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A Year on and Still Paying the Price: The Continuing Economic Costs of the 2014 Gaza War

Home to 1.8 million people, the 362 square kilometre Gaza Strip is one of the most densely populated areas in the world. It is also one of the weakest in regards to economic strength. The World Bank reported that since the 2014 war – a 50 day war between Israeli forces and Gaza – Gaza’s economy has performed 250 per cent worse than any comparable economy including the West Bank. The continued blockades and the 2014 war have been identified as major contributors to the faltering economy in Gaza.

The 2014 war severely damaged and destroyed a range of industries and services in Gaza. Factories, farms and arable land, hospitals, clinics and schools were all targeted during the war and most are yet to be rebuilt or restored. The total cost of the damage was close to US$4.4 billion which, for an economy that recorded negative growth in 2015, makes reconstruction almost impossible. The destruction and damage of 247 factories and 300 commercial centres in Gaza has only further fractured an economy that has weakened consistently since 2007.

Since the 2014 war, Israeli authorities have allowed less than 2 per cent of the construction materials required to rebuild the infrastructure that was destroyed or damaged during the war. These restrictions are only part of the blockades that halt Gaza’s economic growth. The expansion of the blockade onto arable land and the encroaching coastal blockades restrict the growth of agricultural and aquaculture industries. Coastal blockades are set at 6.5 nautical miles from the coastline, while fish are most densely located 8 nautical miles from the coast. This makes it almost impossible for a sustained seafood industry. The blockades negatively impact Gaza’s economy and lower the standard of living in Gaza.

Gaza has the highest unemployment rates in the region with adult unemployment at 43 per cent and youth unemployment at 60 per cent. 70 per cent of those that are employed in the private sector make on average US$174 a month. This is well bellow the yet to be enacted minimum wage which is US$400 a month. While wages remain low, the cost of living has continued to increase. The cost of everyday goods, such as livestock, are at an all time high. These factors mean that 72 per cent of households in Gaza suffer from food insecurity.

According to the 2014 United Nations Conference on Trade and Development (UNCTAD) report, Gaza will be uninhabitable by 2020. The insurmountable costs of rebuilding and restoring Gaza have been identified as the main reason why Gaza’s economy has not recovered. The cost of the region’s instability has amounted to more than three times the GDP of Gaza. In addition to economic costs, 500 000 people are now internally displaced people and 20 000 Palestinian homes are severely damaged or destroyed. In order for Gaza to regain stability, and to relocate its displaced people, barricades need to be removed so that trade can occur and the economy can rebuild.

The cost and the stress of the displacement is too large to overcome with the current barricades and restrictions on Gaza. As a result of the blockades, exacerbated by the region’s instability, Gaza lacks basic services such as clean and accessible water, a reliable electricity stream, waste services and health services. Unreliable services further compromise Gaza’s weak economic performance. This summer Gaza has suffered an electricity crisis, with an average of 4 to 6 hours of electricity a day. This makes the production of goods almost impossible. Without significant changes, Gaza will only continue to retreat rather than grow.

While 80 per cent of people in Gaza are receiving some form of foreign aid, aid alone will not save their faltering economy. The socio economic conditions in Gaza are the worst that they have been since 1967 and the UN has reported that it will be uninhabitable by 2020. The occupation of Gaza is damaging the region and unless the restrictions and blockades are weakened or removed the conditions in Gaza will only continue to worsen.

Jackie Grant is a postgraduate student in the Human Rights program at the University of Sydney.

This article can be republished with attribution under a Creative Commons Licence. Please email with any questions or for more information.

Image: The site of the destroyed El-Wafa Rehabilitation Hospital in Gaza’s east.

Image credit: Jackie Grant, September 2015

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