There is no reason in the world that I can think of that Israel should want to have poor neighbours. Israel has strategic, national, and security interests in enabling the Palestinians to have a strong economy and for Palestinian families to achieve prosperity. Simply put, Palestinian poverty is bad for Israel. Now is the time to begin to allow Palestinian workers to come back to work in Israel. Of course, all those with work permits should receive the necessary security clearances. Today, preventing Palestinian labour in Israel creates a larger security risk for Israel than allowing them to return to their jobs. Israel also has a very clear need for labour especially in the field of construction and Palestinian labour has always been preferred to foreign labour, that sends remittances outside of the economy, whereas Palestinian wages stays within the cycle of the local economy. But the overriding reason why Israel must allow Palestinians to come back to work in Israel is because the Palestinians in the West Bank are Israel’s neighbours and they will remain Israel neighbours whether you support the two states solution or annexation to Israel. Palestinian poverty is bad for Israel and of course it is foolish to ignore the suffering of one’s neighbour.
Prior to October 7 Palestinians were one of the largest purchasers of Israelis goods and services. But today Palestinians in the West Bank don’t have money to purchase their most basic needs. After 20 months of war, the Palestinian economy is crashing. People in the West Bank tell me that they literally don’t have food to put on the table. A good friend who is a medical device supplier to hospitals and clinics all around the West Bank tells me that he has piles of checks from clients with no coverage. He can no longer import new products to sell because his own accounts are empty. He says that this is a general reflection of the entire Palestinian private sector. The income that used to come from work in Israel was the motor of the Palestinian economy. That motor has been shut down for 20 months. The war has led to a substantial decline in real GDP in the West Bank, averaging 32.2% decline over the past year. The unemployment rate is estimated to be around 35%, according to the International Labour Organization.
On the eve of the war that began on October 7, approximately 175,000 Palestinians worked in Israel, 150,000 of them in communities within the Green Line and at least 25,000 working in Israeli settlements in the West Bank. Since the outbreak of the war, the Israeli government has prohibited the entry of Palestinian workers into the Green Line (except for special permission for approximately 8,000 Palestinian workers, for exceptional essential needs). The average daily wage in the West Bank is $32 compared to $82 in Israel. Prior to October 7, Palestinian labour in Israel had become a very important factor in the Palestinian economy over the past decade. The number of Palestinian workers in Israel doubled between 2010 and 2023, but the income of Palestinian workers in Israel has grown at a much faster rate. Total labour income in Israel, as reflected in the PA balance of payments, increased six fold during this period – from about $700 million in 2011 to $4.3 billion per year in 2023.
With regard to the public sector, the Palestinian public sector continues to be the largest Palestinian employer, providing 21.3 percent of all jobs but the public sector is broke, with no ability to borrow money from banks. The PA’s tax revenues, which are collected mainly by Israel and handed over after deducting the costs of services (e.g. water and electricity) provided by the Israel, have been partially or totally suspended during the past 20 months and when paid are almost always delayed. This $175 million monthly revenue has been the PA’s main source of income in recent years. These funds are generally used by the PA to pay its civil servants and provide public services (health, education), with little hope of replenishment. Employees of the Palestinian Authority including the security services receive only partial payments of the salary every month which has a deep impact on the inability of people to purchase daily needs. This of course has a rippling effect in the entire West Bank economy. More than one-third of consumers use credit to buy food daily. Some people survive by planting small gardens with vegetables. Others survive through the collective help of extended families. The impact on nutrition for children is dramatic with increasing health problems for the entire population. Per capita gross domestic product (GDP) is falling, and inflation is soaring. If current trends continue, the budget deficit will double by the end of the year.
This is not sustainable and if it continues, there is no doubt that it will have a direct impact on the general security situation – for Israel and for Palestine. When people are pushed into a situation where they have nothing to lose, and they cannot provide for their families, acts of desperation are more likely to happen. The war in Gaza is coming to an end. (It should have ended a long time ago). The war with Lebanon, Iran, and Syria have also ended. We need to look forward to a period of cooling off and towards reconstruction. Dealing with the economy is easier than dealing with the political aspects of the conflict (that must also come to the table). After October 7, Israelis didn’t want to see any Palestinians and they wanted revenge and felt that all Palestinians were potential terrorists. Palestinians are not going away and the Israeli public must once again understand that these two people are intertwined in our common future and therefore, we must pave the path back to interaction and mutual dependence. That is in the interest of Israel and it is in the interest of Palestine.
