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The story we’re currently seeing unfolding in Israel and Gaza at present doesn’t seem to have much to do with economics. It’s about murders, terrorism and missile attacks.

But the economics lurks behind the scenes. It can’t explain all of what’s happening in the Middle East. It certainly can’t justify the horrendous attacks on Israel on 7 October – the worst massacre of Jewish people since the Holocaust.

Nor can it explain the intensity of the Israeli response, which has, according to Palestinian representatives, claimed more lives than were lost in the Hamas attack.

But, alongside religion, history, democracy – and the lack of it – economics is nonetheless an important part of the background story to the instability in this region.

Trustworthy data on the Palestinian Territories is hard to come by, but earlier today UNCTAD, the economic wing of the United Nations, published its annual stock-take of the Palestinian economy – perhaps the most reliable assessment of the situation on the ground. And that situation is stark.

Chart from Ed Conway, Sky's Economics & Data Editor, on the economics of the Palestinian territories.

It shows that as of last year, in other words before the recent attacks, the economy of Gaza was, by some measures, the most benighted in the world.

Gross domestic product per capita – the broadest measure of living standards – was a whopping 46% below its 1994 levels.

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In other words, in the space of a generation, even as most other countries around the world saw their living standards rise sharply, Gaza’s people have become dramatically poorer.

What’s particularly striking when you look through the data is the divergence between Gaza and the West Bank, the other main part of the Palestinian Territories.

The two regions’ economies had roughly similar GDP per capita up until around 2007, when Hamas seized control of the Gaza Strip.

Chart from Ed Conway, Sky's Economics & Data Editor, on the economics of the Palestinian territories.

But look at what happened next. Economic growth in the West Bank meant that its economy is now considerably bigger and more prosperous than its 2007 levels.

The Gaza Strip, meanwhile, has seen its levels of prosperity crumple in a fashion rarely seen elsewhere in the world.

Chart from Ed Conway, Sky's Economics & Data Editor, on the economics of the Palestinian territories.

It’s a similar story if you look at unemployment rates in each of the regions: while they were relatively close up until 2007 (albeit that the Gaza jobless level was always a few percentage points above the West Bank level) in the post-Hamas period, the two lines have diverged dramatically.

The jobs market in the West Bank is (or was, as of 2022) tough. The jobs market in Gaza was hopeless.

Chart from Ed Conway, Sky's Economics & Data Editor, on the economics of the Palestinian territories.

Compare the Gaza Strip to other countries and you see just how much of an outlier it is.

While the unemployment rate in Israel is 3.5%, the comparable rate in the Palestinian Territories is 24% and the rate in the Gaza Strip is at 45%.

This is higher than any other country in the world – and note that the number is significantly higher for women and for young people.

There are plenty of explanations for this divergence. After Hamas took control of Gaza, Israel imposed a series of restrictions on the flow of people and trade in and out of the region.

The border is heavily policed. Entry and exit by air and sea is banned and there are only two crossing points towards the West Bank and East Jerusalem.

The majority of residents have been “locked in” for years, making it more like a prison than a fully functioning state.

Chart from Ed Conway, Sky's Economics & Data Editor, on the economics of the Palestinian territories.

Look at this chart of exports from Gaza and the West Bank and you get a sense of what this means in practice.

While the West Bank (and for that matter most other economies) have been able to grow their exports each year, as new businesses seek out opportunities to trade with Israel (the trade mostly goes to Israel), Gaza’s exports have essentially flatlined.

Of course, this does not cover the black market, but it’s the best picture we have available.

Israeli authorities say these restrictions are an essential part of policing Hamas and preventing terrorist activity. Trade is monitored and controlled to prevent weapons coming in and leaving.

That goes, too, even for items like fertiliser and steel tubes, since they could be used to make missiles. And they have more than half a point: Hamas social media accounts have gleefully boasted about how productive its home-made ammunition factories have been – despite these restrictions.

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Reality of Palestinians in Gaza City

These restrictions are not the only explanation for the collapse in Gaza’s economy: corruption is rife throughout the territory, with the upshot that much of what enters the country for the purpose of helping civilians is sometimes seized by Hamas leaders.

