Gaza Economy Nearing Collapse Warns World Bank

While many may be familiar with the area known as Gaza or the Gaza Strip from its frequent appearances in the news, many may not realize the economic condition of this region.

After a conflict with Israel in 2014, this area was taken over by Hamas, a militant Islamic group. This led to a series of sanctions and blockades imposed by Israel and Egypt that some say have turned this area into an open-air prison. However, this has had the unintended consequence of turning Gaza into its own de facto micro-nation, separate from both Israel and Palestine.

While many may be familiar with the area known as Gaza or the Gaza Strip from its frequent appearances in the news, many may not realize the economic condition of this region.

After a conflict with Israel in 2014, this area was taken over by Hamas, a militant Islamic group. This led to a series of sanctions and blockades imposed by Israel and Egypt that some say have turned this area into an open-air prison. However, this has had the unintended consequence of turning Gaza into its own de facto micro-nation, separate from both Israel and Palestine.

Thanks to the blockades and sanctions, Gaza has been put into the unenviable position of either becoming self-sufficient, struggle to survive on the meager goods that can cross its borders, or reach an accord with its neighbors quite literally at gunpoint. Much of Gaza’s operational costs are paid for with aid money supplied by charity groups and UN organizations. The UN has also taken over the bulk of Gaza’s costs for things like education and food supplies. Some sources have indicated that Hamas may receive funding from nations like Iran through underground back channels, but this cannot be entirely confirmed.

The governing Hamas are not easily persuaded, and they have refused to relinquish control of the area for almost a year. However, ABC News has reported that the World Bank issued a new report on Gaza’s tiny, fragile economy, finding that it is on the “verge of collapse.” The report, issued Friday, May 15, 2015, indicates that “”blockades, war and poor governance have strangled” Gaza’s economy. According to the World Bank, about 43 percent of Gaza’s 1.8 million residents are currently unemployed. That number is even worse among young people, where unemployment rates reached into the 60s at the close of 2014.

As of 2009, Gaza ranked 164th in terms of per capita income, with the average person making a mere $3,100 per year. This put more than 70 percent of the population before the poverty line, and that was before sanctions were tightened even further following the 2014 conflict.

The report went on to postulate that but for the conflicts and restrictions (including a blockade started as early as 2007), Gaza’s GDP would have been four times higher than it is today. Israel and Egypt imposed the present blockade on Gaza after Hamas violently seized control of the territory from forces loyal to the Western-backed Palestinian President Mahmoud Abbas. Since that time, Hamas has been at war with Israel on three occasions, and tensions remain high at all times.