How Gaza went from desperately poor to even poorer – and why that’s important to the current war
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.
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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.
World
Israel says Hamas commander – who was one of the architects of the 7 October 2023 attacks – killed in strike
A senior Hamas commander who was one of the architects of the 7 October 2023 attacks on Israel has been killed in a strike on Gaza City, according to the country’s military.
Raed Saad was targeted in response to an attack by Hamas in which an explosive device injured two soldiers on Saturday, Israeli Prime Minister Benjamin Netanyahu and Defence Minister Israel Katz said in a joint statement.
It is the highest-profile killing of a senior Hamas figure since the Gaza ceasefire came into effect in October.
Gaza health authorities said the attack on a car in Gaza City killed five people and wounded at least 25 others, but there has been no confirmation from Hamas or medics that Saed was among the dead.
Raed Saed
Hamas condemned the attack in a statement as a violation of the ceasefire agreement but stopped short of threatening retaliation.
An Israeli military official described Saed as a high-ranked Hamas member who helped establish and advance the group’s weapons production network.
“In recent months, he operated to re-establish Hamas’ capabilities and weapons manufacturing, a blatant violation of the ceasefire,” the official said.
The 10 October ceasefire has enabled hundreds of thousands of Palestinians to return to Gaza City’s ruins after a war that began after Hamas-led militants killed 1,200 people, most of them civilians, and seized 251 hostages in an attack on southern Israel.
Israel’s retaliatory offensive has killed more than 70,700 Palestinians, most of them civilians, according to health officials in Gaza.
Israel has pulled troops back from city positions, and aid flows have increased, but violence has not completely stopped.
Palestinian health authorities say Israeli forces have killed at least 386 people in strikes in Gaza since the truce, while Israel says three of its soldiers have been killed.
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Belarus pardons key opposition figure, among 123 prisoners, in exchange for US sanction relief
Belarus has pardoned 123 prisoners, including a Nobel Peace Prize laureate and a key opposition figure who challenged the presidential elections in 2020, in exchange for US sanctions relief.
Human rights advocate Ales Bialiatski and Maria Kolesnikova, a key figure in the mass protests that rocked the country in 2020, were among those released.
Earlier on Saturday, the Trump administration confirmed that the US was lifting sanctions on Belarus’s potash sector after officials held two days of talks in Minsk.
John Coale, the US special envoy for Belarus, also hinted that around 1,000 remaining political prisoners in Belarus could be released in the coming months as authoritarian President Alexander Lukashenko, a close ally of Russia, seeks to improve relations with Washington.
Separately, Ukraine confirmed it had received 114 prisoners released by Belarus. The other nine were received by Lithuania.
Maria Kolesnikova, 43, known for her close-cropped hair and trademark gesture of forming a heart with her hands, was one of dozens of released prisoners who arrived in Ukraine by coach on Saturday.
Maria Kolesnikova (right) celebrates being released from detention. Pic: Coordination Headquarters for the Treatment of Prisoners of War
“Of course, this feeling is incredible happiness,” she said in a video released on X from the Military Intelligence of Ukraine.
“At the same time, of course, I think about those people who are not yet free. I am very much looking forward to the moment when we can all hug each other, when we can all see one another, when we will all be free,” she added.
Ms Kolesnikova became a symbol of resistance when Belarusian authorities tried to deport her to Ukraine in September 2020. She broke away from security forces at the border, tore up her passport and walked back into Belarus.
Maria Kolesnikova became a symbol of resistance to Alexander Lukashenko’s regime. File pic: AP
The professional flautist was convicted in 2021 on charges including conspiracy to seize power and sentenced to 11 years in prison, but then fell seriously ill and underwent surgery.
Ales Bialiatski, 63, who founded Viasna, Belarus’ oldest and most prominent human rights group, won the Nobel Peace Prize in 2022 while awaiting trial for charges which were widely regarded as politically motivated.
After arriving in Lithuania, he spoke briefly to crowds outside the US embassy in Vilnius and said in English: “Never give up”.
Nobel Peace Prize laureate Ales Bialiatski arrives in Lithuania after his release by Belarusian authorities. Pic: AP
He was seen by authorities as especially dangerous because of what Belarus alleged were his “extremist tendencies”.
Sentenced to 10 years in 2023, he had been held at a penal colony in Gorki, notorious for beatings and hard labour, and his health was deteriorating, according to his wife.
The Norwegian Nobel Committee expressed “profound relief and heartfelt joy” at the release of Mr Bialiatski and called on the Belarusian authorities “to release all political prisoners”.
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Sviatlana Tsikhanouskaya, who is an opposition leader in exile and a close ally of Ms Kolesnikova, posted her delight on X: “Maria is free!”
She added: “For five years, we fought for Maria Kolesnikova’s freedom. I am deeply grateful to the US administration and our European partners who worked tirelessly to secure her release.
“Maria is in a safe place, and we hope to hear from her soon.”
Ukrainian officials said President Volodymyr Zelenskyy had also spoken to Ms Kolesnikova after her release, although they have not released any more details.
In a statement, published on the Telegram social media platform, the Military Intelligence of Ukraine confirmed more details of who had been released, including people “imprisoned for political reasons”.
Among the group were Viktar Babaryka, a former banker, jailed in 2021 after challenging Mr Lukashenko at the polls, and journalist Maryna Zolatava, who was imprisoned in 2023 on a range of charges including harming national security. Critics argue both sentences were politically motivated.
President Lukashenko has ruled the nation with an iron fist for more than three decades, but has been repeatedly sanctioned by Western countries both for its crackdown on human rights and for allowing Moscow to use its territory in the invasion of Ukraine.
Following the two-day talks, US envoy John Coale posted on X: “Another 156 political prisoners released thanks to President Trump’s leadership! An important step in U.S.-Belarus relations.”
It is not clear whether the figure includes previously released prisoners.
Speaking to the Reuters news agency on Saturday, Mr Coale said around 1,000 remaining political prisoners in Belarus could be released in the coming months.
“I think it’s more than possible that we can do that, I think it’s probable… We are on the right track, the momentum
is there.”
Belarusian President Alexander Lukashenko meeting John Coale, US special envoy, in Minsk for talks. Pic: President of the Republic of Belarus/Reuters
US officials eased some sanctions after meeting with President Lukashenko in September 2025. In response, Minsk freed more than 50 political prisoners into Lithuania, taking the total number freed by Belarus since July 2024 to more than 430.
Mr Coale also spoke about weather balloons which have flying over the border from Belarus into Lithuania.
“He [Mr Lukashenko] agreed recently to do everything he could to stop the balloons,” Mr Coale told the Reuters news agency.
Lithuania has declared a state of emergency over the balloons, used by cigarette smugglers, which have caused over a dozen closures of Vilnius airport in recent months.
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