It is a sorry story, and the upshot is that Gaza has been a failing economy for many years, with levels of deprivation and poverty which have mounted to world-leading levels.

None of the above can explain, let alone justify, the attacks of October 7. In a parallel universe, Gaza could have been blessed with leadership which would turn the lines in the chart around – though that would also have been reliant on Israel lifting its various restrictions.

But numbers like these tend to make people feel desperate.

Gaza was already desperately poor before Hamas won its election and seized power. It has become significantly poorer, and significantly more desperate, in the years since.

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Israeli military announces ‘tactical pause’ in fighting in parts of Gaza amid hunger crisis

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Israeli military announces 'tactical pause' in fighting in parts of Gaza amid hunger crisis

Israel has begun a pause in fighting in three areas of Gaza to address the worsening humanitarian situation.

The IDF said it would halt fighting in three areas, Muwasi, Deir al-Balah and Gaza City, from 10am to 8pm local time until further notice, beginning today.

In a statement, the IDF said it would also establish secure routes to help the UN and aid agencies deliver food and other supplies.

Palestinians carry aid supplies that entered Gaza through Israel, in Beit Lahia in the northern Gaza Strip, July 27, 2025. REUTERS/Dawoud Ab
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Palestinians carry aid supplies. Pic: Reuters

Israel’s announcement of what it calls a “tactical pause” in fighting comes after it resumed airdrops of aid into Gaza.

While the IDF reiterated claims there is “no starvation” in Gaza, it said the airdrops would include “seven pallets of aid containing flour, sugar and canned food to be provided by international organisations”.

Reports suggest aid has already been dropped into Gaza, with some injured after fighting broke out.

Pic: IDF
Image:
Pic: IDF

In other developments, Bob Geldof has accused Israeli authorities of “lying” about starvation in the territory – telling Sunday Morning With Trevor Phillips the IDF is “dangling food in front of starving, panicked, exhausted mothers”.

He told Sky News: “This month, up to now, 1,000 children or 1,000 people have died of starvation. I’m really not interested in what either of these sides are saying.”

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Bob Geldof: ‘Israeli authorities are lying’

Israel cut off all supplies to Gaza from the start of March. It then reopened aid centres with new restrictions in May, but said the supply had to be controlled to prevent it from being stolen by Hamas militants.

On Saturday, reports referencing US government data said there was no evidence Hamas had stolen aid from UN agencies.

The IDF’s international spokesperson, Lieutenant Colonel Nadav Shoshani, described such reports as “fake news” and said Hamas thefts have been “well documented”.

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Malnourished girl: ‘The war changed me’

Airdrops ‘expensive and inefficient’

It comes as the Hamas-run health ministry in Gaza said as of Saturday, 127 people have died from malnutrition-related causes, including 85 children.

They include a five-month-old girl who weighed less than when she was born, with a doctor at Nasser Hospital describing it as a case of “severe, severe starvation”.

Health workers have also been weakened by hunger, with some putting themselves on IV drips so they can keep treating badly malnourished patients.

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Aid waiting to be distributed in Gaza

On Friday, Israel said it would allow foreign countries to airdrop aid into Gaza – but the UN Relief and Works Agency (UNRWA) has warned this will not reverse “deepening starvation”.

UNRWA head Philippe Lazzarini described the method as “expensive” and “inefficient”, adding: “It is a distraction and screensmoke. A manmade hunger can only be addressed by political will.

“Lift the siege, open the gates and guarantee safe movements and dignified access to people in need.”

UNRWA has the equivalent of 6,000 trucks in Jordan and Egypt waiting for permission to enter Gaza, he added.

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PM says UK will help drop aid to Gaza

MSF, also known as Doctors Without Borders, warned on Friday that 25% of young children and pregnant women in Gaza are now malnourished, and said the lack of food and water on the ground was “unconscionable”.

The UN also estimates Israeli forces have killed more than 1,000 people seeking food, the majority near the militarised distribution sites of the US-backed aid distribution scheme run by the Gaza Humanitarian Foundation.

Read more:
What does recognising a Palestinian state mean?
British surgeon claims IDF ‘deliberately’ shooting boys

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In a statement on Friday, the IDF had said it “categorically rejects the claims of intentional harm to civilians”, and reports of incidents at aid distribution sites were “under examination”.

