A new report from the International Crisis Group states that the economy in the occupied West Bank is nearing collapse due to Israeli restrictions on movement, revenue, and land. These measures are crippling businesses, households, and the Palestinian Authority, fueling instability and hindering future Palestinian aspirations.
The economic collapse of the West Bank could lead to widespread instability, increased violence, and diminished prospects for a future Palestinian state, impacting regional security and international relations.
The economy in the occupied West Bank is facing a severe crisis, teetering toward collapse due to a web of Israeli restrictions, according to a new report from the International Crisis Group. These measures, which include limiting movement, withholding revenue, and taking land, are crippling Palestinian businesses, households, and the internationally backed Palestinian Authority.
The report, based on interviews with Palestinian business leaders, mayors, and government officials, suggests that Israeli policies aim to extend control and prevent the emergence of a Palestinian state. Decades of occupation have already hobbled the Palestinian economy through checkpoints, military gates, and restrictions on land and trade, leading to high unemployment and economic contraction, particularly since the start of the Israel-Hamas war.
Following the Oct. 7 attacks, Israel revoked work permits for nearly 200,000 Palestinians, a move that deprived the Palestinian economy of approximately $400 million per month, representing almost a quarter of its overall economic output. Private companies have seen a 50% decline in business, reflecting tightened controls and disrupted supply chains.
The Palestinian Authority, the largest employer and service provider, is at the heart of the crisis, struggling to pay public sector workers and maintain infrastructure due to borrowed funds. Much of the PA's revenue comes from taxes collected on goods entering through Israeli ports, but Israel has withheld billions in owed tax revenue, with no transfers made since May 2025.
Joost Hiltermann, the report's author, noted that while the world's focus has been on the Gaza war, the changes occurring in the West Bank could have significant consequences for Palestinian future aspirations. He also highlighted disagreements within the Israeli government regarding the management of the Palestinian economy, with security officials concerned about the burden of governing the territory if the Palestinian Authority collapses.