← History As It Happens
History As It Happens
The Palestinians' Economic Catastrophe
00:47:48
When tracing the origins of today's war and devastation in Gaza, it may be easy to overlook economic inequality in favor of political or ideological explanations. In this episode, political analyst and public opinion expert Dahlia Scheindlin says a...
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- [00:01]
Martin DeCaro
I say this every election cycle and I'll say it again. The 2024 political field was intense. So don't get left behind in 2025. If you're running for office, the first thing on your to do list should be securing your name on the web with the your name vote domain from GoDaddy.com you'll stand out and make your mark. Don't wait. Get yours today.
- [00:28]
Dalia Shenlin
History as it happens June 10, 2025 the Palestinians Economic catastrophe There was a.
- [00:35]
Anat Saragusti
Time when the traffic of ideas and commerce and pilgrims flowed uninterrupted among the cities of the Fertile Crescent in Spain and the Middle East. Muslims and Jews once worked together to write brilliant chapters in the history of literature and science. All this can come to pass again.
- [00:53]
Omer Bartov
World bank says the Palestinian economy could grow by 3.5 billion dol or 35% GDP. But the tantalizing prediction hinges on whether Israel will ease security restrictions in what is known as Area C. Since the.
- [01:08]
Martin DeCaro
Israeli blockade, goods sold here are expensive.
- [01:14]
Omer Bartov
This is the result of pent up.
- [01:16]
Dalia Shenlin
Frustration unleashed over the rising cost of living here. Only two of the four markets in.
- [01:21]
Omer Bartov
Gaza City are still running. And for just a few hours a day, Gaza's economy has been hit hard by the recent destruction of most of the smugglers tunnels into to Egypt's Sinai Peninsula. Now the tunnels provided an economic lifeline to Gaza, which has spent the last seven years under an Israeli blockade.
- [01:39]
Dalia Shenlin
The severe economic inequality separating Israelis from Palestinians is somewhat overlooked as a cause of nearly 80 years of conflict, even though we know such poverty can lead to violence. There was a time when Israelis believed peace was necessary for Israel's economy to thrive and that Palestinian growth could substitute for a Palestinian state. A generation later, Gaza is rubble. How we got to this point Next, as we report history as it happens, I'm Martin DeCaro.
- [02:08]
Omer Bartov
Palestinians were put under Israeli occupation in 1967. And in fact we should also say that the Palestinian economy did grow under Israeli occupation. That is simply the reality of how Israel managed the territories. And you can see even GDP per capita grew over time fairly steadily. But the gaps that we talked about did not go away because Israel's GDP grew significantly. Now the main reason why there was so much poverty. Poverty is one indicator, right? It's just one of the indicators. But the reason why there's such a smaller economy among the Palestinian territories is frankly because they're not a free society.
- [02:46]
Anat Saragusti
Today, the eyes of the world are on you.
- [02:51]
Dalia Shenlin
In late 1998, President Bill Clinton made an eight hour stop in a place Few presidents have ever visited the Gaza Strip. He spoke to the Palestine National Council, the first American president, he said, to address the Palestinian people in a city governed by Palestinians. And he acknowledged they had a lot to be disappointed with.
- [03:11]
Anat Saragusti
Five years after Oslo, the benefits of this process remain remote, that for too many Palestinians, lives are hard, jobs are scarce, prospects are uncertain, and personal grief is great. I know that tremendous pain remains as a result of losses suffered from violence, the separation of families, the restrictions on the movement of people and goods. I understand your concerns about settlement activity, land confiscation and home demolitions.
- [03:49]
Dalia Shenlin
As the New York Times reported that day, some Palestinians seized on the visit as evidence they were approaching statehood and if it had not already arrived. As he fingered his prayer beads while waiting at the airport for Mr. Clinton, Nacha Mustafa, the mayor of Hebron, said, this is a very important day in Palestinian history that the president of the United States comes to Palestine. We consider it a recognition of the Palestinian state.
- [04:14]
Anat Saragusti
I thank you. I thank you, Mr. Chairman, for your leadership for peace and your perseverance, for enduring all the criticism from all sides, for being willing to change course and for being strong enough to stay with what is right. You have done a remarkable thing for your people.
- [04:39]
Dalia Shenlin
27 years later, not only is there no Palestinian state, there is no more Gaza. It has been destroyed by Israel and the Palestinian economy, once seen as a necessary ingredient for any political settlement, and is in ruins even before the current war. The political scientist and public opinion expert Dalia Shenlon, writing for the Century foundation, says Israel's GDP per capita was 14 times that of the West bank in Gaza, some $54,900 at current prices, compared to 3,800. This gap has held steady for decades, she says, since at least the time of the Oslo Accords.
- [05:17]
Nacha Mustafa
Relive in an ancient land, and as our land is small, so must our reconciliation be great.