The Gaza Humanitarian Foundation (GHF) has also previously disputed these deaths were connected with its organisation’s operations, with director Johnnie Moore telling Sky News: “We just want to feed Gazans. That’s the only thing that we want to do.”

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Bob Geldof accuses Israeli authorities of ‘lying’ about starvation in Gaza

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Bob Geldof accuses Israeli authorities of 'lying' about starvation in Gaza

Bob Geldof has accused the Israeli authorities of “lying” about starvation in Gaza – after Israel’s government spokesperson claimed there was “no famine caused by Israel”.

Earlier this week, David Mencer claimed that Hamas “starves its own people” while on The News Hour with Mark Austin, denying that Israel was responsible for mass hunger in Gaza.

Appearing on Sunday Morning with Trevor Phillips, Geldof said the claims are false.

Follow latest: Gaza aid airdrops a ‘smokescreen’ and ‘distraction’

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Israel challenged on starvation in Gaza

Sir Trevor asked the Live Aid organiser: “The Israeli view is that there is no famine caused by Israel, there’s a manmade shortage, but it’s been engineered by Hamas.

“I guess the Israelis would say we don’t see much criticism from your side of Hamas.”

In response, Geldof said “that’s a false equivalence” and “the Israeli authorities are lying”.

The singer then added: “They’re lying. [Benjamin] Netanyahu lies, is a liar. The IDF are lying. They’re dangling food in front of starving, panicked, exhausted mothers.

“And while they arrive to accept the tiny amount of food that this sort of set up pantomime outfit, the Gaza Humanitarian Front, I would call it, as they dangle it, then they’re shot wantonly.

“This month, up to now, 1,000 children or 1,000 people have died of starvation. I’m really not interested in what either of these sides are saying.”

He added: “If the newsfeeds and social feeds weren’t so censored in Israel, I imagine that the Israeli people would not permit what has been done in their name.”

Asked about the UK government’s reaction, Geldof said it was “not enough”.

“This is a distraction thing about ‘let’s recognise the state ‘ – absolutely, it should have been done ages ago, but it’s not going to make any material difference,” he said, referring to calls for Sir Keir Starmer to recognise Palestine as a state.

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Gaza: ‘This is man-made starvation’

In the Sky News interview earlier this week, Mr Mencer added: “This suffering exists because Hamas made it so. Here are the facts. Aid is flowing, through the Gaza Humanitarian Foundation. Millions of meals are being delivered directly to civilians.”

He also claimed that, since May, more than 4,400 aid trucks had entered Gaza carrying supplies.

It comes after MSF, also known as Doctors Without Borders, warned 25% of young children and pregnant women in Gaza are now malnourished.

The charity said Israel’s “deliberate use of starvation as a weapon” has reached unprecedented levels, and said that at one of its clinics in Gaza City, rates of severe malnutrition in children under five have trebled over the past two weeks.

MSF then described the lack of food and water on the ground “unconscionable”.

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Aid waiting to be distributed in Gaza

In a statement to Sky News, an Israeli security official said that “despite the false claims that are being spread, the State of Israel does not limit the number of humanitarian aid trucks entering the Gaza Strip”.

It then blamed other groups for issues delivering aid. They said: “Over the past month, we have witnessed a significant decline in the collection of aid from the crossings into the Gaza Strip by international aid organisations.

“The delays in collection by the UN and international organisations harm the situation and the food security of Gaza’s residents.”

Read more:
What does recognising a Palestinian state mean?
Surgeon claims IDF ‘deliberately’ shooting boys at Gaza aid points
Security shot at Palestinians at Gaza aid centre – ex-guard

The IDF also told Sky News: “The IDF allows the American civilian organisation (GHF) to distribute aid to Gaza residents independently, and operates in proximity to the new distribution zones to enable the distribution alongside the continuation of IDF operational activities in the Gaza Strip.

“Following incidents in which harm to civilians who arrived at distribution facilities was reported, thorough examinations were conducted in the Southern Command and instructions were issued to forces in the field following lessons learned.

“The aforementioned incidents are under review by the competent authorities in the IDF.”

