Under Israeli bombs, a war economy emerges in Gaza

On tables and desks in schools converted into shelters, wartime peddlers lined the streets, selling used clothing, baby formula, canned food and the odd batch of homemade cookies.

In some cases, entire aid packages (still adorned with the flags of donor countries and intended to be distributed free) were piled on sidewalks and sold at prices few could afford.

Issam Hamouda, 51, stood next to his paltry shopping offering: an assortment of canned vegetables and beans from a relief box his family had received.

“Most products found in markets are labeled ‘Not for sale,'” he said.

Before the war between Israel and Hamas devastated Gaza’s economy, he was a driving instructor. Now, Hamouda supports his family of eight the only way he can: by reselling some of the food aid they receive every few weeks.

“I once bought four kilos of dried dates and sold one kilo for 8 shekels,” he said, referring to the Israeli currency that amounts to approximately $2.

In the seven months since Israel began bombing Gaza and imposing a siege in response to the Hamas-led attack on October 7, the enclave’s economy has been crushed. People have been forced to flee their homes and jobs. Markets, factories and infrastructure have been bombed and razed. Farmland has been burned by airstrikes or occupied by Israeli forces.

In its place has emerged a war economy. It is a survival market focused on the basics: food, shelter and money.

Humanitarian aid is labeled “Not for Resale” and looted items end up in makeshift markets. People can earn a few dollars a day evacuating displaced people on the backs of trucks and donkey carts, while others dig toilets or build tents from plastic sheeting and reclaimed wood.

Given the growing humanitarian crisis and deep desperation, queuing is now a full-time job, whether at aid distribution sites, at the few open bakeries or at the few ATMs or exchange offices.

It is a “subsistence economy,” said Raja Khalidi, a Palestinian economist based in the Israeli-occupied West Bank.

“It’s not like any war we’ve seen before, where a certain area is attacked and other areas are less affected and can quickly re-engage under economic conditions,” he said. “From month 1, the economy was out of commission.”

In the years before the war, Gaza’s economy (even under a suffocating air, land and sea blockade imposed by Israel and Egypt) was beginning to improve, according to Gaza economists and businessmen. Beachside hotels and restaurants were opening. More Palestinians obtained permits to work in Israel and earned good salaries.

All those achievements (and more) have been lost.

The majority of Palestinians in Gaza now face poverty on multiple levels, which goes beyond lack of income and includes limited access to healthcare, education and housing, according to a recent report from the World Bank, the European Union and the United Nations. About 74 percent of people are unemployed, according to the report. Before the war, the unemployment rate, although high by many standards, was 45 percent.

The impact on Gaza’s economy is one of the largest in recent history, according to the report. Gaza’s gross domestic product fell 86 percent in the last quarter of 2023.

Israel’s Defense Ministry said its attacks on Gaza were not aimed at degrading the enclave’s economy and were directed against Hamas’ “terrorist infrastructure.”

The economy is now largely driven by tight supply and desperate demand for aid. Before the war, about 500 trucks carrying humanitarian aid, fuel and commercial goods entered the Gaza Strip every day.

After the war began and new Israeli restrictions were imposed, that number fell significantly, to 113 per day on average, although it has risen modestly in recent months. Even with the improvements, it falls far short of what aid agencies say is needed to feed Gazans.

Now, the flow of aid and goods has almost stopped, following Israel’s attack on the southern city of Rafah and the almost complete closure of two main border crossings.

Famine is spreading throughout the enclave, in what human rights and aid groups have called Israel’s weaponization of hunger. Israel has denied the accusations.

In a context of conflict, chaos and anarchy, prices have skyrocketed. Since the Rafah raid, products on the market have become even more expensive. And for hundreds of thousands of Palestinians fleeing Israel’s offensive, transportation away from the airstrikes is costing them hundreds of dollars.

Even before the situation in Rafah deteriorated, aid deliveries were inconsistent and chaotic due to Israeli military restrictions, creating desperation and an opportunity for armed gangs or individuals to loot, according to residents.

