Investment Opportunities in Gaza after the War

The Gaza Strip is currently being subjected to a genocidal war which began in October 2023 and which has led to massive loss of life, economic ruin, destruction of homes and infrastructure and depriving Gazans from vital services, food and medicines. This Israeli campaign of genocide against Gaza is a deliberate and highly focused attempt to turn Gaza into a place where life is impossible and is merely a continuation of Israel’s siege of Gaza which has turned it into a large prison. In tandem with this siege Israel waged repeated and highly destructive wars from none of whose effects was Gaza able to recover fully despite partial reconstruction projects undertaken in the wake of some of these wars. This has resulted in a decline in the quality of life in Gaza and a contraction in various economic and social indicators.

At this current moment, top priority is for this genocidal war against the Palestinians in Gaza to stop and for basic humanitarian needs to be met. It is, we realize, too early to speak about priorities of investment in the Gaza Strip after the war. However, the calls being made for reconstruction by various parties, including some Palestinian circles, justify offering some general observations to do with investment priorities after the war, a war to which there is as yet no end in sight. The end result on the battlefield will doubtless have a major impact on the answer to this question once the guns have fallen silent.

The Gaza Strip on the eve of Israel’s onslaught: high population density, besieged resources, and a collapsing economy

According to figures published by the Palestinian Central Bureau of Statistics, 2.3 million Palestinians live in Gaza, 47% of whom are below the age of 18.[1] The Gaza Strip spreads over 365 sq kilometers, which means that population density is in excess of 6000 per sq kilometer.

The Gaza Strip stretches for a distance of 41 kilometers along the Mediterranean coast but is forbidden any direct communication with the outside world. Gaza’s fishermen operate according to Israel’s changeable whims. Israel did not abide by the fishing area designated in the Oslo Accords, and all fishing is very often forbidden for “security reasons.” In the waters off Gaza two gas fields (Gaza Marine 1 and 2)

were discovered some 25 years ago,[2] and negotiations are taking place among various parties regarding exploitation of this gas, to the exclusion of the people of Gaza. Agricultural holdings occupy an area of 94,000 dunums.[3]

Statistical reports indicate a decline in economic performance in the Gaza Strip since the year 2000 after having achieved some success in the period 1994-1999, a result of the foreign aid which flowed into the Palestinian Authority during that period. The period following the year 2006 witnessed steady decline in economic performance in Gaza and the gap grew between Gaza’s economy and that of the West Bank. On the eve of the current Israeli genocidal war on Gaza, Gazan economy was effectively paralyzed as a result of the siege and Israel’s repeated military assaults which cost that economy a loss of at least 16 billion USD in the period 2006 to 2018.[4]

In 2022, GDP in Gaza was about 2.7 billion USD with a per capita share of this amounting to 1256.8 USD, a total amounting to only 28% of this indicator in the West Bank. The basic component in Gaza’s GDP is the services sector.[5]

Table 1

GDP and the contribution of various economic sectors to it according to fixed prices in 2022

Source: Palestinian Central Bureau of Statistics, Performance of Palestinian economy, Ramallah (2023).

The Gaza Strip recorded an unemployment rate unprecedent anywhere in the world, reaching nearly 45 % over the past decade. Worker distribution by economic activity is set forth in Table 2. Earlier statistics reveal the degree of paralysis suffered by Gaza’s economy on the eve of the current war.

Table 2

Worker distribution by economic activity, 2022

Source: Palestinian Central Bureau of Statistics, Performance of Palestinian economy, Ramallah (2023).

Israel’s policy of isolating the Gaza Strip from the rest of the world and from the West Bank, and its systematic destruction of livelihoods in it has led to the collapse of the economy and to a situation which makes it easier for the Zionists to drive out the Palestinians in the current war.

Israel’s current war on the Gaza Strip: collective genocide

The tables above show that Gaza’s economy was on the brink of collapse on the eve of the ongoing Israeli onslaught, which has led to total destruction of all that makes life possible in Gaza, in an attempt to turn it into an unlivable zone. This war has paralyzed economic life and public and private institutions, causing cessation of service due to the massive destruction by Israel of infrastructure and of the various services and economic sectors and their buildings, with Israel prohibiting or else controlling the flow of aid, fuel or medicine.

