Economic costs of the Israeli occupation for the Palestinian people: the economic impact of the Israeli military operation in Gaza from October 2023 to May 2024 – UNCTAD Report (A/79/343)

10 September 2024

Summary

The present report is submitted pursuant to General Assembly resolution 77/22, in which the Assembly requested the United Nations Conference on Trade and Development (UNCTAD) to continue to report to it on economic development in the Occupied Palestinian Territory, including East Jerusalem, and the economic costs of the Israeli occupation for the Palestinian people. The report complements previous UNCTAD reports to the Assembly (A/71/174, A/73/201, A/74/272, A/75/310, A/76/309, A/77/295 and A/78/303).

Since the early 1990s, Israel, the occupying Power, has imposed restrictions on the movement of goods and people in and out of Gaza. The restrictions have been greatly intensified since the 2007 takeover by Hamas of the Gaza Strip. For 17 years, 2.3 million Palestinian people have been confined to a small, 365 km² enclave with one of the highest population densities in the world. Entry of goods has been reduced to basic needs and humanitarian relief. In addition, Gaza has endured numerous extensive military operations in just over a decade and a half: in 2008–2009, 2012, 2014, 2021, 2022 and May 2023 and since October 2023. The restrictions, closures and recurrent military operations have resulted in the utter destruction of Gaza’s infrastructure and productive base. The hollowing out of the economy has cultivated a profound dependency on external aid.

The war that followed the attacks by Hamas and other Palestinian armed groups on 7 October 2023 devastated the remnants of Gaza’s economy and infrastructure. The intense military operations in Gaza resulted in an unprecedented humanitarian, environmental and social catastrophe and propelled Gaza from de-development to utter ruin. The far-reaching repercussions will linger for years to come, and it may take decades to return Gaza to the status quo ante.

The income loss in Gaza caused by 16 years of closures and severe economic and movement restrictions and repeated military operations is staggering. According to thorough estimations described in the present report, in the absence of those constraints, by the end of 2023 it is estimated that Gaza’s gross domestic product (GDP) would have been, on average, 77.6 per cent higher than its actual level. This implies a conservatively estimated cumulative loss of $35.8 billion (in constant 2015 dollars) of unrealized GDP potential during the period 2007–2023 – equivalent to 17 times the GDP of Gaza in 2023.

The damage caused by the war between 7 October 2023 and 20 May 2024 reduced GDP per capita in Gaza by over one half, while other factors redoubled the income loss. Furthermore, physical damage to Gaza’s infrastructure caused during the period from 7 October 2023 until the end of January 2024 was estimated at $18.5 billion – equivalent to seven times Gaza’s GDP in 2022.

Once a ceasefire is reached, a return to the 2007–2022 growth trend would imply that it would take Gaza 350 years just to restore GDP to its level in 2022.

