Israeli Economic Restrictions Push Palestinian Authority Toward Collapse

The Government of Israel has implemented severe economic restrictions in the West Bank, pushing the Palestinian Authority toward financial collapse. Since October 2023, the administration of Benjamin Netanyahu has canceled work permits for tens of thousands of Palestinian laborers, withheld hundreds of millions of dollars in monthly import tax revenues, and limited the transfer of shekels from Palestinian to Israeli banks.

These measures have driven West Bank unemployment to 28 percent. The Palestinian Authority has responded by cutting civil servant salaries, reducing school weeks, and limiting healthcare services. In February 2025, President Mahmoud Abbas issued a decree to end stipends for prisoners in Israeli jails, though Israeli and American officials have dismissed the move.

The Bank of Israel has advised the Palestinian Monetary Authority to develop a contingency plan to replace the shekel as the territory's currency. Palestinian officials warn that the economy is nearing a full crisis, with wholesale importers unable to maintain stock and hospitals facing medication shortages.