Gaza's Post-Ceasefire Crisis: Cash Shortages, Hunger, and a Two-Tier Economy
Despite a ceasefire, Gaza faces a severe economic crisis with an 80% unemployment rate, a critical shortage of physical currency, and widespread food insecurity. While humanitarian aid has increased, approximately 100,000 people still face "catastrophic conditions."
Economic Crisis and Cash Shortage
Following the 2023 Hamas-led attack on Israel and the subsequent conflict, Israel halted banknote transfers to Gaza based on a political order. Israeli officials stated that the restriction is due to Hamas's reliance on cash for military activities.
The conflict led to the destruction or looting of most banks. The Palestine Monetary Authority (PMA) reported that approximately $180 million in cash was stolen. Seven weeks after the ceasefire, some bank branches have reopened, but ATMs remain non-functional. In Khan Younis, banks remain damaged, requiring residents to travel to central Gaza for banking services.
A new informal economy has emerged. Individuals like Baraa Abu al-Aoun operate roadside tables to repair worn banknotes, facilitating cash circulation.
Residents rely on informal money merchants, who charge commissions ranging from up to 50% to a recently decreased rate of approximately 20% for converting digital transfers to physical cash. Commission rates fluctuate with market activity, commodity inflow, and aid distribution.
The United Nations Conference on Trade and Development (Unctad) reports that Gaza's entire population of over two million people has been pushed into poverty. Unemployment is estimated at 80%.
Banking and Digital Payment Adaptations
Nine bank branches across five banks have reopened. Services are limited to reactivating frozen accounts, opening new ones, and registering for banking applications. Asmaa al-Ladaa, seeking to receive funds from relatives, described the process as involving "chaos and crowds."
Electronic transfers via bank applications have become a common payment method, even for minor purchases, with shop owners charging minimal fees. The PMA has launched an instant transaction system for local bank accounts. The Bank of Palestine offers e-wallets, with over 500,000 users in Gaza, allowing transactions via text services on mobile phones without internet access.
Humanitarian Food Aid and Shortages
Humanitarian organizations continue to operate food kitchens in Gaza. American Near East Refugee Aid (Anera) manages a network of over 35 kitchens that provide approximately 210,000 hot meals daily. The organization has expanded from 15 cooking pots to 120 pots daily to serve over 30 internally displaced people's camps, providing meals to more than 4,000 families.
The United Nations reported that the daily number of meals distributed across Gaza reached 1.4 million in the past week, an increase from under one million meals a month prior.
Despite increased aid, meal options are largely confined to rice, pasta, and lentils, supplemented with canned vegetables. Essential proteins such as meat and chicken are not permitted for humanitarian aid distribution.
Fresh meat and poultry are available through commercial sellers but are cost-prohibitive for aid organizations. Anera has provided a meat-inclusive meal only once since the ceasefire, using tinned products.
Anera's operations are also affected by a shortage of essential cooking equipment, including utensils, packaging materials, and gas canisters, necessitating the use of open wood fires. Transportation for meal distribution has shifted from horses and carts to a small truck following the renewed availability of fuel.
Food Security and IPC Classification
A report by UN-backed food security experts indicates improvements in nutrition and food supplies following the ceasefire. The Integrated Food Security Phase Classification (IPC) stated that no areas in Gaza are now classified as "in Famine."
However, the IPC's latest analysis reported that approximately 100,000 individuals were still classified as experiencing "catastrophic conditions" (IPC Phase 5) last month. Half a million Gazans were facing emergency conditions. The IPC projects a decrease in this number but emphasizes that the situation remains "highly fragile."
The UN's World Food Programme (WFP) indicates that a quarter of households in Gaza consume only one meal daily. While local market prices for basic items like vegetables, sunflower oil, and flour have decreased, they remain significantly higher than pre-war levels. Surveys reveal that two-thirds of households encounter difficulties purchasing food, primarily due to insufficient cash.
Israeli Response to IPC Report
Israel's Foreign Ministry stated that the IPC report was "deliberately distorted" and did not "reflect the reality in the Gaza Strip." Cogat, the Israeli military body managing Gaza's crossings, asserted that the weekly number of food aid trucks entering Gaza exceeded the quantities the UN had identified as necessary. Cogat further stated that the report "relies on severe gaps in data collection and on sources that do not reflect the full scope of humanitarian assistance." Israel had previously rejected the IPC's earlier findings of famine and continues to question its methodology.
Access Restrictions: Commercial vs. Humanitarian Imports
Access for goods entering Gaza is managed through a system that permits commercial traders to import items frequently restricted for humanitarian organizations. Basic supplies, including generators and tent poles, are categorized by Israeli authorities as "dual-use" items, with entry restricted due to concerns they could be utilized by Hamas or other armed groups for military purposes.
For approximately one month, businesses have been authorized by Israeli authorities to transport various dual-use items into Gaza, such as generators and metal pallets. These items are now reportedly available on the open market within Gaza.
Sam Rose, acting director for Gaza for Unrwa, reported that generators are currently available exclusively through the private sector at a markup. He noted that commercial sector imports of items not approved for humanitarian organizations create a "two-tier system."
Cogat's Response
Cogat denied "preventing or delaying" aid shipments to Gaza and denied applying looser restrictions for commercial traders. A Cogat spokesperson stated that the policy for aid entry is approved by the Israeli political echelon and implemented uniformly for the UN, international organizations, donor countries, and the private sector. The spokesperson added that Israel "offers international organizations alternatives that allow and facilitate a humanitarian response" for dual-use items. Cogat also stated that medical aid organizations received permits for generators over the past month.
US Involvement
US forces at the Civil-Military Coordination Center (CMCC) in southern Israel, established in October, encountered political challenges regarding entry restrictions. US officers at the CMCC compiled a list of at least twelve key humanitarian items they sought to have removed from the dual-use list, including tent poles. Weeks later, restrictions on these items reportedly remain.
Additional Obstacles
Beyond the dual-use list, other bureaucratic factors impede humanitarian aid flows. Some items are prohibited based on determinations that they do not address urgent humanitarian needs; examples include paper and pencils for schools, and frozen beef and mutton. Aid organizations have been restricted to chicken, while commercial traders have imported various types of meat.
This week, Israel informed 37 Non-Governmental Organizations (NGOs) operating in Gaza that they must cease operations within 60 days unless they provide detailed information on their Palestinian staff. The EU humanitarian chief, Hadja Lahbib, stated on social media that the "NGO registration law cannot be implemented in its current form" and that aid must reach those in need as per international humanitarian law.
Future Economic Prospects
US President Donald Trump's 20-point peace plan includes an "economic development plan to rebuild and energise Gaza," proposing new investments and development ideas to create jobs and opportunities. However, the plan lacks detailed strategies for generating growth and stability. Concurrently, Unctad has warned that the Gaza Strip is experiencing its most severe economic crisis on record.