The economy in the occupied West Bank is being dismantled, report says
[June 15, 2026] By
SAM METZ
RAMALLAH, West Bank (AP) — The economy in the West Bank is teetering
toward collapse as Israel maintains a web of restrictions that limit
opportunities for Palestinians living under long-term military
occupation, according to a new report from a leading conflict tracker.
The International Crisis Group says that Israeli measures restricting
movement, withholding revenue and taking land are not only crippling the
Palestinian economy but also fueling deep instability.
“The economic conditions necessary for any Palestinian future other than
permanent subjugation are being dismantled,” it says.
The report, based on interviews with Palestinian business leaders,
mayors and government officials, details the financial crisis afflicting
companies, households and the internationally backed Palestinian
Authority, which administers cities and towns in the West Bank.
It says Israeli policies suggest a concerted effort to “advance Israel’s
own declared goal of extending its control and preventing a Palestinian
state from emerging.”
Throughout decades of military occupation, the Palestinian economy has
been hobbled by checkpoints and military gates that curtail movement of
people and goods. Households and businesses have relied heavily on jobs
and imports tied to Israel, and faced restrictions on land and trade.
The roughly 3.4 million Palestinians living in the West Bank today face
roughly 30% unemployment and have seen their economy contract
substantially since the start of the Israel-Hamas war.
After Hamas’ Oct. 7, 2023, attack, Israel revoked work permits for most
of the nearly 200,000 Palestinians who had worked there previously.
Officials cited security but in effect, it deprived the Palestinian
economy of nearly $400 million a month, or almost one-fourth of its
overall economic output.
Many businesses today are struggling to pay workers, contractors and
suppliers, with private companies seeing an estimated 50% decline in
business since before the war, “reflecting tightened movement controls,
disrupted supply chains and heightened uncertainty,” the report says.
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 “Palestinian society survives, but
in a state of grinding immiseration. Absent remedies, the result
will likely be a loss of hope and a growing risk of instability and
greater violence,” it says.
As the occupied West Bank's largest employer and
service provider, Palestinian Authority is at the heart of the
crisis. Government agencies have borrowed heavily to stay afloat as
public sector workers go unpaid and infrastructure like roads and
water lines crumble. The inability to fund to public services is
keeping patients out of hospitals and kids out of school.
Most of the PA's money comes from taxes collected on goods entering
the West Bank through Israeli ports, because Palestinians do not
control their own borders. But under hard-line ministers in Israeli
Prime Minister Benjamin Netanyahu’s government, Israel has withheld
billions of dollars in owed tax revenue and unilaterally imposed
deductions on the funds. No transfers have been made since May 2025.
Joost Hiltermann, International Crisis Group’s special adviser for
the Middle East and North Africa, said the world’s focus on more
than two years of war in Gaza had drawn attention away from the West
Bank, but that changes taking place now could have arguably wider
consequences for Palestinians’ future aspirations.
Hiltermann, who wrote the report, said Israeli officials, who exert
considerable control over many of the policies in question, did not
agree to be interviewed. But he noted disagreements within
Netanyahu’s government, with settler leaders and security officials
often clashing on how to manage the Palestinian economy.
“The security establishment doesn’t want the Palestinian Authority
or economy to collapse because they would have to assume the burden
of governing the territory in full after essentially destroying it,”
he said
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