- [05:28]
Dalia Shenlin
Dalia's report for the Century foundation is titled the Economic foundation for Peace in Israel and Palestine. It argues that the conflict is, at least as much as anything else, a story of inequality. I'll share a link to her report in my weekly newsletter. You can sign up@historyasithappens.com or go to Substack and search for history as it happens. So at the top of the podcast, I said, the economic angles here are somewhat overlooked as a cause of all the violence. We often focus on the political and the ideological, the ideas that inspire violence. But did you know before the war, the unemployment rate in Gaza was 45%? Now, policymakers going back to the Oslo period did not ignore the importance of economic growth, but ideas and projects designed to help Palestinians achieve a better standard of living ran into myriad problems across the decades. And we're going to talk about the economic origins of today's war in this episode. Dalia Shenlin is a political analyst and a public opinion researcher who has advised on nine electoral campaigns in Israel and worked in 15 other countries over 25 years. She is a columnist at Haaretz English and a policy fellow at Century International. Her writings appeared in the New York Times, the Guardian, Foreign Affairs, Foreign Policy, and the New York Review of Books, among other major publications. And she is the author of the Crooked Timber of Democracy in Promise Unfulfilled, which was listed on Foreign affairs best books of 2024.
- [07:01]
Omer Bartov
Our conversation next History is defined by.
- [07:04]
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- [07:32]
Dalia Shenlin
Dahlia Shenlin, welcome back to the show.
- [07:35]
Omer Bartov
Thank you for having me on again, Martin.
- [07:36]
Dalia Shenlin
So we're going to talk about your excellent report that you wrote for the Century foundation where you are a fellow about the economics of the Israeli Palestinian conflict. But I do want to ask you about a couple of matters that caught my eye in the news. Reading the newspaper where you write columns. Haaretz There was an op ed written by Anat Saragusti and I've seen pieces similar to hers attitudes toward what is going on in Gaza. She wrote that the Israeli media isn't really covering the suffering of the Palestinians there. So therefore most Israelis are either ignorant or uninterested.
- [08:14]
Omer Bartov
There are so many different ways to parse this, and I think it's something we've noticed throughout from the very beginning of this war, that the Israeli media, particularly television media, but in general is not covering the visuals of human suffering in Gaza. I think that's the best way to characterize it. It's not that Israelis are unable to see this kind of material because every Israeli has a cable package or satellite package with access to all of the international news media. Every Israeli has a cell phone and the vast majority of them have smartphones. Everybody has social media if they want it, and all of that material is available. And so this creates a dilemma for analysts trying to figure out if Israelis are simply being kept in the dark and cannot know what's going on, which I just can't believe that because I have access to everything. I'm Israeli, and I can see it if I want to. The fact that they would have to make that extra effort going beyond their normal and traditional news sources. And of course, we know that social media, which everybody has, can reinforce people's silos, famously, and so that if they don't make that effort, they don't actually have to see it, because it's not put in front of their faces on Israeli television media, to the extent that that is a major source of information still for a lot of people or not, and not on the front pages of the major Israeli print dailies. What we have is a situation of a combination, of course, but mostly that Israelis are completely, completely consumed with their own suffering during the war. To whatever extent the international audience likes or even understands it. Israelis are still living October 7, largely reinforced by the fact that the hostages are not all back. There are still 58 people who are being held hostage, some of them living, some of them dead. We estimate between 20 and 25 still alive. And it's impossible to overstate the importance of this for Israelis, which keeps them in the mindset of continuing to be the suffering victims of October 7th. And that is the reality. That's what consumes people. That's what people are obsessed about. The course of the war is, of course, important. We know that surveys show us that a majority of Israelis, a strong majority, would prefer to end the war at this point for the sake of getting the hostages back. But that doesn't mean it's because they're focusing on the humanitarian situation in Gaza basically removes any motivation they would have to seek out the information that isn't actually placed in front of them. Now it's changing some somewhat. In recent months, we have seen more coverage of the humanitarian situation. Little by little. We've certainly had more discussion about what the nature of the humanitarian crisis is in Gaza. And of course, Israelis are defending against charges of having created a famine. So there has been coverage of that issue. Sometimes it's posed as a question, right? I think where much of the world is convinced that there is starvation and it's a level of famine or impending famine, many Israelis doubt that. So they're debating the issue, but at least they're aware that it's part of the problem. Increasing awareness is there, but it's usually seen as a political issue or an issue of Israel's image or an issue of whether Israel is trying to has to break down some of the international accusations. So that's also part of it. And finally, to the extent that there is particularly visual coverage of what's going on in Gaza, there is, it usually comes from soldiers, body cams. And so you're not really seeing the human side of it. What happens with people in Gaza, we see destroyed neighborhoods and destroyed buildings, but not so much those people who are desperate and suffering.
- [11:27]
Dalia Shenlin
I know that journalists aren't allowed inside Gaza, but as you say, social media. I mean, I see images on my Twitter feed all the time of horrible violence and children dead, parents wailing over the corpses of their family. That's all there for people to see. Now you have to be careful when you see any photo on Twitter, who knows where it's from or if it's an old one or a new one. Right. There's a lot of manipulation, but still, I mean, I just can't see how anyone could not know what's going on there. If they're interested in finding out. That's again, that's the key.
