Why it takes more than money for Gaza to recover | DW News

Key Concepts

• Humanitarian Crisis in Gaza: The severe and ongoing suffering of the population due to destruction and lack of basic necessities.
• Economic Collapse: The drastic decline in Gaza's economic activity, including GDP, employment, and per capita income.
• Reconstruction Costs: The estimated financial resources required to rebuild Gaza's infrastructure and economy.
• Fiscal Crisis: The severe financial difficulties faced by the Palestinian government due to withheld revenues.
• Paris Protocol: An agreement governing economic relations between Palestinians and Israelis, including tax collection.
• UN Security Council Resolution: A recent UN decision outlining a plan for Gaza's future, including demilitarization and international stabilization.

Humanitarian Situation and Economic Collapse

The transcript details the dire humanitarian situation in Gaza, exacerbated by what the UN describes as the "worst economic collapse ever recorded." Decades of human development have been erased, with businesses, homes, and entire communities destroyed. Families are forced to live in severely restricted spaces, with their living areas serving multiple purposes. The European Union and Egypt have jointly called for urgent international coordination to ensure a "full and intensive flow of humanitarian aid" to Gaza. EU Crisis Management Commissioner Haja Labib and Egypt's Foreign Minister Badra Alati Abelati urged Israel to open all crossings into Gaza, emphasizing the need for shelter materials ahead of winter.

Scale of Destruction and Reconstruction Needs

Much of Gaza is in ruins after years of war. The United Nations estimates the cost of rebuilding at over $70 billion. A report by the UN Trade and Development Body (UNCTAD) highlights that Israel's military operations have "significantly undermined every pillar of survival," leading to "extreme multi-dimensional impoverishment."

• Economic Contraction: Gaza's economy has collapsed by 87%.
• Unemployment: Unemployment stands at 80%.
• GDP per capita: GDP per capita has fallen to $161, among the lowest globally.

Reconstruction Timelines and Challenges

The scale of recovery is described as "staggering." Plans for an international reconstruction effort are complicated by political tensions. Egypt has postponed a planned reconstruction conference, and donor governments are demanding guarantees against future destruction, which are impossible to provide while fighting continues.

Ramy Alisay, an economist and co-author of the UNCTAD report, elaborates on the reconstruction needs:

• Urgent Humanitarian Relief: $20 billion is urgently needed for humanitarian relief over the next two years. This includes temporary housing, provision of basic services (health and education), and vaccinations for children.
• Infrastructure Rebuilding: Over 80% of structures, infrastructure, schools, and hospitals are destroyed.
• Recovery Timeline: Even with a ceasefire, international consensus, financing, lifting restrictions, and a reconstruction plan, full recovery could take decades. Dividing the $70 billion reconstruction cost by Gaza's pre-conflict GDP of $2.7 billion (in 2023) suggests it would take two decades for Gaza to produce its former economic output. This assumes a sustained ceasefire, significant international funding, and an independently functioning economy post-reconstruction.

Economic Realities for Individuals

Under the current conditions, economic life in Gaza is virtually non-existent.

• Daily Survival: The 2.2 million Palestinians in Gaza are living on less than half a dollar per day since October 2023, with the situation becoming more acute in 2024 and 2025. Famine was confirmed in August 2025.
• Developmental Impact: 80% of the Gaza Strip is destroyed. One million children have not attended school for over two years, with long-term developmental consequences expected to affect generations.

Fiscal Crisis and Withheld Revenues

A significant factor contributing to the crisis is Israel's withholding of tax revenues collected on behalf of the Palestinian Authority. According to the Paris Protocol, which governs economic relations under the Oslo Accords, Israel collects Palestinian taxes due to its control over borders and trade, operating within a customs and monetary union.

• Collection Fee: Israel deducts a 3% collection fee from Palestinian revenues monthly.
• Unilateral Deductions: Since 2019, Israel has unilaterally deducted amounts related to payments for Palestinian prisoners and martyrs.
• Post-October 7th Deductions: Since October 7th, Israel has also deducted 75 million shekels (approximately $20 million) monthly from these revenues, impacting payments for social support and salaries for Palestinian government employees in Gaza.
• Accumulated Debt: These withheld amounts have accumulated to over $2 billion, contributing to the "worst fiscal crisis" for the Palestinian government.
• Government Finances: The Palestinian government has been unable to pay full salaries, often paying 60-70%, and has accumulated billions in arrears to suppliers and the private sector. This is compounded by the economic contraction, which reduces domestically collected tax revenues. The Palestinian government is left reliant on donor aid and limited domestic collections.

Future Outlook and UN Security Council Resolution

The UN Security Council recently backed "phase two" of Donald Trump's 20-point plan for Gaza, which calls for demilitarization, an international stabilization force, and a vetted technocratic administration.

• Alignment with UNCTAD Recommendations: Ramy Alisay states that the UNCTAD report and the UN Security Council resolution move in the "same direction." The primary recommendation of the UNCTAD report is a permanent ceasefire to create conditions for economic recovery, humanitarian relief, service restoration, and alleviation of suffering.
• Technical vs. Political: While the overall direction is aligned, the technicalities and politics differ. UNCTAD Secretary-General Rebecca Greenspan welcomed the Security Council resolution as a step towards creating the right conditions for rebuilding and alleviating suffering in Gaza.