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Palestinians fear Israel's economic chokehold won't end — with or without a ceasefire

Mousa Zaita was one of more than 100,000 Palestinians with a work permit allowing them to hold jobs in Israel. After Oct. 7, the permits were revoked, leaving many Palestinians fearing that harsh economic restrictions imposed by Israel will last long after the war in Gaza ends.  (Lily Martin/CBC - image credit)
Mousa Zaita was one of more than 100,000 Palestinians with a work permit allowing them to hold jobs in Israel. After Oct. 7, the permits were revoked, leaving many Palestinians fearing that harsh economic restrictions imposed by Israel will last long after the war in Gaza ends. (Lily Martin/CBC - image credit)

It's not just violence from Israeli settlers and raids by Israel's military that have pushed tensions with Palestinians in the occupied West Bank to a flash point.

So have Israeli economic restrictions that some Palestinians fear will last long after the war in Gaza ends, regardless of whether current negotiations between Israel and Hamas lead to a ceasefire.

Between Palestinians who've had permits to work in Israel revoked and Arab Israelis who can no longer travel to spend money in the West Bank, roughly a third of the territory's income has vanished over the last four months.

Additionally, Israel is withholding the tax revenues it collects on behalf of the Palestinian Authority (PA) — the single biggest employer in the West Bank — forcing it to cut worker salaries.

Since Hamas's deadly attacks on southern Israel on Oct. 7, Israel's military has imposed hundreds of roadblocks and other checkpoints across the territory, ostensibly for "security" reasons, which have caused intense traffic bottlenecks and further curtailed commerce.

"With the war, they have closed the West Bank," said Samir Hulileh, an economist and prominent Palestinian businessman in Ramallah.

"They are shocking the economy completely."

Lily Martin/CBC
Lily Martin/CBC

Many Palestinians, including Hulileh, believe that Israel's government is using the pretext of Hamas's attacks on Oct. 7 to ratchet up economic and political pressure on the PA, which runs the West Bank and is dominated by the rival Fatah party, to extract political concessions once the war stops.

"I think it will not be a policy only during the war. It will be a continuous policy," Hulileh told CBC News in an interview in Ramallah.

He says Israel's leaders "are thinking that there is an opportunity to reshuffle and to restructure the relationship between Israel and the West Bank and Gaza."

What exactly Israel's government, led by Prime Minister Benjamin Netanyahu, has in mind for the Palestinian territories after the fighting in Gaza ends remains unclear.

While the United States, Canada and other Western nations have indicated a "two-state solution" is the only viable, sustainable proposition, Netanyahu has ruled that out.

The United Nations and human rights groups have long feared Israel is laying the groundwork to annex Palestinian territories and further repopulate the area with Israeli settlements.

WATCH | West Bank economy struggles as Israel-Hamas war continues:

Economic collapse 

In the aftermath of Oct. 7, the economy of the West Bank has fallen off a cliff.

Money earned by Palestinians working in Israel — along with money spent by Arab Israelis in the West Bank — accounted for roughly $5.5 billion US a year, or approaching a third of the $19 billion US GDP of the territory.

"Life has stopped for us since our work stopped," said Mousa Zaita, a father of three who lives with his extended family just outside Ramallah.

Until Oct. 7, he worked in Tel Aviv on a construction site for an Israeli company.

"The borders are closed. No Palestinian worker is allowed inside Israel. I searched all of Ramallah in every spot, and I couldn't find work," he said.

The single hardest economic hit faced by the West Bank has been the cancellation of roughly 100,000 work permits for Palestinians. Mousa told CBC News that he earned the equivalent of $2,000 Cdn a month on a building site, three times the going rate in the West Bank.

His mother, Ramah, has five sons and now, none are working.

"We are in extreme conditions," she said. "We have to pay the electricity bill, we have to pay a water bill. The kids are always demanding a biscuit from here and a sandwich from there. It's extremely difficult."

Ronen Zvulun/Reuters
Ronen Zvulun/Reuters

Replacing Palestinian workers

Israeli businesses have also been hurt by the absence of Palestinian workers, but rather than restore the permit system,  the Netanyahu government has gone in another direction.

Reported disagreements within the cabinet about reinstating the permits, particularly involving far-right members of the governing coalition, led to a plan that will see labourers and other workers brought in from Southeast Asia instead.