- [11:57]
Omer Bartov
I agree with you. And I think the point I want to get across is that on the one hand, I try to understand what it is that makes Israelis consume news or not consume the reality of what's going on there. I don't like to portray it as just a matter of images. Right. Israelis will often talk about the images the world is seeing, the pictures the world is seeing as opposed to what we see. But it's not a matter of pictures and images. It's a matter of the reality that's going on in Gaza. So on the one hand, I try to understand what it is that drives Israeli behavior on this, but I also think that it is frankly at this point inexcusable because all the information is there and accessible. And no matter how much Israelis have suffered, it is at least their responsibility to know what is being done in this war. Yeah.
- [12:38]
Dalia Shenlin
It's not just what Hamas says or what the Hamas run public health ministry says. It's how it's often phrased in newspapers. There are international observers, a groups, NGOs, people who are with witnessing this. One last item about public attitudes and then we'll move on to your report about economics. Another report in Haaretz, a recent survey of Israeli Jews reveals a growing comfort with the idea of forcibly expelling Palestinians both from Gaza and from within Israel's borders. The poll also found that a significant minority supports the mass Killing of civilians in enemy cities, captured by the Israeli army. Is that right?
- [13:16]
Omer Bartov
First of all, I should say this is not my survey. This is a survey done by an academic at Penn State University, Tamir Sorek. And I've been getting a lot of inquiries about this survey. And I think that it's, you know, people should read the whole survey and, you know, he will be publishing, I think, more of the findings eventually. The second question that you mentioned was not so much phrased in terms of should Israel kill civilians? It was intended to test a kind of, I guess you would call it a doctrine, but a kind of biblical analogy in which the Israelites. Yeah, who. An analogy, exactly. Of having completely wiped out the enemy city, everybody in it. Do you agree or disagree with this approach? Now, the data are very, very severe. And I think what most people latched onto, partly because it was in the headline, was the 82% who said they would support forcible expulsion of people from Gaza. And this generated just a wave of shock among readers from the left and from the right as well. And I think in particular it was people on the left who were devastated to find out that the reality is this bad. It raised a lot of questions in a way, I think that people were so desperate to try to see the reality as maybe not as bad as the survey showed. There were a lot of questions about, or at least I got a lot of questions about whether the survey was credible and whether the methodology seemed sound. And so having, you know, reached out to Professor Tamir Sorek, who is well respected and shared his data, I think that there is very little that we can say is problematic about the methodology on some level that would undermine the findings themselves. I think we have to take the findings at face value. And there are certainly choices that a public opinion researcher makes. I'm speaking as a public opinion researcher myself, of course, that influence the precise results that you're going to get. You have to make decisions about your sample. You have to think about how to make up for people who may be underrepresented in any given randomized sample. You need to think about how to structure your questions, whether you give the response of I don't know and let people choose that if they really don't want to take a position. In this case, Professor Sorek's questions did not involve a don't know response. So you may have had people who are not so committed but were forced to choose one of the responses, you know, support or oppose these very, very severe attitudes. And, you know, there was criticism and discussion about all of those things. But those are all legitimate choices. There are reasons to, to structure a question like that when you want to find out where people generally fall out. And even if you were to say, well, any of these choices can result in a bias one way or the other of a few points, right? Five points, even 10 points, when you have 82% who supported the expulsion of Palestinians from Gaza and some of the other very severe responses we saw in that survey, you can't write it off as a matter of a slight bias, which could change things by five or even 10 points, which is, of course, a guess. But it also, those findings basically concur pretty closely with other surveys, at least in the broad trends. And I mean, surveys in the media testing whether people support the Trump plan, which included expulsion from Gaza. In other words, the questions were phrased that way. And we see similar, very strong majorities, even if not the exact same majority. And so I think, you know, ultimately, people have to cope with the reality that Israel is in a very, very belligerent frame of mind right now, which is what happens during wartime. People become more belligerent and less humane.
- [16:23]
Dalia Shenlin
The historian Omer Bartov has shared these attitudes with me that he's observed on his multiple trips back to Israel. He now teaches at Brown University. 82% was the headline number. I neglected to mention that 82% of Israeli Jews are okay with the idea of forcibly expelling Palestinians. One last remark here. It's often pointed out accurately that the hardliners in Hamas who refuse to recognize Israel and advocate for its physical destruction, not just the end of a Jewish state where you now have a binational state with Israelis and Palestinians sharing equal rights, talking about people who advocate for the physical destruction of Israel. That's often said, you know, that's Hamas's position. How can you negotiate with them? Well, if this poll is accurate, it sounds like Israeli society has similar attitudes toward Palestinians. I don't know.
