The West Bank a stifling financial and economic crisis fueled by occupation policies

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The Palestinian government is facing a stifling financial crisis that has affected a number of vital sectors, including government and private sectors, and its repercussions have affected the Palestinian citizen.

The crisis is due to Israeli measures towards the Authority, deductions from clearance funds, a decline in foreign grants and a decline in domestic resources, in addition to the difficulty of reducing current spending.

A new summary issued by the International Labor Organization and the Palestinian Central Bureau of Statistics today, June 7, stated that eight months of war in the Gaza Strip have caused widespread loss of jobs and livelihoods, and a sharp decline in the gross domestic product in the occupied Palestinian territories.

In the West Bank, the unemployment rate reached 32%. While Israel is besieging and bombing Gaza, it is also waging an economic war in the West Bank due to the comprehensive restrictions on the Palestinian economy, the cancellation of work permits and the obstruction of freedom of movement, in addition to the Israeli occupation withholding the tax revenues of the Palestinian Authority (clearing) for several days. Months.

Job loss and weak purchasing power

According to the International Labor Organization report, 51% of West Bank workers who are still working faced a reduction in working hours, while 62.8% of them suffered a decrease in wages.

The report also concluded that 65.3% of companies in the West Bank reported a reduction in their workforce, as many companies resorted to permanent or temporary layoffs of workers.

Last May, a World Bank report said that the Israeli war affected infrastructure and living standards, leading to the loss of half a million jobs in the Palestinian territories.

148,000 workers from the West Bank were unable to reach their jobs in the 48 territories, and 144,000 jobs were also lost in the West Bank due to the escalation of violence and its repercussions on supply chains and production capacity, as well as on the ability of breadwinners to reach their places of work.

In addition, the Israeli government withholds more than 6 billion shekels ($1.61 billion) from clearance funds, which are taxes that the Israeli treasury collects on imported goods monthly, and transfers them to the Palestinian Ministry of Finance.

The World Bank confirmed that the public finances of the Palestinian Authority have deteriorated severely, increasing the risks of disorderly adjustments and the possibility of an imminent financial collapse.

The financing gap for the Palestinian Authority after aid for the year 2023 reached $682 million, or 3.9% of the gross domestic product, and with a potential financing gap in 2024 that may reach $1.2 billion, the financial crisis is expected to worsen, according to the World Bank.

Israeli restrictions, severe financial pressures, and high unemployment lead to a sharp deterioration in purchasing power and negatively affect general economic activity in the West Bank.

Regarding the impact of the crisis on the reality of workers and employees, Aisha Hamouda, member of the secretariat of the Palestinian Federation of Trade Unions, says that this crisis has a serious repercussions related to the fact that families considered to be at the middle income level will face the risk of a decline in the level of food security and their ability to secure education and health needs.

She added in an interview with TRT Arabic, “Families who receive salaries from the government will be classified below the national poverty line and the extreme poverty line, as indicators show that this aspect will contribute to an increase in the percentage of poor families who cannot meet the minimum needs, especially with the data of the Labor Organization report.” "The international community has serious indicators that have not been reported by any country in the world."

Hamouda confirms that “the real problem is that the issue of health insurance, which was facing a major challenge, and which the Israeli government deducts from Palestinian workers, is not provided to the Palestinian government, like other benefits that the Israelis confiscated in a process that is considered blackmail of the Palestinian people.”

She explains: “We are facing a dangerous turning point in the shift of employees and families of employees in the public sector to the level of extreme poverty.”

Health and education are the most affected sectors

One of the most prominent sectors affected by the financial crisis is the health sector, as the crisis affected the financing of the Ministry of Health’s budget, operational capacity, supply, and stores of medicines and medical consumables, according to Wafa Agency.

Public financial constraints impose a burden on the Palestinian health system, especially its ability to deal with the increasing burden of non-communicable diseases, and many obstacles that prevent the provision of health care have led to the system of external medical referrals for treatment to non-Palestinian hospitals, according to the World Bank.

Undersecretary of the Ministry of Health, Wael Al-Sheikh, told the Palestinian News Agency, “Wafa,” that the lack of medicine stock and the inability to provide some pharmaceutical items prompted the Ministry of Health to rely more on referring patients for treatment in private and private hospitals, which increased the bill for transfers and service purchases.

He stressed that the financial crisis has disastrous repercussions on the Palestinian health sector, and a serious impact on the Ministry’s ability to fulfill its obligations towards patients, especially those with chronic and serious diseases, by providing medicines and providing medical services, while a large number of medicines are currently missing from the Ministry’s central warehouses.

The education sector was also affected, and because education is one of the largest items of public sector spending in the West Bank, the sharp decline in revenues led to a reduction or postponement of the wages of public sector employees, as teachers’ salaries decreased by almost half since October.

The most prominent features of the financial crisis

Aisha Hamouda, a member of the General Secretariat of the General Federation of Palestinian Trade Unions, says, “From the beginning of October 7, a real financial problem occurred, firstly with the unemployment of 240,000 workers inside the occupied territories.”

She adds, "The closures imposed by the occupation and the raids on a large number of West Bank towns caused the exit of up to 100,000 workers from the labor market. Later, the greatest challenge also emerged in the occupation's confiscation of clearing funds pumped to large numbers of workers within the public sector, including Sectors that provide services to citizens.

Homouda considers that “this is a dangerous indicator of the failure and destruction of the system of job construction in Palestine to provide services, and this constitutes a major challenge now because since the seventh of October and before that, the government had had a financial crisis, but it is clear that the financial crisis is worsening as the levels of providing salaries have decreased to reach 80-70%, and today there is talk of a 50% decrease, which is reflected in the fact that these amounts are being pumped into the Palestinian market and within the wheel of production in buying and selling.”