How Gaza went from desperately poor to even poorer – and why that’s important to the current war

Published

2 years ago

October 25, 2023

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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.

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.

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.

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.

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.

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.

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.

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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Two security workers injured after grenades thrown at aid site, Gaza Humanitarian Foundation says

Published

59 mins ago

July 5, 2025

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Two security workers injured after grenades thrown at aid site, Gaza Humanitarian Foundation says

Two American security workers in Gaza were injured after grenades were thrown during food distribution in Khan Younis, the Gaza Humanitarian Foundation (GHF) has said.

In a statement, the US and Israeli-backed aid group said a targeted terrorist attack was carried out at one of its sites in southern Gaza on Saturday morning.

The two Americans injured “are receiving medical treatment and are in stable condition,” it said, adding that the delivery of aid was “otherwise successful” and that “no local aid workers or civilians were harmed”.

GHF didn’t say exactly when the incident happened but claimed Hamas was behind the attack, adding: “GHF has repeatedly warned of credible threats from Hamas, including explicit plans to target American personnel, Palestinian aid workers, and the civilians who rely on our sites for food.

“Today’s attack tragically affirms those warnings.”

Later, the aid group posted a picture on social media, which it said showed “fragments of a grenade packed with ball bearings” that was used in the attack.

Asked by Sky’s US partner network, NBC News, whether the two injured individuals were responsible for handing out aid or were responsible for providing security, GHF said they were “American security workers” and “two American veterans.”

The aid group did not provide specific evidence that Hamas was behind the attack.

The US and Israeli-backed group has been primarily responsible for aid distribution since Israel lifted its 11-week blockade of the Gaza Strip in May.

It comes after Sky News analysis showed GHF aid distributions are associated with a significant increase in deaths in Gaza.

According to Gaza’s health ministry, 600 Palestinians have been killed while seeking aid from GHF sites as of 3 July, which charities and the UN have branded “death traps”.

Meanwhile, the Associated Press has reported that Israeli-backed American contractors guarding GHF aid centres in Gaza are using live ammunition and stun grenades.

GHF has vehemently denied the accusations, adding that it investigated AP’s allegations and found them to be “categorically false”.

Israel’s military added that it fires only warning shots and is investigating reports of civilian harm.

It denies deliberately shooting at any innocent civilians and says it’s examining how to reduce “friction with the population” in the areas surrounding the distribution centres.

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Hamas gives ‘positive’ response to ceasefire proposal but asks for amendments

Published

7 hours ago

July 5, 2025

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Hamas gives 'positive' response to ceasefire proposal but asks for amendments

Hamas has said it has “submitted its positive response” to the latest proposal for a ceasefire in Gaza to mediators.

The proposal for a 60-day ceasefire was presented by US President Donald Trump, who has been pushing hard for a deal to end the fighting in Gaza, with Israeli Prime Minister Benjamin Netanyahu set to visit the White House next week to discuss a deal.

Mr Trump said Israel had agreed to his proposed ceasefire terms, and he urged Hamas to accept the deal as well.

Hamas’ “positive” response to the proposal had slightly different wording on three issues around humanitarian aid, the status of the Israeli Defence Forces inside Gaza and the language around guarantees beyond the 60-day ceasefire, a source with knowledge of the negotiations revealed.

But the source told Sky News: “Things are looking good.”

Hamas said it is “fully prepared to immediately enter into a round of negotiations regarding the mechanism for implementing this framework” without elaborating on what needed to be worked out in the proposal’s implementation.

The US said during the ceasefire it would “work with all parties to end the war”.

A Hamas official said on condition of anonymity that the truce could start as early as next week.

But he added that talks were needed first to establish how many Palestinian prisoners would be released in return for each freed Israeli hostage and to specify the amount of humanitarian aid that will be allowed to enter Gaza during the ceasefire.

He said negotiations on a permanent ceasefire and the full withdrawal of Israeli troops from Gaza in return for the release of the remaining hostages would start on the first day of the truce.

Hamas has been seeking guarantees that the 60-day ceasefire would lead to a total end to the nearly 21-month-old war, which caused previous rounds of negotiations to fail as Mr Netanyahu has insisted that Israel would continue fighting in Gaza to ensure the destruction of Hamas.