- [17:12]
Omer Bartov
I think it's even. Yeah, I think I wouldn't even. I wouldn't even limit it to Hamas. I think we have to recognize, for example, what Israelis see in Palestinian public opinion, which is that the first survey conducted by the Palestinian center for Policy and survey research after October 7, which was conducted, I believe, in November 2023 and maybe published in, or maybe it was published in December, found that 72% of Palestinians in general thought that Hamas was correct to carry out what the survey called its offensive on October 7th. That number went all around the country and was repeatedly cited in Israel as evidence that the vast majority, 72% of Palestinians, supported this attack. That was basically a matter of atrocities targeting civilians. So they see that as proof that Palestinians have an eliminationist approach. And I can cite another poll, which is the joint survey that I work on for the Israeli side of the research, together with Dr. Khalil Shikaki, who is the head of the Palestinian center for Policy and Survey Research. And we've conducted joint surveys for years. We asked a question about what you think the other side's intentions have been on October 7th and during this war. And each side believes the other is intending to commit genocide by over 60% with very little gap. It's about 66% among Israelis who believed that Hamas was trying to commit genocide against them on October 7, and just over 60%, about 61% of Palestinians who believe that about Israelis during the war. So these perceptions are very mutual, frankly. What it comes down to is leadership. And that's not an excuse excuse or a reductive approach. But ultimately, as we say here, it's a cliche, but it's true. You make peace with your enemies, not with your friends. If you were friends, you wouldn't need to make peace. Leaders who believe that there is a political framework to end the occupation and end this conflict will have to get there. And once they agree on how to do it, they will have to convince their people to go along with it. And they will never convince 100%. And that's normal. Conflicts don't end because 100% of people change their mind. Conflicts don't even end when a majority of people change their mind. They end when a majority of people tolerate their leaders coming to a political framework for containing and reducing and minimizing conflict, as opposed to always resorting to further cycles of violence. And that is what is severely lacking in this region.
- [19:24]
Dalia Shenlin
Your remark there reminds me of what Rabin said on the day of the Oslo Accord signing ceremony at the White House, and this is now over 30 years ago, where he said about how difficult it was to do this, even though it was necessary at that time. And the first intifada convinced Rabin that something had to change. But even so, he said, after all the bloodshed, all the violence, all the Israelis who have lost family members because of what the PLO had been doing for decades, this was not an easy.
- [19:52]
Nacha Mustafa
Day, this signing of the Israeli Palestinian Declaration of Principle here today, it's not so easy, neither for myself as a soldier in Israel's war, nor for the people of Israel, not for the Jewish people in the diaspora who are watching us now with great hope mixed with apprehension.
- [20:21]
Dalia Shenlin
So we'll talk about Oslo a little bit here. The economics of the Israeli Palestinian conflict. In your report for the Century foundation, you wrote this is in large part a story of haves and have nots. Economic inequality, economic misery really on the part of the Palestinians can help drive conflict, and then conflict makes the economic situation worse. You wrote that in 2022. So this is before the outbreak of the war. In 2022, Israel's GDP per capita was 14 times that of the West bank in Gaza, $54,900, compared to $3,800, and that the gap, you say held steady for decades, since at least the time of the Oslo accord. So I know this is a big question, but just broadly speaking, why was there so much poverty in the Palestinian territories as of 2022?
- [21:13]
Omer Bartov
Let's see, without wanting to kind of open up an entire economic history and you know, I should say at the outset, I'm not an economist, but I don't think it takes one to understand something of these bigger trends. I mean, Palestinians were put under Israeli occupation in 1967. And in fact, we should also say that the Palestinian economy did grow under Israeli occupation, and that is simply the reality of how Israel managed the territories. It, and you can see even GDP per capita grew over time fairly steadily. But the gaps that we talked about did not go away because Israel's GDP grew significantly. Now, the main reason why there was so much poverty, poverty is one indicator, right? It's just one of the indicators. But the reason why there's such a smaller economy among Palestinian territories is frankly, because they're not a free society. Now, if they were a completely free and independent society, would their economy be as good as Israel's? That's impossible to know. It's a counterfactual. But the fact is that their economy has been heavily controlled over all of those years by Israel. And in the earliest years of the occupation, the policy that Israel undertook during those years was to both exploit the labor and resources of the areas that it had conquered, which helped the Israeli economy to grow, but also kept control, very tight control in every, you know, control in every way over Palestinian life, but also the economy, which essentially kept their economy maybe growing somewhat. Right, we know that, but much more slowly. And then I think, you know, again, without getting into that entire long term history, there was more opportunity in that time for Palestinian Palestinians. Before the first intifada, before the late 1980s, there was much more freedom of movement. Palestinian laborers worked in Israel at a large, you know, with large numbers. And that's part of what contributed to the growth, such as it was. This is not to suggest that things were good. Personally, I think that no population should be held under military occupation indefinitely. But that's part of the economic dynamic. After Israel and the Palestinians signed the Oslo Agreements, right, the Declaration of Princess Principles that was intended to open up negotiations to reach a final status solution. It's important to say that because the Oslo Agreements are often remembered as a peace agreement, they were not a peace agreement. They never actually named a final political status for the two sides. That would be called a two state solution, which is what we came to see it as later. And the Palestinians certainly hoped it would lead to a Palestinian state, and some Israelis maybe thought so too. But the declarations themselves were up a matter of principles for some sort of incremental autonomy on the Palestinian side that would be phased and conditional.
- [23:39]
Anat Saragusti
Today, the leadership of Israel and the Palestine Liberation Organization will sign a Declaration of Principles on Interim Palestinian Self government. It charts a course toward reconciliation between two peoples who have both known the bitterness of exile. Now both pledge to put old sorrows and antagonisms behind them and to work for a shared future shaped by the values of the Torah, the Koran and the Bible.