Israel's government announced last week that at least 65,000 workers from India, Sri Lanka and Uzbekistan will start arriving over the coming weeks to do the jobs previously held by Palestinians.

CBC News visited several businesses in a Ramallah industrial park and found workers either idle or doing work for people who couldn't pay for it.

"The situation is very dire," said mechanic Hisham Jaber.

"People can't afford to pay, so they will pay later," he said hopefully.

Lily Martin/CBC
Lily Martin/CBC

Earlier this week, the PA — which has approximately 81,000 employees and retirees — said it would only be able to pay its employees roughly 60 per cent of their December salaries.

"Last month, our tax revenue was around 1 billion Shekels ($367 million Cdn), of which Israel deducted, illegally, 600 million Shekels, and this has affected our ability to pay full salaries to our civil servants," Palestinian Prime Minister Mohammad Shtayyeh told CBC News in an interview.

Although Hamas has been in charge of the administration of Gaza since 2005, the PA maintained a significant payroll of employees there.

Israel collected tax money from Gaza and remitted it to the authorities in Ramallah, but since Oct. 7 it has withheld hundreds of millions of dollars of that tax money, fearing it could be used by Hamas.

"It's very dangerous, because economic crises have a social impact, and we don't know for how long people can tolerate the situation," Shtayyeh told CBC News.

Lewis Joly/The Associated Press
Lewis Joly/The Associated Press

Checkpoints stifle movement

On top of the extreme shortage of disposable income in the territory, the Israeli military has imposed hundreds of frequent and unpredictable checkpoints across the West Bank, which have infuriated drivers and served as another choke on the movement of people and goods.

The bottlenecks, which can last for several hours, combined with the broader economic uncertainty, have driven up prices, especially for staples.

Grocery store owner Naser Khalil said the price of flour has gone up 25 per cent.

Lily Martin/CBC
Lily Martin/CBC

He showed CBC News his handwritten ledger listing the amounts owing from people who haven't been able to pay him over the last four months.

"For 120 days people have not gone to work," he said. "There's no money."

In a statement provided to CBC News, the Israel Defence Forces justified the checkpoints, writing that since Oct. 7, there have been "over 700 attempted attacks" on Israeli targets in the West Bank, and that as part of "security operations in the area, dynamic checkpoints have been put up over different places."

Pressures mounting

Without access to jobs in Israel, and with movement restrictions and the flow of money into the territory reduced to a trickle, Hulileh, the economist, predicts violence may not be far off.

"Things will erupt," he said, noting that at the moment, Israel is not offering any incentives, just threats.

"There is no carrot — there is nothing. Either you will be killed, you will not have water, you will not have food, you will not have shelter, you will not have salaries. You have nothing."

Most worrying, say business leaders, is that there is no obvious sign that the situation will improve.

CBC News visited the Sinokrot Food Company in Ramallah, best known for its Ali Baba chocolate wafer cookies, which, prior to Oct. 7, were sold throughout the West Bank and Gaza.

Lily Martin/CBC
Lily Martin/CBC

Chief operating officer Majd Sinokrot said the company kept a sizable operation in Gaza, which has now been decimated. He said several warehouses are damaged, likely beyond repair, and he hasn't been able to contact 10 staff members in more than two weeks.

"I don't know if they are alive or if they are dead," he said.

He showed CBC News a production line that used to produce for the Gaza market — roughly 15 per cent of the company's total sales. The line has been idled, forcing him to cut dozens of workers.

Sinokrot said he'd like to hire more Palestinians now looking for work, but he's simply not able to.

"Every day they are coming for our HR department: 'We need a job. We need a job,'" he said.

"We are not seeing an end to this [poor economy] — in fact, we see it expanding."

Lily Martin/CBC
Lily Martin/CBC

Like most Palestinians, Sinokrot blames Israel's more than 50-year occupation of the region and the extreme controls placed on Palestinians at all levels of their lives.

Sinokrot said Israel is sending a message that it doesn't want Palestinians to produce or sell and that it will keep pushing them until they leave for other countries.

He said what Palestinians hear from Israel is, "Maybe one day you decide to leave for Jordan, Saudi Arabia or Lebanon — just leave this country. But we are staying."