Economics of the Occupation

Page last updated 3 July 2018


Understanding the ‘economics’ of the Israeli Occupation is essential in order to fully comprehend some of the reasons behind the past and present realities of the situation and some of the motivations behind maintaining the status quo. Whether it is the continuation of the occupation, the expansion of settlements in the West Bank, or the ‘winners’ and ‘losers’ (financially speaking) as a result of the occupation, it is clear that economics have a huge part to play in this conflict.


Articles and Analysis

1. Why Does the Occupation Continue?
Max Ajl, MER262, Vol 42, Spring 2012

“Attitudes are well established. Yet actual explanations of the occupation’s endurance have been thin. Shir Hever’s The Political Economy of the Occupation [Pluto, 2010] is an effort to supply one that goes beyond partial or flawed theories and dominant obfuscations. Hever is first concerned to total the macro-economic costs and benefits of the occupation. He warns that aggregate numbers can conceal disparities of economic power and privilege in a blur of averages, but he uses them to paint a rough-and-ready picture of the relationship between the Palestinian and Israeli ‘sectors’, as well as the ways in which labor and capital, demand and tariffs, coil, braid and meld, making talk of Palestinian this or Jewish that not merely muddying but misleading. Many of the relevant statistics are buried or deliberately made inaccessible by the Israeli government. Nevertheless, Hever arrives at a cautious estimate of ‘income’ drawn from the occupation: about 39 billion shekels during the period 1970-2008. He also calculates outflows of 104 billion shekels in the form of subsidies to the settlers in the West Bank and Gaza, and 316 billion shekels in ‘security costs’, the currency expended to protect the settlers and subdue the restive Palestinians.”


2. The Political Economy of Israeli Occupation: What is Colonial about It?
Leila Farsakh, Electronic Journal of Middle Eastern Studies, No.8, Spring 2008

“The aim of this paper is to analyze the political economy of Israeli occupation and to explore the underlying structural mechanisms that brought about such a catastrophic result. It explores the way in which the Palestinian economy under occupation is a under a colonial structure of domination. The colonization perspective as an analytical framework for understanding the Israeli- Palestinian conflict has been addressed from a sociological point of view. However, it has not been dealt with seriously from a political and economic point of view. The work of Maxime Rodinson in 1973, of the ‘new Israeli sociologists’ such as Baruch Kimmerling, Uri Ram, and Gershon Shafir among others, as well as of Ilan Pappe, among the ‘new Israeli historians’, has been key in showing the importance of using the colonization perspective as a means for understanding Israeli society and history.”

“They emphasize the centrality of analyzing the Zionist nationalist project as a colonial project that is tied to land acquisition and demographic control. They show how both the character of the Israeli State and the shape of its economy are the outcome of the specific forms of control over land, labor and demography that were pursued in order to create an exclusivist Jewish state. Palestinian academics, on the other hand, relied on the colonization perspective to explain the extent of Palestinian dispossession and exploitation under Israeli rule. They, like the Israeli new sociologists, also saw in the 1967 war a continuity, rather than a rapture, in Israel’s colonization process. They, however, did not always frame the structural changes that occurred to the Palestinian economy specifically during the Oslo years within a colonial perspective, nor did they show how the colonial economic structure compromised all prospects for Palestinian statehood.”


3. The economics at the heart of Israeli settlements
Annie Slemrod, IRIN, 5 Jan 2015

“While they are often thought of as the result of a religious quest by Jews to claim new territory, in fact for most settlers the reasons for moving are economic – encouraged through government-planned incentive schemes to relocate. But for some, the process of living in a settlement may have a radicalizing effect.”


4. Exposing the Israeli Occupation Industry

The Who Profits’ website is “dedicated to exposing the commercial involvement of companies in the continuing Israeli control over Palestinian and Syrian land. The project publishes information about these companies, produces in-depth reports and serves as an information centre”.


5. Money for nothing and occupation for free: The 1994 Paris protocols on economic relations between Israel and the PLO
Simone Daud, Mondoweiss, 28 Sep 2011

“The monetary and economic union envisaged by the Paris protocols is inconceivable without the ability of Palestinian workers to work in Israel. Over the last decade however Israel has gradually imposed hermetic restrictions on the mobility the Palestinians living in the Israel-Palestine economic zone. Israel has effectively boycotted Palestinian labor and because of this the Palestinians have turned into simply an imprisoned population with almost no capacity for economic activity. Israel’s boycott of Palestinian labor has turned the monetary and economic union between Israel and Palestine into a situation that is worse for Palestinians than Apartheid was for black South Africans. Israel’s boycott of Palestinian labor has turned the Paris protocols into an unmitigated economic disaster for the Palestinians.”