- [24:08]
Omer Bartov
So Palestinians would start out having a little more control over their civilian and security affairs in a sliver or portions. I shouldn't call it a sliver because it's not a contiguous area, but in certain heavily populated cities of the west bank which were known as Area A, and they make a about 18% of the west bank at that time, really, it began with Gaza and Jericho, but let's say 18% of the west bank is what we came to think about it after Israel withdrew from Gaza. So that was only a small portion. If things had gone well, there were supposed to be further Israeli redeployments from Area B, which is another roughly 20% of the west bank, and in Area C, which is about 60% of the West Bank, Israel maintained full military occupation control over military and civilian affairs. And that is a complicated explanation to try to convey how the Palestinian economic situation changed. Because between Areas A, B and C, which again are not like contiguous side by side strips of land, but are completely broken up into different strips and bubbles of territory all around the west bank and Gaza, Palestinians were suddenly not allowed to move freely in parts of that land, but they were allowed to move through other parts of it. So an Area A where they had more Control, they could move more freely. But those areas were not contiguous. In area C, they were severely restricted. And all of them were restricted between Gaza and the West Bank. And increasingly over the decades, but especially during the 1990s, when the Oslo phase was still active. Right. The agreements were still in place. There were still negotiations that were intended to advance a final status solution, negotiations that would continue and reach their peak in the year 2000, 2001. During all of that time, there was ongoing tension. Both sides were violating the agreements in different ways. Israel continued building settlements. Palestinian spoilers like Hamas were undertaking suicide bombings. And these led to Israeli further restrictions on movement in addition to the ones I just mentioned. And so every time there's a closure, you have essentially the suffocation of Palestinian labor flow, industry, and what we saw was a decline in the standard of living and a rise in unemployment.
- [26:12]
Anat Saragusti
I want the people of Israel to know that for many Palestinians, five years after Oslo, the benefits of this process remain remote. That for too many Palestinians, lives are hard, jobs are scarce, prospects are uncertain, and personal growth grief is great.
- [26:37]
Omer Bartov
You know, because you asked about the long term sources of poverty, I think we have to mention that there was a much more significant change also after 2005 and 2007. In 2005, Israel withdrew its forces and its settlements from inside Gaza, but maintained very significant control. And then when Hamas took over in 2007, Israel's policy was to establish a kind of closure or siege or whatever you want to call it, whereby Israel Rent retained very strict control over everything that went in and out of Gaza. All import, export, with very severe restrictions, particularly on imports, but also on exports. Israel controls all of the land crossings except for Rafah, which it coordinates with Egypt, all the sea ports and airspace and electromagnetic fields and population registries. So nobody can move, let alone establish a business and conduct any serious trade without Israel's control. And ultimately such severe restrictions that. That largely choked off economic life in Gaza too.
- [27:32]
Dalia Shenlin
Yeah, this has been called the land, air and sea blockade. So I'm glad you gave us this overview. We'll go back and peel away some of these individual layers. The Oslo years, and then what happened after that. But I do want to just return to what's happening now. After the October 7 attacks, you write here, the Israeli government immediately banned entry for the roughly 150,000 Palestinian laborers who worked legally in Israel with security vetted work permits. And then you said another thing that happened after October 7th. The Israeli government stopped transferring the clearance taxes designated for administration for Gaza, which it has collected for the Palestinian Authority since the Oslo years. You call this a 1,2 punch that cancel the income of the families who depend on these laborers and also slash tax revenue to the pa. What are clearance taxes?
- [28:24]
Omer Bartov
Yeah, well, this goes back to the Oslo Accords. I mean, one of the many agreements that were established during that period was called the Paris Protocol, and that essentially was trying to establish the economic relations between Israel and this new Palestinian Authority, which before that, Israel simply controlled the Palestinian economy. Actually, the Paris Protocol are essentially another form of Israeli control, even if they were nominally intended to begin a process of some more autonomy and some more control over of the Palestinian institution institutions over economic life. But effectively they retained Israel's kind of veto power over all ports of entry. And one of the things that was agreed was that Israel would be collecting taxes on imports and exports from everything to do with the Palestinian Authority. And so Israel collects those taxes and is supposed to transfer them from the to the Palestinian Authority, which is a major source of revenue for the Authority. But what happens is that allows Israel to use them as political leverage so that if Israel decides to punish the PA for any reason, it can say, well, we're going to withhold basically your own money. And in this case, Israel said, we're going to withhold them, you know, everything that was designated to PA activity in Gaza, we're going to just withhold all of this. And that was a serious, you know, undermining of the source of revenue for the pa, which, given what I, what you also mentioned the sudden and severe loss of jobs, although some of them have been allowed back since October 7, but very small numbers, that also meant a loss of revenue for the PA in terms of taxes as well as direct income loss. And in addition, everything to do with the war damaged Palestinian industries, including in the west bank, which means that you have up to another 40,000 people by economic analyses that have lost jobs in the west bank unrelated to those who've worked in Israel. And when I say worked in Israel, I should clarify, I also mean people who worked in Israeli settlements, because Palestinian laborers work in the settlements as well. So all of these caused such a financial crisis among the Palestinian Authority that it was then forced to slash the salaries of all civil servants, first by about 30% and then up to half in some cases. And that lasted for a long time. It's hard to know exactly which, you know, at what point some of those salaries have crept back. But all of this has created enormous damage within, you know, within west bank society as well, let alone the Gazan Economy has been, I think it's fair to say, you know, essentially wiped out. It's, as far as we know, it has contracted by about 85% during the war. Unemployment is up to about 80%. It was 45% in Gaza before the war. So we have to realize, like, you know, when we talk about how bad things are now in Gaza, I mean, it was starting from, can you imagine, 45, unemployment. We don't even know about numbers like that in most Western countries. So, you know, this was a very weak economy to begin with. But the damage of the war, I mean, everybody's number one knows that major cities in Gaza have been practically raised and almost 100% of the population is dislocated. So it's not a surprise when you see the numbers, you realize just how vast the task is ahead. And it does contribute to the, you know, what, again, forms the kind of backbone of my, of my report, which is that it simply makes already enormous economic disparities between the two sides vastly bigger, even if we don't have final data on exactly how, you know, the GDP per capita of each side. But it was, as you point out, 14 times higher among Palestinians before the war. So, you know, the gaps are huge. And I think that that has been underappreciated as one of the dynamics that.