The Hamas official said that Mr Trump has guaranteed that the ceasefire will extend beyond 60 days if necessary to reach a peace deal, but there is no confirmation from the US of such a guarantee.

Speaking to journalists on Air Force One, Mr Trump welcomed Hamas’s “positive spirit” to the proposal, adding that there could be a ceasefire deal by next week.

Hamas also said it wants more aid to flow through the United Nations and other humanitarian agencies, which comes as the UN human rights officer said it recorded 613 Palestinians killed in Gaza within a month while trying to obtain aid.

Most of them were said to have been killed while trying to reach food distribution points by the controversial US- and Israeli-backed Gaza Humanitarian Foundation (GHF).

The spokeswoman for the UN human rights office, Ravina Shamdasani, said the agency was not able to attribute responsibility for the killings, but added that “it is clear that the Israeli military has shelled and shot at Palestinians trying to reach the distribution points” operated by GHF.

Ms Shamdasani said that of the total tallied, 509 killings were “GHF-related”, meaning at or near its distribution sites.

The GHF accused the UN of taking its casualty figures “directly from the Hamas-controlled Gaza health ministry” and of trying “to falsely smear our effort”, which echoed statements to Sky News by the executive director of GHF, Johnnie Moore.

Mr Moore called the UN figures a “disinformation campaign” that is “meant to shut down our efforts” in the Gaza Strip.

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Gaza: The man in the room acting as backchannel for Hamas in negotiations with US

Published

7 hours ago

July 5, 2025

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Gaza: The man in the room acting as backchannel for Hamas in negotiations with US

Behind the efforts to secure the Gaza ceasefire and hostage release is the remarkable story of one man’s unlikely involvement.

His name is Bishara Bahbah, he’s a Harvard-educated economics professor from Phoenix, Arizona.

In April, his phone rang. It was Hamas.

Since that phone call, Dr Bahbah has been living temporarily in Qatar where he is in direct contact with officials from Hamas. He has emerged as an important back-channel American negotiator. But how?

An inauguration party

I first met Dr Bahbah in January. It was the eve of President Trump’s inauguration and a group of Arab-Americans had thrown a party at a swanky restaurant in Washington DC’s Wharf district.

There was a sense of excitement. Arab-Americans were crediting themselves for having helped Trump over the line in the key swing state of Michigan.

Despite traditionally being aligned with the Democrats, Arab-Americans had abandoned Joe Biden in large numbers because of his handling of the Gaza war.

I’d reported from Michigan weeks earlier and been struck by the overwhelming support for Trump. The vibe essentially was ‘it can’t get any worse – we may as well give Trump a shot’.

Mingling among diplomats from Middle Eastern countries, wealthy business owners and even the president of FIFA, I was introduced to an unassuming man in his late 60s.

We got talking and shared stories of his birthplace and my adopted home for a few years – Jerusalem.

He told me that he still has the deed to his family’s 68 dunum (16 acre) Palestinian orchard.

With nostalgia, he explained how he still had his family’s UN food card which shows their allocated monthly rations from their time living in a refugee camp and in the Jerusalem’s old city.

Dr Bahnah left Jerusalem in 1976. He is now a US citizen but told me Jerusalem would always be home.

He echoed the views I had heard in Michigan, where he had spent many months campaigning as the president of Arab-Americans for Trump.

He dismissed my scepticism that Trump would be any better than Biden for the Palestinians.

We exchanged numbers and agreed to meet for lunch a few weeks later.

A connection with Trump

Dr Bahbah invited two Arab-American friends to our lunch. Over burgers and coke, a block from the White House, we discussed their hopes for Gaza under Trump.

The three men repeated what I had heard on the campaign trail – that things couldn’t get any worse for the Palestinians than they were under Biden.

Trump, they said, would use his pragmatism and transactional nature to create opportunities.

Dr Bahbah displayed to me his own initiative too. He revealed that he got a message to the Palestinian Authority President, Mahmoud Abbas, to suggest he ought to write a personal letter of congratulations to President Trump.

A letter from Ramallah was on the Oval Office desk on 6 November, a day after the election. It’s the sort of gesture Trump notices.