Figures indicate that 26,083 Palestinian have thus far been martyred, approximately half of whom (47.3 %) are children, with around 64,487 wounded, in addition to around 7 thousand missing up till January 27, 2024.[6] For a society the size of Gaza, these are catastrophic figures affecting some 5% of the total population. The war has also caused the displacement of 1.9 million Palestinians who live in 154 places of refuge belonging to UNRWA or in its vicinity,[7] and a high proportion of whom still live in northern Gaza where delivery of aid to them, even registering them by UNRWA, is very limited or non-existent.

The Israeli army has during this war totally destroyed 70,000 residential units and partially damaged 290,000 others, constituting more than three quarters of Gazan residences. That army further destroyed some 140 government centers, totally demolished 99 schools and universities, and partially destroyed 295 others, in addition to the destruction of 161 mosques and 3 churches. Infrastructure in the Gaza Strip was pulverized and made unserviceable, e.g. roads, drainage canals, waterpipes, wells, seawater purification plants, electricity, alternative electricity sources such as solar panels and communications. According to preliminary figures, some 87% of water and drainage facilities “were destroyed or damaged” in northern Gaza.[8]

Likewise, most agricultural land and the vast majority of economic installations thereat numbering some 65,000 have been destroyed and all activity has ceased due to partial or total destruction or because of the continued Zionist onslaught,[9] in addition to suspending all workers in Gaza except for workers in the health and humanitarian services sectors.

This genocidal war has not ended yet and the losses and destruction are ongoing. This makes the total reconstruction of the crippled Gaza Strip the principal issue in the post war period.

What is to come after the war?

The Zionists and their allies have, since the early days of Israel’s onslaught, raised the question of what is to happen in Gaza, an onslaught which is taking place within the larger framework of the war being waged on the Palestinian people and their resistance. Four months into the war, steadfast Palestinian resistance which has inflicted massive losses among the invading army, and deep changes in international societies such as the ICJ holding Israel responsible for genocide, have all been factors that no longer permit Israel and its allies to have the last word on what is to happen in Gaza after the war. Options is this regard remain open. As for investment in the Gaza Strip after the war, the investment environment is decisive in attracting investment to a particular region, and this paper will not discuss the indicators of the investment environment in the Gaza Strip following Israel’s genocidal war. That war has reduced the chances of sustainable life in that region to their barest minimum, given Israel’s pursuit of a scheme to evict the Palestinians from the Gaza Strip. On the other hand, reconstruction and investment opportunities will depend upon the post-war political settlement in Gaza resulting from this war. Diverse possible outcomes remain depending upon the war’s eventual end on the ground and upon the effect of the regional and international scene, e.g:

• The extent to which Israel controls or influences reconstruction. Reconstruction projects undertaken in Gaza after Israel’s repeated wars upon it in the period between 2008 and 2022 were all undertaken under Israeli control, leading to increased dependence on Israel by Gaza’s economy and its compliance with Israel’s security and political priorities. Talk of reconstruction schemes is still muted and bashful as long as Gaza remains isolated from the outside world and the West Bank, and as long as Israel continues to control the quality and quantity of items allowed into Gaza and its imposition of complex and timewasting measures of control, all of which was allowed to take place due to complicity by international bodies when these measures were imposed.

• The extent to which Palestinian resistance can intervene in decision making as to the current and future fate of Gaza. This would leave its imprint on the priorities of reconstruction and on linking reconstruction projects to a political and economic settlement and vision in direct conflict with Zionist colonialist projects. Earlier reconstruction projects, including ones prepared by the Palestinian Authority, were closer to a response to immediate needs, namely, rebuilding what the Israeli war machine had destroyed and supplying food. Nonetheless, that response was limited and had very little effect, resulting in reinforcing the state of economic collapse in the Gaza Strip.

• The extent to which Gaza is open to the outside world, the economic merger between Gaza and the West Bank and what this requires by way of developing an infrastructure that allows this, such as a port, an airport and communication facilities.