- [31:36]
Dalia Shenlin
Exacerbate conflict to that point. The origins of Palestinian inequality, poverty, and what that does to a society, whether that drives violent conflict. We'll return just briefly to the 1980s, and I'll set up a question about the paradigms that you identify. The shifting paradigm, starting with the Oslo years. But I have William Cleveland's terrific book here in My Hands, A History of the Modern Middle East. He says, in addition to constructing new settlements, the Likud dominated governments of the 1980s sought to prepare the way for the annexation of the territories by adopting measures designed to isolate and subjugate the Palestinian inhabitants. The Israeli state stepped up its practice of confiscating plots of Arab land, and the Israeli security services deported an increasing number of suspected political activists. Administrative detention, a practice that permitted Palestinians to be arrested without a warrant and held for up to six months without being charged, was employed with greater frequency. The occupation intruded on the daily lives of Palestinians in countless ways. They had to carry identity cards and pay special taxes, had to overcome a maze of bureaucratic obstacles and security checks to obtain the most basic licenses and business permits. That's enough. I won't read the entire book here, but you get the picture.
- [32:56]
Omer Bartov
I do think it's just important to say that most of those practices were put into place from the beginning. The labor government was still in power for the first 10 years after the occupation. And I think we should not, you know, dismiss the fact that this is essentially what counts for a bipartisan policy, at least the occupation itself. Whether parties tried to end it is a different story.
- [33:12]
Dalia Shenlin
The Oslo Accords come about, and as you say in your, in your report, there was an acknowledgement that economics had to be part of this. It couldn't just be a political agreement or a political basis. There had to be some economic basis to this as well. But to act as a complement, it was not the main focus. It was to complement or supplement or buttress a political settlement. And as you say here, the process was built in part on a belief in Israeli business and economic circles that prosperity could never truly flourish without Israel's full global and regional economic integration and that peace would be necessary to achieve both. So while there was a lot of focus on improving Israel's economy, it didn't really go over to the Palestinian side, right?
- [33:58]
Omer Bartov
Well, I mean, I'm not sure if it's entirely fair to say that it didn't go over at all into the Palestinian side because there was, you know, again, a beginning of constructing institutions in the beginning of, you know, developing a more somewhat more autonomous economic life, which was simply severely constrained over time partly by the policies and partly by what should have been seen as a breach of policies or an anomaly. Right. If there were special closures, etc. But the fact is that it vastly, you know, there was vastly more investment in the Israeli economy at that time. And just the fact that there was a breakthrough for peace in the direction of peace, even if it didn't actually reach peace, created this paradoxical situation where Israel was able to, to enjoy the fruits of that breakthrough by being increasingly kind of embraced in global circles. And Israel was also going through a liberalization process that began in the mid to late 1980s that really advanced its own global integration, its own global outlook and its global trade, relaxing constraints on foreign currency and particularly developing a high tech industry. And so all of that is burgeoning through the 1990s. Foreign direct investment went way up during that time, partly as a result of this process. And yet, as I mentioned in the beginning, I think that there was a misunderstanding that the process itself had not ever reached a final status agreement and never would. And so ultimately, you had asked me before this interview, were they wrong? Were Israeli business people wrong to think that Israel needed to reach peace in order to fulfill its global potential. Yes, they were wrong, but they couldn't have known it. In other words, Israel was able to reap the benefits of global integration without reaching peace, because that's how the process turned out. And then Israel was flourishing without peace, advancing, in fact, severe deterioration on the Israeli Palestinian front in the 2000s.
- [35:34]
Dalia Shenlin
You wrote here in 1995, September of that year, the UN Committee on Trade and Development found that economic benefits to Palestinians had not materialized. Standards of living had fallen sharply, and the number of Palestinian laborers working in Israel, a vital source of income that accounted for for 25 to 30% of the Palestinian GDP, had fallen from 120,000 in 1988 to 30,000 in mid 1995. And then the paradigm begins to shift, to borrow the term you use in your report here on the Israeli side, especially after Netanyahu returns to power in 2009, the idea that, yes, we need to have peace for our economy to thrive and that there has to be some economic benefit for Palestinians in order for any type of political settlement, eventual political settlement, to hold. Netanyahu kind of flips this on its head. And you call this the economic peace fallacy. He says, instead of a political settlement, let's just help the Palestinians economically and that'll be enough.
