With the ceasefire agreement coming into effect, the world is looking ahead to the enormous economic effort that will be required to rebuild the Gaza Strip. The extensive destruction shrouds the horizon, and questions abound: at what stage will reconstruction work begin, and what will be the Israeli involvement compared with international efforts. Who will pay for it all, and how will the Palestinian Authority, which has no money, be involved while Hamas is still the governing body in the Gaza Strip? What mechanism will be in place to examine the quality and quantity of goods and raw materials that will enter the Gaza Strip and many more questions.
Meanwhile, the US is considering the option of a kind of population relocation, in order to rebuild the Gaza Strip. According to NBC, a country being considered for temporary absorption of Gazans is Indonesia, but the Palestinians are reluctant to implement such an idea. The fear is that this would be the first step in the Israeli expulsion of Palestinians from the territory.
Universities and mosques
The UN estimates that reconstruction work in the Gaza Strip will cost $80 billion, 25 times more than after Operation Protective Edge in 2014. The particularly high cost stems from the fact that about 69% of the buildings in the Gaza Strip (more than 170,000) have been destroyed, including about 90% of the housing units.
Even before reconstruction, 42 million tons of rubble created by the bombings have to be cleared. The process alone is expected to cost $1.2 billion, with the UN assessment last April estimating that treatment of the rubble will take 14 years.
Out of Gaza’s population of 2.3 million, 1.9 million have been displaced from their homes – including hundreds of thousands living in tents. In the infrastructure sector, in January last year, the damage was estimated at $18.5 billion, while last month the UN humanitarian office noted that the water supply had dropped to less than a quarter of what it was before October 7, 2023.
Jezreel Valley Academic College head of the Middle East Studies Program Dr. Ido Zelkovitz tells “Globes,” “The use by Hamas of civilian infrastructures was very extensive. It was intended to disguise the extensive network of tunnels, which includes transit, and holding and attack tunnels. Some of the entrances to the shafts passed through public and civilian facilities, and of course under the homes of senior members of the movement – risking the lives of civilians living nearby. This is because any tunnel infrastructure is considered a legitimate military target under international law.”
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Palestinian data reported by “Reuters” indicate that 17 of the 36 hospitals in the Gaza Strip remained active. In light of this, the World Health Organization estimates that $10 billion will be needed in the next 5-7 years to restore health infrastructure. In addition, 136 schools and universities have been destroyed, as were 823 mosques, more than 200 government institutions and 80-96% of agricultural assets.
A precarious economic situation
An analysis conducted in October 2024 by the International Labor Organization (ILO) and the Palestinian Bureau of Statistics shows that the average unemployment rate in the Gaza Strip between October 2023 and September 2024 was 79.7%, while in Judea and Samaria it was 34.9%. The GDP in Judea and Samaria (West Bank) fell 21.7% in October compared with October 2023, and by 84.7% in the Gaza Strip.
Despite the many economic challenges facing the Palestinian Authority, Ramallah declared that it had completed all preparations to assume full responsibility for the Gaza Strip, including initial steps to restore basic services such as water and electricity – “In coordination with the Gaza Municipality and the Jabalia Municipality and in cooperation with the ‘Arab International Committee for the Rehabilitation of Palestine'”. This is despite the fact that the Authority is not a party to the agreement, and has not been promised control over the Gaza Strip.
Dr. Zelkovitz says, “Ramallah has had no influence on daily life in the Gaza Strip since 2007, and in recent years it has even gradually reduced payments of allowances to its people who remain there. Most of the burden of managing economic life in the Gaza Strip has been on the Hamas regime, which has used this to expand its power base, since Hamas became the largest employer in the Gaza Strip. They controlled the public sector and created a new class of wealthy people who made their fortunes thanks to political connections with the movement, and enjoyed income from the media and private commerce.”
Former deputy head of the Palestinian arena in the IDF Planning Directorate Lt. Col. (res.) Amit Yagur says that the Palestinian Authority is expected to ask for foreign aid and thus perpetuate the existing situation, just as UNRWA has expanded the refugee phenomenon since 1949. “The Palestinian Authority wants to convince the world that there is a possibility for a Palestinian state, while Hamas strives to end the war in control of Gaza. I fear that the Hezbollah model in Lebanon will develop in the Gaza Strip, because it will be convenient for everyone. The Palestinian Authority will present itself as in control of the Gaza Strip, because it understands that this is required for the sake of an image of a viable state, while Hamas will de facto control the territory.”
Neomi Neumann is a visiting fellow at the Washington Institute and the former head of the research unit of the Israel Security Services (Shin Bet). She wrote in an article in May 2024 that the Palestinian Authority’s external debt to banks, pension payments, and service providers stood at $5.4 billion. That debt is fed by a monthly deficit of $110-125 million during the war, compared with $50 million during times of calm. One of the solutions they found in Ramallah is a 30%-50% reduction in the salaries of 145,000 Palestinian Authority employees, including the security apparatus, which could encourage a spillover into terrorism and strengthen Hamas’ grip.
Key figures
There are serious questions about the leadership that will succeed 89 year-old Palestinian Authority Chairman Mahmoud Abbas (Abu Mazen). PLO Secretary-General Hussein al-Sheikh and General Security Chief Majed Faraj stand out as potential future leaders, but Dr. Zelkovitch notes that the release of prisoners as part of the deal could shuffle the deck. “The possible release of Marwan Barghouti could tip the scales, because he enjoys the broadest popular support. On the day after the war, we are also expected to see ousted figures, such as Mohammad Dahlan, taking a significant part in the reconstruction of the Gaza Strip. In the West Bank, the guiding idea in the conduct of the Palestinian Authority is to maintain a normal routine of life with freedom of occupation and movement as much as possible. Therefore, they have a lot to lose if it seems that an uprising begins the day after Abu Mazen.”
Lt. Col. (res.) Yagur concludes that there are reasons to worry about the weakening of the Palestinian Authority. “Polls have indicated that Hamas’ popularity in Judea and Samaria exceeds that in the Gaza Strip. In the Palestinian Authority, they operated in Jenin until they reached a truce with Hamas and Islamic Jihad. In other words, they accepted the authority of the militants, so that if they remain on the ground, they can remain influential.”
Published by Globes, Israel business news – en.globes.co.il – on January 19, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