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‘I still have hope’: Parents of IDF soldier taken hostage by Hamas fear he’ll be one of last freed

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'I still have hope': Parents of IDF soldier taken hostage by Hamas fear he'll be one of last freed

Yehuda searches through a downstairs room looking for a plastic bag containing the most precious of objects.

It’s a small, blackened Rubik’s Cube that belongs to Yehuda’s son Nimrod – one of 20 living Israeli hostages still being held by the terrorist group Hamas in Gaza.

It was found in Nimrod’s burnt-out tank after the October 7th attacks.

“He likes PlayStation and Rubik’s Cube,” says Nimrod’s mother, Vicky.

“They found the Rubik’s Cube in the tank. It was complete but a little bit dark and they brought it back to us.”

Stills from Holland PKG of Vicky Cohen whose son Nimrod Cohen, an 19 y/o IDF soldier, who is being held hostage by Hamas
Image:
Vicky Cohen

We spoke to Nimrod’s parents Yehuda and Vicky about the emotional rollercoaster hostage families in Israel are going through – as hope rises and fades of a ceasefire agreement with Hamas.

“I still have hope that maybe I will see Nimrod again,” says Vicky.

“It almost breaks my heart because I still had expectation,” she says – in spite of the latest failure to find resolution in talks between Israel and Hamas in Doha.

“But I still have hope that maybe something good will happen,” she says.

Rubik's cube owned by Nimrod Cohen, an 19 y/o IDF soldier, who is being held hostage by Hamas
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Nimrod’s charred Rubik’s Cube

Vicky says: “We heard [during] the last weeks, President Trump saying we will hear about a ceasefire soon – next week – in a few days.

“We heard our prime minister [Benjamin Netanyahu] say visiting Washington and meeting Trump was very successful – and heard members of the coalition talking about our prime minister eventually understanding he needs to end the war. But until now nothing.”

The delegation coming back to Israel doesn’t mean a total collapse of ceasefire talks, but US envoy Steve Witkoff said the response to the latest ceasefire proposals by Hamas showed “a lack of desire”.

And so the rollercoaster of emotion for the hostage families continues.

Middle East latest: Gaza aid airdrops a ‘smokescreen’

Nimrod Cohen, an 19 y/o IDF soldier, who is being held hostage by Hamas
Image:
Nimrod

Nimrod’s father Yehuda Cohen said: “Of course it’s a disappointment but it’s not the first one. A long time ago I learned not to get my expectations up so the disappointment won’t be too deep.

“The solution is very simple – I’ve got it on my shirt – ceasefire and hostage deal. Meaning the only way to get all the hostages is ending the war.”

Stills from Holland PKG on Yehuda Cohen (pictured) whose son Nimrod Cohen is being held hostage by Hamas
Image:
Nimrod’s father Yehuda

Yehuda shows us Nimrod’s bedroom at the family home. It’s exactly as it was when Nimrod left to return to his army duties a few days before the October 7 attacks.

Except in a corner, there’s a box of uniforms and personal possessions, including a wallet which Nimrod had left at his army outpost – all returned to the family by the IDF.

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Stills from Holland PKG on Yehuda and Vicky Cohen's son Nimrod Cohen, an 19 y/o IDF soldier, who is being held hostage by Hamas.
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The IDF handed Nimrod’s parents a box of his possessions left at his army outpost

It’s just like the bedroom of any other teenager – Nimrod was 19 when he was kidnapped. But two birthdays have passed since then. Nimrod is 21 now – a milestone spent in captivity a few weeks ago.

It’s believed there are 20 living Israeli hostages in Gaza – all male – and that Hamas is holding the bodies of 27 more hostages who have been killed.

Read more from Sky News:
Israel resumes airdrops into Gaza
Bob Geldof accuses Israel of ‘lying’
25% of children malnourished, charity says

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Starvation in Gaza continues

But even if a deal is agreed, the first phase is expected to secure the release of only half of the living hostages – and Nimrod’s parents say their son, as a soldier, is not likely to be one of the 10.

Yehuda says: “A partial deal means that the probability my son will be on that list is close to zero. So he’s going to be one of the last ones to be released, and that’s why we have to fight.”

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