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The impact of the financial crisis on the Palestinian community

by Qusay Hamed, Nablus, Palestine. 13th May 2006

The term “Financial crisis” is an old/new term in the Palestinian dictionary; this occupied territory – that has scanty resources – is economically bounded with Israel.

Nowadays Palestine lives a dramatic financial crisis that is considered one of the worst in the nation’s history.

Palestinians have been punished for their democratic choice, where the Palestinians practiced choosing their representatives to the Palestinian Legislative Council; this choice practically brought Hamas up to the power by majority.

This choice that has been embodied by the democracy became as a pretext to refuse this choice and stop the international community subsidy to the Palestinian Authority.

I personally understand the term “Democracy” as the people’s choice for their representative in a civilized, transparent and highly credited manner.

The main and most important factor of the crisis is the external stipulated subsidy that has been cut by the American government and the European countries, in addition to the huge pressure that they practice in order to not transfer money to the newly elected government.

At the same time, Palestinian Authority has no control over their borders to import or export, That leaves Palestinian people depending on the international aid to keep the Palestinian economy and the infrastructure alive.

Political and security impacts


There is no doubt that the crisis came out as a result of the American, Israeli and European pressure upon the Palestinian authority in general and upon Hamas government particularly, in order to force the government to change its political agenda. The continuation of this crisis means that the Palestinian authority will not be able to maintain it’s authority on the economical, social, health and security institutions; Which could be simply represented by the disability of what has remained from the security force, in securing the essential needs like food, health services etc, whether for it’s members or even the prisoners. In addition to that, the government is not able to pay the police force salaries. Therefore, the police force will not be able to practice its high demanded job, thus disorder, revelry and robbery will spread out and prevail.

Compulsory resignation

The other political impact is that the government becomes forced to resign or to be deposed.

This scenario is approaching for sure as this crisis continues, where the government will be forced out or will have to resign which will bring the region to a complex problematic situation that will inflame the anarchy and will have unacceptable and unpredictable results.

The economical impact of the crisis

The external financial subsidy equals 85 % of the total Palestinian income, a part of that goes to feed 150,000 employees’ families, which is the soul source of life for them. These salaries help to keep the Palestinian economy surviving, which is also considered as the main factor that keeps the Palestinian economy functioning; since these subsidies were frozen, families are not able to secure their essential life necessities. Thus the economic life is frozen also; it’s clearly embodied in Ramallah, Nablus and Hebron as the biggest cities in Palestine territories; factories, supermarkets and companies were closed as a result of the economical stagnancy and not being able to bear extra cost. Consequently that means what is called Palestinian economy will collapse at any time.

Humanitarian impact

The health sector can also clearly show the suffering which caused by the current financial crisis, whereby this institution is not able to offer its health services, in addition to the huge lack of medical staff and medicine. Therefore they are not able to give the very basic needs of life, children’s milk and health care services to the people, where also the problems of isolation and lack of mobility make it difficult for people to access essential services.

On the other hand, the education sector is highly affected by this crisis, Transportation is almost impossible because people would rather save money for basic needs of food.

Finally, the continuation of the crisis is mainly harming the lower class, Poor families are barley managing; about 150.000 families are having no money for the past three months and not clear future in the horizon, make it almost impossible for them to survive.
All this require a serious stand from the international community in order to stop the continuous suffering of the Palestinian people as a result of this financial sanction.