• The parties tasked with executing the reconstruction projects, the leeway granted to the companies belonging to the funding parties, the private sector as contrasted with foreign companies, and whether any party has the right to determine partnership in execution. In such a case, the right to participate in reconstruction and investment might be a sort of reward granted to certain parties for political reasons, in the context of using the carrot and the stick with Palestinian investors and perhaps foreign ones as well.

• Just as the decision to rebuild is a political decision with regard to its priorities and aims in the short and long terms, so too is the decision to invest (private investment) and rests upon diverse priorities among investors and diverse visions of Gaza’s future and economy. The decision to invest differs between a gambling investor intent on making maximum profit and one whose political and ideological motives form an important part in taking the decision to invest.

• Investment opportunities might also be affected by decisions such as schemes of compensation for losses by investors and granting them priority in reinvestment or in expanding their investments, and also by whether these investors who lost their investments and perhaps their resources are allowed to compete with new investors.

In sum, investment opportunities within the framework of reconstruction projects in Gaza are subject to changing political conditions which have not yet been finally settled and which shall affect the nature and extent of these projects and their relationship to a project of liberation. UNCTAD had previously submitted a number of recommendations to “place Gaza on the road leading to renewed development.” This was expressed as “lifting all restrictions and closures and all obstacles to entry and movement; reintegrating Gaza with the West Bank and the rest of the world; giving free rein to Gaza’s economic potential by building a port and airport; launching water and energy schemes to completely restore supplies of water and electricity and making use of oil and natural gas resources opposite the coasts of Gaza.”[10] These stipulations were made before the deeper impoverishment of Gaza and before the total and deliberate destruction that has taken place during the genocidal war waged by Israel since October 7, 2023. To achieve this requires that Israel’s role must end or at least be weakened immediately or in the short term. This is the responsibility of the economic decision maker and the investor in Gaza and requires them to prioritize in their investment decisions the lessening of dependence on Israel and its ability to control Gaza’s economy.

As long as economic activity in the Gaza Strip is included, in the short and medium terms, under the heading of reconstruction, the focus will rest on rehabilitating the economy of the Strip which means removing the rubble and providing temporary shelters  to people whose houses were destroyed prior to rebuilding them;  repairing partially destroyed homes; rehabilitating infrastructure such as drainage, water, roads and so forth; rebuilding and rehabilitating schools, universities, hospitals, clinics, houses of worship, and governmental institutions; reviving the communications sector and providing urgently needed food, medical care and so forth to the population at large.

It also means that the leading sector in the medium term will be the building and construction sector and the services and industrial sectors connected to it, and that this will be the nerve center of economic activity in the medium term. This will require developing the relevant industries, developing the transport sector as also import activities such as import companies bringing in the needed materials not available in Gaza itself, together with the machinery to be used in this regard. It may be useful to pay close attention to the development of projects that lessen dependence on Israel’s economy such as alternative energy schemes.

Next comes the rebuilding of the fishing and agriculture sectors. This begins by restoring the infrastructure of the fishing sector such as a port, fishing boats and tackle, storage facilities and so forth. Likewise, the soil must be rehabilitated and cleansed of the effect of tens of tons of various bombs and missiles which destroyed Gaza’s soil and repairing damaged agricultural installations. This in turn is connected to diverse services activities such as providing the necessary equipment and expertise in these fields. All this is further connected to fish food industries and local agricultural produce.

As for the informatics sector, and despite the fact that its contribution to employment and to GDP in Gaza before the war was slight, it is nevertheless a promising sector in the short and medium terms, requiring the development of the infrastructure appropriate for it. It is a sector needed by other sectors and provides opportunities for outside employment.

Opportunities for investment in various economic sectors

In sum, schemes of reconstruction might be nearer to black comedy while Israel continues to destroy Gaza and the international community, including Arabs, shall “fund reconstruction” as stipulated by Israel, with guaranteed Israeli profits from that funding. Such “reconstruction projects” will partially cover Palestinian losses, increase dependence on Israel, and enhance Israeli control to the point where Israel shall determine which companies will undertake implementing the various schemes, how these are supervised, and how the international community, including the Arabs, shall deal with them.[11]

• Investment opportunities will depend upon the answers to the following questions:

• Who will undertake reconstruction, who will decide the substance of reconstruction and its horizons and who will take part in carrying it out?