I. Objective and scope

1. The present report is submitted pursuant to General Assembly resolution 77/22, in which the Assembly requested the United Nations Conference on Trade and Development (UNCTAD) to continue to report to it on economic development in the Occupied Palestinian Territory, including East Jerusalem, and the economic costs of the Israeli occupation for the Palestinian people. It adds to seven reports prepared by UNCTAD and submitted to the Assembly on the subject.
2. In the context of 57 years of Israeli occupation, Israel has imposed closures and severe economic and movement restrictions on Gaza since June 2007 and conducted a number of major military operations, which destroyed its infrastructure and the productive base of its economy. Prior to October 2023, the economy of Gaza was hollowed out and its people were nearly completely dependent on international aid. On 7 October 2023, Hamas and other Palestinian armed groups launched large-scale attacks on Israel and committed numerous acts of terror. Since then, Israeli sources have reported a total of over 1,500 Israelis and foreign nationals killed in this context, including at least 338 women and 38 children, and 690 members of the security forces. Around 6,200 Israelis and foreigners were injured, according to official Israeli sources. Furthermore, 33 attacks on Israeli medical facilities and personnel were recorded. In addition, some 250 people, both Israelis and foreign nationals, including approximately 65 women and 34 children, were abducted and taken into Gaza, with some subsequently released in November. Following the attacks on 7 October, Israel launched a military operation in Gaza. The ensuing war in Gaza destroyed nearly all of what was left of Gaza’s economic base and life-sustaining infrastructure.
3. The objective of the present report is to evaluate the economic impact of the latest Israeli military operation in terms of three key indicators, using different time periods based on the availability of data: gross domestic product (GDP) loss, the time horizon for recovery, and the direct impact of the damage on economic activities from the war up until 20 May 2024. Furthermore, building on the findings of UNCTAD in 2020 (see A/75/310), the present report provides an assessment of the cumulative economic cost of the Israeli closures and other restrictions and the aforementioned military operations between 2007 and 2023 on Gaza. Finally, other data on the war, ongoing at the time of writing, are included up until 12 August 2024.
4. The military operation was still ongoing at the time of conclusion of the present report. Hence, all quantitative assessments are lower-bound, interim estimates of the loss and damage inflicted on Gaza in terms of the economic impact, cost and time frame for recovery.

