israeli occupation are estimated at approximately $9.46 billion.
The PA hoped that joining BRICS would solve, at least partially, its economic crisis. Palestine intended to apply for BRICS membership after last year’s October summit in Kazan, Russia. However, there have been no official announcements confirming Palestine’s acceptance into the bloc. BRICS’s criterion for accepting new members is conditional to full membership in the UN. In 2012, the UN recognized Palestine as a non-member state, and since then, the Palestinians have been fighting their way across the corridors of the UN to gain full membership. US vetoes and opposition played a significant role in foiling those Palestinian attempts. Their chances of earning such membership in Ronald Trump’s second term are next to zero.
Ahmed Alqarout, a Palestinian political economist, believes that BRICS membership offers the Palestinian economy significant opportunities to overcome Western sanctions and isolation. In an article he published in the Palestinian Policy Network, Alshabaka, on March 11, 2025, Alqarout argued that the Palestinians “can benefit from financial innovations like BRICS Pay QR for retail transactions and BRICS Pay B2B for businesses, both of which could reduce dependence on Israeli-controlled financial systems.”
As long as Palestine is not a BRICS member, its chances of receiving economic support from the new world constellation are minimal. Most BRICS member states support Palestinian right to independent statehood and the two-state solution. In contrast, others are not sufficiently supportive or do little to interpret their support into action.
Alqarout explained in his article that BRICS membership “opens markets for Palestinian technology start-ups, fosters innovation, creates jobs, offers opportunities for economic recovery and growth in Gaza and the West Bank, and counters Israeli measures.”
Elias Zananiri is a Palestinian veteran journalist who has held several senior positions in the PLO as a political advisor and media consultant in the past two decades.