It was clear to me that the campaigning efforts and continued support of these three wealthy men had been recognised by the Trump administration.

They had become close to key figures in Trump’s team – connections that would, in time, pay off.

There were tensions along the way. When Trump announced he would “own Gaza”, Dr Bahbah was disillusioned.

And then came the AI video of Trump and Israeli Prime Minister Benjamin Netanyahu sunning themselves in a Gazan wonderland.

“It is provocative and unacceptable,” he told me just after the president posted the video in February.

Trump must have thought it was funny, so he posted it. He loves anything with his name on it.”

Then came the Trump plan to resettle Palestinians out of Gaza. To this, he released a public statement titled Urgent Press Release.

“Arab-Americans for Trump firmly rejects President Donald J Trump’s suggestion to remove – voluntarily or forcibly – Palestinians in Gaza to Egypt and Jordan,” he said.

He then changed the name of his alliance, dropping Trump. It became Arab-Americans for Peace.

I wondered if the wheels were coming off this unlikely alliance.

Was he realising Trump couldn’t or wouldn’t solve the Palestinian issue? But Dr Bahbah maintained faith in the new president.

“I am worried, but at the same time, Trump might be testing the waters to determine what is acceptable…,” he told me in late February as the war dragged on.

“There is no alternative to the two-state solution.”

He told me that he expected the president and his team to work on the rebuilding of Gaza and work to launch a process that would culminate in the establishment of a Palestinian state, side by side in peace with Israel.

It was, and remains, an expectation at odds with the Trump administration’s official policy.

The phone call

In late April, Dr Bahbah’s phone rang. The man at the other end of the line was Dr Ghazi Hamad, a senior member of Hamas.

Dr Bahbah and Dr Hamad had never met – they did not know each other.

But Hamas had identified Dr Bahbah as the Palestinian-American with the most influence in Trump’s administration.

Dr Hamad suggested that they could work together – to secure the release of all the hostages in return for a permanent ceasefire.

Hamas was already using the Qatari government as a conduit to the Americans but Dr Bahbah represented a second channel through which they hoped they could convince President Trump to increase pressure on Israel.

There is a thread of history which runs through this story. It was the widow of former Palestinian leader Yasser Arafat who passed Dr Bahbah’s number to Dr Hamad.

In the 1990s, Dr Bahbah was part of a Palestinian delegation to the multilateral peace talks.

He became close to Arafat but he had no experience of a negotiation as delicate and intractable as this.

The first step was to build trust. Dr Bahbah contacted Steve Witkoff, Trump’s Middle East envoy.

Witkoff and Bahbah had something in common – one a real-estate mogul, the other an academic, neither had any experience in diplomacy. It represented the perfect manifestation of Trump’s ‘outside the box’ methods.

But Witkoff was sceptical of Dr Bahbah’s proposal at first. Could he really have any success at securing agreement between Israel and Hamas? A gesture to build trust was necessary.

Bahbah claims he told his new Hamas contact that they needed to prove to the Trump administration that they were serious about negotiating.

Within weeks a remarkable moment more than convinced Dr Bahbah and Witkoff that this new Hamas back-channel could be vitally important.

On 12 May, after 584 days in Hamas captivity, Israeli-American Edan Alexander was released.

We were told at the time that his release was a result of a direct deal between Hamas and the US.

Israel was not involved and the deal was described by Hamas as a “good faith” gesture. Dr Bahbah sees it as his deal.

Direct talks took place between Dr Bahbah and five Hamas officials in Doha who would then convey messages back to at least 17 other Hamas leadership figures in both Gaza and Cairo.

Dr Bahbah in turn conveyed Hamas messages back to Witkoff who was not directly involved in the Hamas talks.

A Qatari source told me that Dr Bahbah was “very involved” in the negotiations.

But publicly, the White House has sought to downplay his role, with an official telling Axios in May that “he was involved but tangentially”.

The Israeli government was unaware of his involvement until their own spies discovered the backchannel discussion about the release of Alexander.

Since that April phone call, Dr Bahbah has remained in the Qatari capital, with trips to Cairo, trying to help secure a final agreement.

He is taking no payment from anyone for his work.

As he told me when we first met back in January: “If I can do something to help to end this war and secure a future for the Palestinian people, I will.”