UN report warns war has already set Gaza and West Bank economy back more than a decade

Israel’s war on Hamas could set the Palestinian economy in Gaza and the West Bank back decades, according to a new analysis by the United Nations Development Programme (UNDP).

A report released Thursday by the organization paints a dire picture of the economic conditions in the Palestinian enclave, where more than 10,700 people have been killed in the response to the October 7 terror attack in Israel, according to the Palestinian Ministry of Health in Ramallah, which draws from sources in the Hamas-controlled enclave.

Since the start of the latest conflict, the number of Palestinians living in poverty has risen by 300,000, according to Abdallah Al Dardari, director of the UNDP Regional Bureau for Arab States.

Almost 1.5 million people in Gaza have been displaced since the fighting began last month, according to the United Nations Relief and Works Agency, while Israel’s blockade on fuel combined with severe restrictions on food, water and medical deliveries has sparked a humanitarian crisis.

Key economic measurements, including employment rates and GDP, have all plunged across Gaza and the West Bank, according to the UNDP analysis.

The past month of conflict has erased 61 percent of employment in Gaza and 24 percent of employment in the West Bank, the report warns. Palestinian GDP is expected to have fallen 4.2 percent after one month of war compared with pre-war estimates, a loss of about $857 million. If the war lasts through a second month, that figure would rise to $1.7 billion, about an 8.4 percent loss of GDP, it adds.

“That is massive,” Al Dardari said in an interview. “I’ve been following conflicts for 30 years and writing on them, I have never seen such a dramatic shock in such a short time,” he told CNN.

Poverty in Gaza was already severe before Israel’s October campaign – with 61 percent of the population considered below the poverty line in 2020, according to the World Bank.

Access to the crowded enclave of some 2 million people has been severely curtailed by Israel and Egypt for the last 17 years in what NGO Human Rights Watch has long dubbed an “open-air prison.”

The latest outbreak of war has only deepened the economic misfortune.

After one month of fighting, the number of people living in poverty in Gaza and the West Bank increased by nearly 20 percent, the UNDP report says. If the war were to last a second month, the total increase of the population in poverty would top 34 percent, or 500,000 people, according to Al Dardari.

Structural damage in the densely developed area has been extensive throughout the four-week Israeli campaign, with nearly half of the housing stock said to have been damaged or destroyed by the bombardment and 40 percent of educational facilities damaged, according to United Nations Office for the Coordination of Humanitarian Affairs.

Overall, the UNDP report predicts an 11 to 16-year setback in a metric it calls “human development” across Gaza and the West Bank, due to the conflict so far. The estimation comes from a UNDP assessment of educational, health, and economic indicators that contribute to the state’s score on the Human Development Index.

If the fighting were to continue through a second month, the Palestinian economy would be set back 19 years’ worth of development, Al Dardari said.

“That means Palestine will go back to 2001, 2002,” he said. “Every investment the international community, the Palestinian people, have put into their human development – health, education, growth, business – everything that was built since 2002 is lost.”

Officials in Israel have not given any public indication of the expected length of the military operation in Gaza, outside of declarations that the war is likely to be long, and that the goal of the air and ground offensive is the complete elimination of Hamas.

Israeli Prime Minister Benjamin Netanyahu reiterated as recently as Wednesday that he would not approve of a cease fire until the around 240 hostages being held in Gaza were released.

Still, questions have risen over the post-war management of Gaza in recent days, after Netanyahu told an interviewer Monday that Israel should have “overall security responsibility” in the Palestinian enclave for an “indefinite period.” His advisors have since said that Israel would seek security control in the region, not governing power.

UNDP has not produced an estimate of the costs for reconstruction in Gaza once a ceasefire is reached, given uncertainty around the length of the campaign. Al Dardari said UNDP would likely eventually be involved in rebuilding the battered enclave, although he warned that a continued Israeli blockade would complicate the process.

“From a technical point of view,” he said, “a massive reconstruction exercise and a blockade don’t go hand in hand.”