- [36:35]
Omer Bartov
I distinguish between two related concepts in Netanyahu's thinking and policy making since he came back to power in 2009. At first, he talked about economic peace and seemed to portray it, even if it was a matter of lip service, as something that would help advance an eventual peace. You can see the logic in saying, if we strengthen the Palestinian economic situation, it will become a more stable and growing society with an incentive to maintain stability, which will help if we ever move ahead with the peace process, which at the time was not quite dead. Netanyahu himself oversaw negotiations on the Israel. You know, led Israeli negotiations together with the Palestinian side under American auspices during the Obama administration from 2013 to 2014. But those negotiations were never really that likely to succeed. Netanyahu has been deeply opposed to Palestinian state, really, for his entire political career. And once they were over, once the negotiations fell apart and they're never to be revived, really, over those middle years of the 2010s, of the decade of the 2010s, Netanyahu essentially shifted from saying, well, well, economic growth would be good for a future peace to saying economic growth can replace a future peace. He didn't necessarily say it in those words, but it became clear that he was doing everything possible to avoid ever going back to negotiations. He started to openly say that he was completely opposed to a Palestinian state very explicitly already from about 2015 onwards. This should come as no surprise to anybody. The idea that there could be economic growth became a way of saying it would be Palestinian economic growth is a replacement. They can simply live a better life and forget about all this foolish national, you know, national ambition to have independence. I think even at a later phase, there's another nuance which is that was able to move ahead, to forge ahead with these peace agreements with parts of the Arab. With four different countries in the Arab world, and particularly, I think, with the Gulf countries, which, you know, is a major boon to the, to Israel's global positioning, certainly Middle east positioning, and also Abraham Accords.
- [38:32]
Dalia Shenlin
The Abraham Accords.
- [38:33]
Omer Bartov
The Abraham Accords, exactly. With UAE and Bahrain and let's say Morocco and Sudan are sort of their partners as well. But it wasn't as meaningful from the regional positioning side of it. But still, Netanyahu, I think, really was able to look at those accords not only as a way of saying that economic development for Palestinians will somehow replace peace, but as a way of ensuring that he would never have to deal with the Palestinian situation because Israel's getting everything it wanted from the Middle East. In his perspective, if the Palestinians want to have some economic gain from it, maybe they can. But the point is we will never have to do it because we're getting everything we need. We don't have any incentive. We can even normalize relations in the Middle East. It became a means of sort of relegating the whole Palestinian question to something that would be in the dust. I don't know what you want to call it. Margins, dustbin of history. And it didn't work out very well.
- [39:21]
Dalia Shenlin
Needless to say, you anticipated my next question. I was going to ask about the second shift here. And as you say, we know we don't need any of this anymore. Palestinians might have a better economy. They might have a degree of autonomy. We really don't need this anymore because they have proven Rabin wrong. At one point in his career, Rabin concluded that the occupation was not sustainable. Although. Although, Dalia, as you point out in your report October 7th, kind of blew that whole notion to pieces.
- [39:50]
Omer Bartov
That's the ultimate point. That's why I was a little confused when you said, well, Rabin may have been wrong. I mean, I think even I, a long time, lifelong personal advocate for peace and as a political scientist who works on. I mean, I work on comparative issues and conflict in addition to public opinion Research. And it's clear to me that any unresolved conflict will always eventually escalate. So I argued for years that occupation and conflict were unsustainable if they were not resolved. And even I started to think at a certain point, maybe I was wrong because Israel has managed to continue the occupation and is expanding it and is moving towards annexation and had been for years and, and was able to normalize with countries in the Middle east. Exactly what Netanyahu had been arguing. And maybe he was right. Well then October 7th comes along and proves basically that history has repeated itself yet again. Like so many other conflicts, if they are unresolved, they will eventually escalate into severe violence of some form. And that is exactly what happened. I mean, there's no nice way to put this. You have to resolve conflicts or they will become bloody all over again. Not that resolving a conflict through political means removes all possibilities of violence. We all know that people are violent and all societies are violent. But political resolution can contain the violence, can reduce the incentives to violence, and within that, just to bring it back to the economic side of it. I've never seen the economic factor as the main reason for this conflict. However, it is a severely exacerbating factor. And I think it's not an accident that the worst violence came out of Gaza. Mean Israel had this policy that if you just separate Gaza and hermetically close it and control it with billions of dollars worth of fences and underground barriers and overhead radars and incredible levels of surveillance that you could by physical force simply keep it contained. But that same physical force that was used to hermetically contain and control Gaza meant that the economy was rotting. Right. 45% unemployment. We don't need any more data than that. There's a wealth of, of data about the terrible indicators, but people with no horizon, people who see. And of course that leads to a very highly stratified inequalities inside Gaza. Right. Within the populations. It all feeds fury. And that leaves people vulnerable. And all the comparative studies show this that leaves people vulnerable to recruitment by the most militant fundamentalist non state actors or any violent actor who uses a fundamentalist ideology, whether they're a state or not, has a much easier time recruiting people in that situation. Yeah, it was wrongful thinking to think that Israel could go on like this. And we have seen the limits of it. It's only tragic. I mean, tragedy makes it sound like it came from the heavens. These are human choices that led to the continuation of the situation until we reach this. Absolutely. You know, really depraved reality we're in now from October 7th onward. What happened on October 7th, what Hamas has done to Israeli civilians and its attack on Israeli sovereign territory and the war ever since, which has expanded into a war of revenge and destruction that is ruining Palestinian society to the point where it's Israel's being accused of genocide and there is a case to be made. So I think we have certainly seen the limits of the idea that you can just roll along with a continuing occupation, ever expanding, ever suppressing the people under your control.