6. To get a sense of the Economy of the Israeli Occupation
Nerina Schiavo and Aida Bruni, Shabka, 1 May 2013

“The Israeli military occupation of the Palestinian territory imposes a huge price on the Palestinian economy. Israeli restrictions, in fact, prevent Palestinians from accessing much of their land and from exploiting most of their natural resources; they isolate the Palestinians from global markets, and fragment their territory into small, badly connected, ‘cantons’. As highlighted also by international economic organisations, including the World Bank, UNCTAD and the IMF, these restrictions are the main impediment to any prospects of a sustainable Palestinian economy…The total costs imposed by the Israeli occupation on the Palestinian economy was USD 6.897 billion in 2010, a staggering 84.9% of the total estimated Palestinian GDP. In other words, had the Palestinians not been subject to the Israeli occupation, their economy would have been almost double in size than it is today.”


7. The economic costs of military rule
Shlomo Swirski and Yarom Hoffman Dishon, +972, 1 Jun 2015

“The social-economic cost of the Israeli-Palestinian conflict is spoken about far less than the human cost or the price Israel pays on an international level. And when the social-economic costs do get brought up, the leaders of the economy always stress that this is a relatively small price to pay that have a short-term negative effect on the market. This position only lends to the idea that the conflict can be ‘managed’, and does not require a peace agreement. Education Minister Naftali Bennett arrogantly expressed this idea when he likened the Palestinian problem to ‘shrapnel in the ass’ that must be taken out. This approach is nothing short of delusional, and both Israeli society and the Israeli economy are paying a heavy price for the continuation of the conflict. Here are seven reasons why.”


8The UN Database on Business in Israeli Settlements: Pitfalls and Opportunities

Valentina Azarova, Al Shabaka Policy Network, 29 May 2018

“As Israel ramps up construction of settlements in the Occupied Palestinian Territory (OPT) with added cover from the Trump administration, we should recall that not only does the establishment and maintenance of the settlements constitute violations of international law, but so do all private transactions and business dealings in or related to the settlements, which Israel has effectively integrated into its national economy. UN Security Council Resolution 2334 of December 2016 affirmed that Israel’s settlement activity in the OPT has “no legal validity and constitutes a flagrant violation under international law,” but did not clarify the nature of the legal consequences and risks that states and private actors may incur from activities in or related to the settlements.”

“Hundreds of businesses continue to operate freely and without consequence in some 250 settlements Israel has erected. In March 2016, member states of the UN Human Rights Council (HRC) decided to act on this issue: Through HRC resolution 31/36 they tasked the UN Office of the High Commissioner of Human Rights (OHCHR) with setting up a database of such businesses and reviewing it annually. The OHCHR announced in a January 2018 report that it had created a list of 206 businesses, the names of which it intends to disclose “in a future update.”


9A Lab and a Showroom: The Israeli Military Industries and the Oppression of the Great March of Return in Gaza

Coalition of women for peace and Hamushim, June 2018

“‘Gaza has become a showroom for the company’s ‘smart fences,’ as customers appreciate that the products are battle-tested.’ Magal’s former CEO Saar Koursh.”

“Israeli military operations in Gaza in the past decade have been especially profitable for the country’s military industries. Both private companies and the Israeli government alike use Gaza as an opportunity to test new weapons, technologies and methods to be marketed based on their new operational success. The Israeli military industry exploits the occupation of Palestine, and specifically the siege on Gaza, as an arena to battle-test, invest in, and innovate military technology to later be marketed to the international community based on their effectiveness on Palestinian Civilians. This method, thoroughly explained in Yotam Feldman’s 2013 film “The Lab”, has been especially beneficial to Israeli military industries during the 2008-9, 2012 and 2014 attacks on Gaza.”


10. Doing Business with the Occupation: 

Economic and Financial Relationships of Foreign Companies with Israel’s Settlement Enterprise

Profundo, Research and Advice, 27 June 2018

“Israeli settlements are illegal under international law and are considered war crimes under the Fourth Geneva Convention (1949) and the Rome Statute (1998). They render sustainable social and economic development in the occupied Palestinian territory (OPT) impossible and lie at the basis of multiple human rights violations. Israeli settlements also fragment the West Bank and isolate it from East Jerusalem, thereby heavily damaging the prospect of a two-state solution.”

“Private actors, represented by Israeli and international businesses operating in or providing services to the occupation economy, play a critical role in facilitating the functioning and growth of the illegal settlements. Considering the illegality of settlements but also the heavy social and humanitarian impact on the Palestinian population in the OPT and the obstruction of the development of a Palestinian economy, corporations have a responsibility to ensure that they are not– directly or indirectly – involved in violations of international humanitarian law.”


Contents of this section


a) Maps of the occupation
b) Occupation and the Fourth Geneva Convention

Israel’s human rights violations – an introduction
Settlement building and land issues
Restrictions on movement
House demolitions, forced displacement, denial of residency rights
The Wall
The Green Line
The economics of the occupation

c) Gaza under occupation
d) Living under occupation

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