• The political situation in the Gaza Strip, the party that runs it and its priorities.

• Who will fund reconstruction.

• Whether such reconstruction includes restitution of loss for investors or granting them priority in investment in sectors they worked in.

[1] "د. علا عوض، رئيسة الإحصاء الفلسطيني: تستعرض أوضاع الفلسطينيين في نهاية عام 2023". رام الله: الجهاز المركزي للإحصاء الفلسطيني، 31/12/2023.

[2] "إسرائيل تريد غزة فارغة من سكانها لتسطو على غاز شواطئها"، "الجزيرة"، 25/12/2023.

[3] "التعداد الزراعي 2021: النتائج النهائية"، رام الله: الجهاز المركزي للإحصاء الفلسطيني، 2023، ص 164.

[4] "ملخص اقتصادي حول الحرب على غزة، العدد 3 - 29/10/2023: صدمات جوهرية وضعت اقتصاد غزة على حافة الانهيار عشية الحرب"، رام الله: معهد أبحاث السياسات الاقتصادية الفلسطيني (ماس)، 2023.

[5] "أداء الاقتصاد الفلسطيني 2022"، رام الله: الجهاز المركزي للإحصاء الفلسطيني، 2023.

[6] الجهاز المركزي للإحصاء الفلسطيني.

هذه الأرقام في تصاعد مستمر مع استمرار حرب الإبادة الصهيونية على الشعب الفلسطيني في قطاع غزة.

[7] "تقرير الأونروا رقم 69 حول الوضع في قطاع غزة والضفة الغربية، التي تشمل القدس الشرقية"، وكالة الأمم المتحدة لإغاثة وتشغيل لاجئي فلسطين في الشرق الأدنى (الأونروا)، 25/1/2024.

[8] "الأعمال القتالية في قطاع غزة وإسرائيل | تقرير موجز بالمستجدات رقم 102"، مكتب الأمم المتحدة لتنسيق الشؤون الإنسانية (OCHA)، 2024.

بحسب تقرير لـ "الجزيرة"، فإن الحرب بحلول 12 كانون الأول/ديسمبر، كانت قد دمرت 77% من المرافق الصحية، و72% من الخدمات البلدية، مثل الحدائق والمحاكم والمكتبات، و68% من بنية الاتصالات، و76% من المواقع التجارية، بما في ذلك تدمير شبه كامل للمنطقة الصناعية في الشمال. انظر: "تقرير: دمار غزة يماثل أكثر الحملات تدميراً بالتاريخ"، "الجزيرة"، 30/12/2023.

[9] "الإحصاء الفلسطيني يصدر بياناً صحفياً حول خسائر القطاع الخاص في فلسطين بسبب عدوان الاحتلال الإسرائيلي على قطاع غزة"، الجهاز المركزي للإحصاء الفلسطيني، 27/12/2023.

[10] "التكاليف الاقتصادية للاحتلال الإسرائيلي على الشعب الفلسطيني: إفقار غزة تحت الحصار"، مؤسسة الأمم المتحدة للتجارة والتنمية (الأونكتاد)، 2020. ص Viii.

[11] مثل آلية الأمم المتحدة "سيري" (إدخال الحديد والأسمنت ومواد الإعمار)، التي جرى بلورتها في أعقاب حرب إسرائيل على غزة عام 2014، وصممت هذه الآلية لفرض رقابة مشددة على مواد الإعمار ضمن برنامج إعادة الإعمار، لضمان وصولها إلى مستحقيها (المدمرة منازلهم)، وقد أدت هذه الآلية الدولية إلى تعقيد العملية، وزيادة التكاليف، وإبطاء الإعمار، وانتشار السوق السوداء.

"مأزق إعادة الإعمار في قطاع غزة: جلسة طاولة مستديرة رقم 1"، معهد أبحاث السياسات الاقتصادية الفلسطيني (ماس)، 2015.