Chokehold: Countering Israel’s Grip on the West Bank Economy

International Crisis Group

The Israeli government has imposed severe economic penalties on the West Bank since October 2023, choking off the PA's revenue streams and restricting movement. This aggressive policy has pushed the Palestinian financial system to the brink of insolvency and caused a gross domestic product contraction of over 20 per cent, threatening total economic collapse.

Decades of structural dependency under the 1994 Paris Protocol left the Palestinian economy highly vulnerable to such unilateral measures, as Israel retains absolute control over borders, trade, and customs collection. Withholding clearance revenues and barring nearly 200,000 Palestinian workers from their jobs has driven unemployment above 30 per cent. While the United States has pressured Israeli banks to maintain vital correspondent links, broader international intervention is required to restore cash flows and prevent widespread instability. Ultimately, long-term recovery demands deep structural reforms by the PA alongside international efforts to reduce its systemic economic reliance on Israel.

Comment

Economic warfare often serves as a precursor to annexation. Financial strangulation reduces the administrative capacity of local governance structures. This vacuum inevitably invites security degradation. External powers must therefore view fiscal stability as a core component of regional deterrence.

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