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VI. Concluding observations

60. I strongly condemn the horrific attacks by Hamas and other Palestinian armed groups in Israel on 7 October 2023 and the continued holding of hostages in Gaza. Nothing can justify these acts of terror. I reiterate my call for all hostages to be released immediately and unconditionally.
61. Civilians throughout Gaza face grave danger. A humanitarian ceasefire is needed immediately. The scope of death and destruction in Gaza as a result of the war has been catastrophic, unprecedented and horrifying. Nothing can justify the collective punishment of the Palestinian people. I unequivocally condemn the widespread killing and maiming of civilians in Gaza, including women and children.
62. Prior to October 2023, stringent air, sea and land closures and restrictions, including on the importation of technology and essential inputs, had a severe impact on Gaza’s economy and precipitated a deep humanitarian crisis within the densely populated Strip. The socioeconomic challenges were daunting even before October 2023.
63. Since 7 October 2023, hostilities of an unprecedented intensity have taken place in Gaza. Economic activity across all productive sectors ground to a halt, except for minimum humanitarian, health and food services provided under conditions of severe water, fuel and electricity shortages and access constraints. The intense hostilities have made the already precarious living conditions far worse for the people of Gaza, half of them children.
64. Israel’s military response and the war have resulted in a catastrophic situation for Gaza’s 2.3 million inhabitants, who were already living under dire social and economic conditions in view of 57 years of occupation and 17 years of closures of Gaza. Monetary poverty has widened and deepened, while multidimensional poverty has engulfed the entire population, given deprivations in food, education, health and basic infrastructure.
65. Absent the closures, economic and movement restrictions and recurrent rounds of escalations and the war since 7 October at a minimum, Gaza would very likely have at least maintained its share in the Palestinian economy and its GDP would have been about 77.6 per cent higher and GDP per capita would have been about 172 per cent higher than the actual figures in 2023.
66. The constraints on the Palestinian economy in general, and in Gaza in particular, are not solely a consequence of recent events but are rooted in a prolonged 57-year occupation and 17 years of closures. Achieving sustainable development across the Occupied Palestinian Territory requires ending the occupation and extending substantial financial and political support from the international community.
67. The future of the Palestinian people in the Occupied Palestinian Territory will be largely determined by the actions of the Government of Israel, the Government of the State of Palestine, donors and the international community. The vicious cycle of destruction and partial reconstruction must be broken by ending the occupation and by a negotiated two-State solution, based on international law and relevant United Nations resolutions.
68. A new approach to economic rehabilitation centred around peacebuilding cannot merely aim to restore the pre-October 2023 status quo. Only sustainable political solutions and lifting the debilitating Israeli closures, in line with Security Council resolution 1860 (2009), will restore hope to the long-suffering population of Gaza. Piecemeal, reversible measures cannot be a substitute for lifting the closure off Gaza to allow its economy to recover, and to trade normally and freely with the West Bank, including East Jerusalem, and the rest of the world.
69. There is an urgent need for concrete steps towards unifying Gaza and the occupied West Bank politically, economically and administratively. Gaza is and must remain an integral part of an independent, democratic, contiguous, sovereign and viable Palestinian State, as part of resolving the conflict in line with international law, including relevant United Nations resolutions. The international community should play a key role in facilitating such a solution by providing consistent political, technical and financial support.
70. Beyond a permanent ceasefire and immediate relief, the recovery and sustainable development of Gaza demand urgent action from the international community to inject massive aid for rebuilding the devastated Gaza Strip. Building Gaza back fully and better is not impossible. History shows that rebuilding war-torn societies is possible if the international community rallies together.
71. For this to succeed, there will be a need to convene an international conference for the reconstruction of Gaza during which donors can make credible pledges to a fund dedicated for reconstruction, relief and budget support for the Government of the State of Palestine. A comprehensive recovery plan for the State of Palestine, not just Gaza, is needed for fostering long-term recovery, peace and stability. The plan should address immediate humanitarian needs and prioritize the restoration of critical, life-sustaining infrastructure as part of a comprehensive intervention to facilitate the two-State solution and lay the economic foundations for lasting peace and stability in the Occupied Palestinian Territory, Israel and across the region.
72. Rapid restoration of infrastructure and essential services is crucial for containing the long-term consequences of the recent, unprecedented war. There is a glaring, urgent need for an extensive recovery programme that prioritizes rebuilding the entire infrastructure, especially in such vital public goods as water, sanitation and hygiene, education, and health, in addition to the restoration of full public access to electricity. Throughout the recovery process, gender perspectives will need to be included to account for differentiated needs. Likewise, accessibility for persons with disabilities must be integrated into rebuilding and reconstruction in order to protect their rights and ensure their inclusion in society.
73. This solution would be enhanced by enabling a unified Government of the State of Palestine to develop the natural gas fields discovered in the 1990s in the Mediterranean Sea off the shore of Gaza to help to finance the reconstruction of infrastructure and rebuild the productive base of Gaza and enhance energy security across the Occupied Palestinian Territory.[1]
74. Development gains can be maximized by fostering a synergy linking relief to development whereby donor-funded reconstruction efforts prioritize employing Palestinian workers and professionals and contracting Palestinian firms from Gaza, as well as the West Bank, including East Jerusalem.
75. The ability of UNRWA to meet the growing needs of Palestine refugees across the Occupied Palestinian Territory has been significantly limited. UNRWA remains the largest humanitarian actor in Gaza by far and is the backbone of the humanitarian response. Its vital role in providing essential support, mitigating the impact of humanitarian crises and fostering regional stability is widely recognized and has become even more crucial during this war.
76. The Palestinian people’s right to development, self-determination and statehood cannot be replaced by humanitarian and economic assistance, essential as these may be in the interim. The devastation and misery of the past months have reinforced a simple truth: Palestinians and Israelis can no longer wait to establish a viable political horizon. Now is the time to lay the foundations for a better future for Palestinians, Israelis and the people of the broader region. Israelis, Palestinians, the States of the region and the broader international community must urgently take steps that will enable the parties to re-engage on the long-delayed political path to achieving a two-State solution.
77. The United Nations remains committed to supporting Palestinians and Israelis in ending the occupation and resolving the conflict in line with international law and relevant United Nations resolutions and bilateral agreements in pursuit of the vision of two States – Israel and a fully independent, democratic, contiguous, viable and sovereign Palestinian State, of which Gaza is an integral part – living side by side in peace and security within secure and recognized borders, on the basis of the pre-1967 lines, with Jerusalem as the capital of both States.