“Food aid is dropped or brought and stolen by armed people like gangs,” said Majeda Abu Eisha, 49, a mother of 10.

While trying to get help, she said Israeli soldiers shot and wounded her son and nephew. They couldn’t get any help.

“The winner in this battle is the armed one who can get whatever he wants from the aid,” Abu Eisha said. “Anyone who is not armed or strong enough to fight and push goes home empty-handed.”

The Israeli military said it would “never deliberately attack aid workers and convoys.” It added that it would continue to counter threats “while persisting in mitigating harm to civilians.”

Without enough aid deliveries, residents must turn to makeshift markets. Products there can be sold for whatever price the sellers choose. Prices usually follow the escalation of the conflict.

Sugar was recently sold in Rafah markets for 7 shekels, less than $2. Then the next day, Hamas fired more than a dozen rockets at Israeli forces near the Kerem Shalom border crossing between Gaza and Israel, prompting its closure. In the following hours, the price rose to 25 shekels. The next day, the price of sugar dropped to 20 shekels.

“The same item can sell at different prices in the same market,” said Sabah Abu Ghanem, 25, a mother of one and former surfer. “When the police are there, the merchants will sell the things at the price the police decide. “When the police leave, prices go up immediately.”

Residents say officials and ministries associated with the Hamas-led government are present in some capacity, especially in the south.

While some Gazans say police have tried to force war profiteers to sell goods at inflationary prices, others have accused Hamas of profiting from looted aid.

Hamouda said the help his family occasionally received came from the Hamas-run Ministry of Social Development, which oversees welfare programs.

He said the packages were often missing some items, especially foods like sugar, dates or cooking oil. Other times, he said, they only received a few canned vegetables in black plastic bags. Food missing from aid packages ultimately ends up in markets sold at high prices, she said.

Ismael Thawabteh, deputy director of the Hamas government’s media office, said the ministry received about a quarter of the aid brought into Gaza, which it then distributes. “The accusations that the Gaza government is stealing aid are absolutely false and incorrect,” he said.

The looting of aid is carried out by a small number of people who have been forced into desperation by Israel, Thawabteh claimed. He said the Hamas government had tried to suppress such looting, but its police and security personnel had been targeted by Israeli airstrikes.

The Israeli military has said it has attacked police officers and commanders, as well as stations and vehicles, in its attempt to “dismantle the military and administrative capabilities of Hamas.”

With most jobs gone, people have found new ways to earn a few dollars as the war has created new needs.

Many of Gaza’s displaced residents live in tents, so building temporary shelters and toilets has become a cottage industry.

Tents made of thin plastic sheets and wooden boards can sell for more than 3,000 shekels, or $800, residents of the city of Rafah have said. Unable to pay, others have improvised their own tents with tarps and reclaimed wood.

“I bought those covers at an expensive price,” Hamouda said, referring to the tarps he used to build his family’s shelter. “We bought a second-hand toilet for 250 shekels and paid 50 shekels to the plumber who installed it.”

The cost, he said, was more than double what it was before the war.

Even access to money itself to pay the inflated prices of war has allowed some to take advantage of the crisis.

There are few ATMs still operating throughout Gaza, and those that do are often packed with people trying to withdraw their money. Often, someone armed watches an ATM and charges a fee to use it. Money changers offer people access to their own money in exchange for high commissions.

“I could only receive my salary from some people who received 17 percent of the total money,” said Ekrami Osama al-Nims, a father of seven displaced to the south and a civil servant.

He tried several times to get a bag of flour from aid trucks (despite the risk of being shot by Israeli soldiers, he said) to avoid having to buy it on the black market. But he never had any success.

“My salary used to cover us for a whole month of food and other basic needs,” he said. “Now my salary is not even enough to buy half a bag of flour.”

Abu Bakr Bashir, Aaron Boxerman and Iyad Abuheweila contributed with reports.

Leave a Comment