- [42:56]
Dalia Shenlin
Who's going to rebuild Gaza? Where's that money?
- [42:59]
Omer Bartov
Nobody's going to rebuild Gaza if the war doesn't end. And once the war does end, I think it's a big mistake to think there's going to be serious investment in rebuilding Gaza, which the World bank estimates will cost $53 billion. If there's not a longer term horizon towards political end to the occupation and end of the conflict. And a framework for doing that is absolutely the number one condition that any party with any incentive to invest in rebuilding Gaza will need. Because why would people, you know, the cycle has just gone on so many times. Countries invest huge amounts of money in rebuilding physical infrastructure only to see, see it destroyed in the next war. That's one thing. And then of course, even if you have the physical reconstruction of Gaza, I think we've learned that you really can't construct a proper, functioning, sustainable economy with any hope of becoming a modern economy unless there is the political freedom to do it. This is not an abstract concept. If Palestinians don't have that level of autonomy of control over their, their movement and their borders and their greater opportunities, they will not be able to, to benefit from the considerable skill set that you have among the population and Palestinian, among Palestinians in general in Gaza, you have a pretty highly educated population. You have a good portion of skilled workers. Too often economic growth such as Israel has seen, it has been a matter of tinkering with the number of permits for laborers who come in to work in manual labor and blue collar jobs in Israel, which is maybe useful for those particular families. And I'm not saying that's not important. But ultimately you want a growing economy that can fit into modern industries and Palestinians have those human resources and educational capacity, especially if they, Israel hadn't destroyed all the universities. So all of that will have to be reconstructed. That requires a much more stable environment than a conflict, an unresolved conflict situation can ever allow. I can't see any indication, I haven't seen any evidence that There are countries, Arab states, Gulf states, Egypt, Jordan, or any Western countries who are able or willing to think about putting that kind of money to reconstruct physically, but also to help rebuild all that infrastructure like universities, that could really be the basis for a sound and growing economy. Unless there is a horizon for political freedom, which involves greater Palestinian independence. But it will also mean building a framework that reflects the actual real interdependence of these two economies. Right. Ultimately, what I'm arguing is that Israelis and Palestinians will never be completely separate. And the separation policy is what led us to this very isolated situation for Gaza in which you saw the complete deterioration of all aspects of society, including at the economic level. You need a political resolution, preferably based on two states, but also one that acknowledges their actual interdependence, in which I propose and my colleagues over at a land for all propose and be established as two states in a confederated arrangement to eventually allow, even incrementally, for freedom of movement, for greater exposure and opportunity, for greater exposure to each other's opportunities and skill sets, jobs, cultural interactions, but primarily so that you have the flexibility, the movement and the range to be able to develop an economy. And with Israel's coordination, you can't do most of these kinds of things without Israel allowing those greater freedoms that Palestinians will need. Because Israel does ultimately have control at this point over every, you know, all of the external boundaries and everything that goes in or out of the Palestinian Authority, and I mean both west bank and Gaza. So Israel will have to be part of this, it will have to coordinate, it will have to agree on these things. The best way that's done is through permanent cooperation on economic issues, through coordinated policymaking. And I think that's best done in the framework of a political resolution that accepts the need of both sides to be independent states, but also reflects their actual interdependence and the need for joint economic policymaking, one that ideally is focused on reducing those huge gaps between them, as well as advancing growth on both sides. And even better if I have oil wish list, one that also works on reducing economic gaps within each society, which also exacerbate the political tensions.
- [46:52]
Unnamed Speaker
But the Palestinian people's right to self determination, their right to justice, must also be recognized. And put yourself in their shoes. Look at the world through their eyes. It is not fair that a Palestinian child cannot grow up in a state of their own, living their entire lives with the presence of a foreign army that controls the movements, not just of those young people, but their parents, their grandparents, every single day. It's not just when settler violence against Palestinians goes unpunished. It's not right to prevent Palestinians from farming their lands or restricting a student's ability to move around the west bank or displace Palestinian families from their homes. Neither occupation nor expulsion is the answer.
- [48:11]
Dalia Shenlin
On the next episode of History As It Happens, who is Nayib Bukele and what has happened to El Salvador's democracy? That's next as we report History As It Happens. New episodes every Tuesday and Friday. My newsletter every Friday. Sign up at History As It Happens. And you can also find us on Facebook now, too.
- [48:31]
Just search for History As It Happens.