Fact Sheet: Palestine’s Occupied Economy

June 19, 2019 IMEU
Fact Sheet: Palestine’s Occupied Economy


The Palestinian economy in the West Bank, East Jerusalem, and Gaza is subject to severe restrictions imposed by Israel’s occupying army, most notably the limiting of freedom of movement for people and goods and the theft of natural resources.

The Oslo Accords, signed by Israel and the Palestine Liberation Organization in the 1990s, govern economic relations between Palestinians and their Israeli occupiers, in particular the Protocol on Economic Relations (also known as the Paris Protocol). Under the Protocol, Israel collects tax revenue from Palestinians and is supposed to transfer it to the Palestinian Authority, giving Israel enormous economic leverage in its dealing with the PA, with Israel frequently withholding desperately needed revenues to apply political pressure.

Since 2007, Israel has imposed a draconian siege and naval blockade on Gaza that have been condemned as a form of collective punishment and illegal by the UN and human rights organizations, creating a deliberately man-made humanitarian catastrophe for the nearly 2 million Palestinians trapped in the tiny coastal enclave.

Quick Facts on the Palestinian Economy

  • Main industries: The Palestinian economy in the occupied territories is dominated by the service and manufacturing industries and the government sector (the Palestinian Authority).
  • Unemployment rate (2018): 30.8% overall in the occupied West Bank and Gaza, with 52% of Palestinians in Gaza without work, including more than 67% of young people, and 18-19% of Palestinians in the West Bank unemployed.
  • Number of Palestinians working inside Israel or in illegal Jewish settlements: Approximately 127,000, many of whom are exploited as cheap labor on construction sites by unscrupulous Israeli employers and subject to dangerous working conditions.
  • GDP (2018): $14.7 billion (USD). According to the World Bank, in recent years 70-80% of Gaza’s GDP has been comprised of donor aid and spending by the Palestinian Authority.
  • GDP per capita (2018): $3,058 (USD).
  • Economic growth (2018): According to the World Bank, Gaza’s economy actually shrank by 8% in 2018, while the West Bank only saw 2% growth. Overall, the Palestinian economy in the occupied territories grew by just 0.9% in 2018, according to the International Labour Organization (ILO).
  • Number of Palestinians living below the poverty line in Gaza: According to the ILO, between 2009 and 2017 the proportion of Palestinians in Gaza living below the poverty line rose from 38.3% to 53%.
  • Number of Palestinians in Gaza who are forced to rely on food aid to survive: More than one million.

Israeli Restrictions on the Palestinian Economy

Restrictions on the Movement of People and Goods

  • In the occupied West Bank, the movement of Palestinians and their goods is restricted by a network of hundreds of Israeli military checkpoints, walls, and illegal Jewish settlements. To enter Israel, occupied East Jerusalem, or travel to the outside world for work or any other purpose Palestinians require permits from the Israeli army, which are difficult for most to obtain. Historically, Jerusalem has been a central hub of economic activity for Palestinians in the West Bank so Israel’s restrictions on entry into the city have disrupted traditional patterns of economic life.
  • In Gaza, which remains under Israeli military occupation despite Israel’s withdrawal of settlers in 2005, Palestinians are trapped under siege, prevented from leaving to do business or study except in rare cases. Israel also severely limits imports and exports from Gaza, while the Israeli navy prevents Palestinian fisherman from travelling a certain distance (which changes) from shore to reach the best fishing grounds, often harassing and shooting at them in the process. Severe shortages of electricity and essentials such as clean water caused by the siege and repeated Israeli military assaults also hinder economic activity.
  • In both cases, the movement of manufactured goods and agricultural products to market is subject to the whims of Israel’s government and occupying army, which frequently impose costly delays without reason.

Theft and Destruction of Natural resources

  • Since militarily occupying the West Bank, including East Jerusalem, and Gaza in the 1967 War, Israel has systematically plundered the natural resources of Palestine in flagrant violation of international law, most notably water and land for illegal Jewish settlements.
  • The Israeli army and settlers have also destroyed countless acres of agricultural land, including ancient olive orchards, to build settlements, Israel’s West Bank wall, and to harass and intimidate Palestinian farmers and force them off their land.

Restrictions on Construction

  • Israel makes it nearly impossible for Palestinians to build homes or businesses in most of the occupied West Bank and East Jerusalem by requiring construction permits that are extremely difficult to obtain. When Palestinians do build without a permit Israeli authorities destroy the structures or force people to do it themselves or face a large fine and possible jail time.
  • In Gaza, construction is severely limited by Israel’s siege, which prevents the import of many basic construction materials. To compound matters, Israel’s military has devastated industry and the civilian infrastructure of Gaza during a series of devastating assaults since 2008, making the lack of building materials even more acute.