With the ceasefire agreement coming into force, the world is contemplating the enormous economic effort that will be needed to rebuild the Gaza Strip. Massive destruction obscures the horizon and questions abound: at what stage will reconstruction work begin and what Israeli involvement will be in relation to international efforts.
Who will pay for all this, and how will the moneyless Palestinian Authority be involved when Hamas is still the governing body of the Gaza Strip? What mechanism will be put in place to examine the quality and quantity of goods and raw materials that will enter the Gaza Strip and many other issues.
Meanwhile, the United States is considering the option of some sort of population relocation in order to rebuild the Gaza Strip. According to NBC, Indonesia is a country being considered for the temporary absorption of Gazans, but the Palestinians are reluctant to implement such an idea. The fear is that this could be the first step towards Israeli expulsion of Palestinians from the territory.
The UN estimates that reconstruction work in the Gaza Strip will cost $80 billion, 25 times more than after Operation Protective Edge in 2014. This particularly high cost comes from the fact that around 69% of the buildings in the Gaza Strip (more than 170,000) were destroyed, including around 90% of housing.
Even before reconstruction, 42 million tons of rubble created by the bombings must be cleared. The process alone is expected to cost $1.2 billion, with the UN assessment last April estimating that processing the rubble will take 14 years.
Of Gaza’s 2.3 million residents, 1.9 million have been displaced from their homes, including hundreds of thousands living in tents. In the infrastructure sector, in January last year, damage was estimated at $18.5 billion, while last month the UN humanitarian office noted that water supplies had fallen less than a quarter of what it was before October 7, 2023.
Dr. Ido Zelkovitz, director of the Middle East Studies Program at Jezreel Valley Academic College, told Globes: “Hamas’ use of civilian infrastructure has been very extensive. It was intended to conceal the extensive tunnel network, which includes transit, holding and attack tunnels. Some of the entrances to the wells passed through public and civilian facilities, and of course under the homes of senior movement officials – risking the lives of civilians living nearby. Indeed, any tunnel infrastructure is considered a legitimate military target under international law.
Infrastructure and economy
Palestinian data reported by Reuters indicates that 17 of the 36 hospitals in the Gaza Strip remained active. In light of this, the World Health Organization estimates that $10 billion will be needed over the next 5-7 years to restore health infrastructure. In addition, 136 schools and universities were destroyed, as were 823 mosques, more than 200 government institutions and 80-96% of agricultural assets.
An analysis conducted in October 2024 by the International Labor Organization (ILO) and the Palestinian Bureau of Statistics shows that the average unemployment rate in the Gaza Strip between October 2023 and September 2024 was 79.7%, while in Judea and Samaria it was 34.9%. GDP in Judea and Samaria (West Bank) fell by 21.7% in October compared to October 2023, and by 84.7% in the Gaza Strip.
Despite the many economic challenges facing the Palestinian Authority, Ramallah said it had completed all preparations to assume full responsibility for the Gaza Strip, including the first steps to restore basic services such as water and electricity – “in coordination with the municipality of Gaza and the municipality of Jabalia”. Municipality and in cooperation with the “Arab International Committee for the Rehabilitation of Palestine”. This is despite the fact that the Authority is not a party to the agreement and has not been promised control of the Gaza Strip.
Dr. Zelkovitz says: “Ramallah has had no influence on daily life in the Gaza Strip since 2007, and in recent years it has even gradually reduced the payment of benefits to its residents who remain there. Most of the burden of managing economic life in the Gaza Strip falls on the Hamas regime, which takes advantage of this to expand its power base, since Hamas became the largest employer in the Gaza Strip. They controlled the public sector and created a new class of wealthy people who made fortunes through their political ties to the movement and benefited from income from the media and private commerce.
Former deputy head of the Palestinian arena in the IDF Planning Directorate, Lt. Col. (res.) Amit Yagur, said that the Palestinian Authority should ask for foreign aid and thus perpetuate the existing situation , just as UNRWA has expanded the refugee phenomenon since 1949. “The Palestinian Authority wants to convince the world that there is a possibility of the creation of a Palestinian state, while Hamas strives to end the war for control of Gaza. I fear that the model of Hezbollah in Lebanon will develop in the Gaza Strip, because it will suit everyone. The Palestinian Authority will present itself as controlling the Gaza Strip, because it understands that this is necessary for the sake of the image of a viable state, while Hamas will de facto control the territory.”
Neomi Neumann is a visiting scholar at the Washington Institute and former director of the Israeli Security Services (Shin Bet) Research Unit. She wrote in a May 2024 article that the PA’s external debt to banks, pension payments and service providers totaled $5.4 billion. This debt is fueled by a monthly deficit of $110 to $125 million during the war, compared to $50 million during periods of calm. One of the solutions found in Ramallah is a 30 to 50 percent reduction in the salaries of the 145,000 Palestinian Authority employees, including the security apparatus, which could encourage a spillover into terrorism and strengthen the influence of Hamas.
Serious questions arise about the leadership that will succeed 89-year-old Palestinian Authority President Mahmoud Abbas (Abu Mazen). PLO Secretary General Hussein al-Sheikh and General Security Chief Majed Faraj emerge as potential future leaders, but Dr. Zelkovich notes that the release of prisoners under the deal could reshuffle the cards.
“The possible release of Marwan Barghouti could tip the scales, because he enjoys the broadest popular support. In the aftermath of the war, fallen figures, such as Mohammad Dahlan, are also expected to take a significant part in the reconstruction of the Gaza Strip. In the West Bank, the guiding idea of the Palestinian Authority’s conduct is to maintain a normal routine of life with as much freedom of occupation and movement as possible. So they have a lot to lose if it looks like an uprising breaks out the day after Abu Mazen.”
Lieutenant Colonel (Reserve) Yagur concludes that there is reason to worry about the weakening of the Palestinian Authority. “Polls indicate that Hamas’s popularity in Judea and Samaria exceeds that of the Gaza Strip. Within the Palestinian Authority, they operated in Jenin until reaching a truce with Hamas and Islamic Jihad. In other words, they accepted the authority of the activists, so that if they remained on the ground, they could maintain their influence.”
