West Bank Faces Unprecedented Economic Crisis, 900,000 Palestinians Face Food Insecurity

Economic expert Rula Shanar has warned of an unprecedented economic crisis in the West Bank, despite the continuation of daily life. Shanar, who participated in preparing a report on the economic conditions, stated that while Palestinians are managing their lives under difficult circumstances, economic indicators reveal a severe situation. She noted that unemployment has reached approximately 28%, a level not seen since the Oslo Accords. This crisis is exacerbated by Israel's withholding of Palestinian Authority (PA) clearance revenues, exceeding $6.5 billion, which constitutes about 68% of the PA's income. These funds are crucial not only for public sector salaries but also for payments to the private sector, hospitals, and schools, leading to disruptions in economic and service sectors.

Shanar highlighted the dire humanitarian consequences, with around 900,000 people in the West Bank experiencing food insecurity. She attributed this to the isolation of areas due to checkpoints and movement restrictions, which hinder commerce and income sources. The displacement in Jenin, Tulkarm, and Nur Shams refugee camps over the past two years, coupled with reduced international aid from organizations like the World Food Programme, has worsened the situation. The cessation of work permits for Palestinians in Israel since October 7, 2023, has further deprived the Palestinian economy of a vital income source, increasing poverty and reducing household purchasing power.

The PA's ability to cope is strained as both public sector salaries and private sector activity face immense pressure. Shanar pointed out that Israel has not transferred clearance funds to the PA's Ministry of Finance since May 2025, resulting in public sector salaries being paid at only 50% of their value, with a minimum of 2,000 shekels. These salaries are insufficient given the high cost of living, which is comparable to Israel's, and average family sizes of three to five people. The private sector, though the largest employer, cannot compensate for the PA's diminished role due to increasing restrictions.

The economic downturn in the West Bank also impacts Israel, with annual trade exceeding 51 billion shekels. Shanar warned that continued commercial disruption and economic decline will lead to recession, higher poverty, and unemployment in Israel. She stressed that the lack of economic and political prospects and worsening living conditions undermine stability for both sides. Additionally, the economic activity of Palestinian citizens of Israel, which significantly supports West Bank economies through trade and tourism, has declined due to security concerns and movement restrictions, representing another financial loss for the Palestinian economy.