When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.


Why Israel's Sanctions Threat Against Palestinians Is A Big Bluff

Reconciliation between Hamas and the Palestinian Authority has angered Israeli leaders. But Israel's own economy can't afford a strangling of the Gaza and West Bank economies.

A checkpoint between Bethlehem and Jerusalem
A checkpoint between Bethlehem and Jerusalem
Danny Rubinstein

TEL AVIV — When the Israeli government seeks to justify enforcing economic sanctions on the Palestinian Authority because of the reconciliation agreement with Hamas, exactly two facts should be kept in mind.

First, the bond between the two Palestinian factions is not new. And second, even the Israeli government behaved no differently from the Palestinian Authority.

Despite harsh Israeli criticism of last week's reconciliation accord, in the seven years since Hamas took over Gaza, the Palestinian Authority government in Ramallah has been de facto supporting its Gazan counterpart when it pays the salaries of most state employees in Gaza and funds governmental institutions.

The Hamas government indeed laid off many of the senior officials of the Ramallah government who were stationed in Gaza — chiefly security officials.

But Mahmoud Abbas’ Palestinian Authority administration refused to recognize these layoffs. And over the years, the Ramallah government has repeatedly emphasised the burden of the Gaza expenses on the Palestinian budget.

In fact, they argued, close to $4 billion of the annual Palestinian budget is spent on salaries and services maintenance in Gaza, even though Gaza accounts for only one-third of the total Palestinian population. On top of this, a considerable share of the taxes in Gaza are collected by the local Hamas government, not the one in Ramallah.

Therefore, it appears that the Ramallah-based Palestinian Authority has been supporting the Hamas regime in Gaza rather generously.

That second fact is that the Israeli government hasn’t acted very differently. It first imposed an economic siege. Later, the raid on the Turkish flotilla led to the blockade being partly lifted.

The Israeli government effectively controls the Palestinian economy in the West Bank and Gaza, and therefore at least ostensibly has the power to impose harsh economic sanctions.

Fruits and flowers

The Israeli control means that nearly all of the Palestinian external trade is indeed with Israel itself. Some 80% of the West Bank’s exports and imports are with Israel, including fuel, electricity and basic foodstuff. Export from the West Bank abroad is particularly small, and the only exports from Gaza are strawberries and flowers.

Approximately 150,000 Palestinians work for Israeli employers — including those working in the Israeli settlements in the West Bank, those entering Israel with no documents, and those working in the West Bank for Israeli industries. And Israel can, of course, also block these workers from entering.

Israel’s problem, however, is that such sanctions have a clearly defined red line — and that is a collapse of the Palestinian Authority’s economy. If Israel imposes the threatened sanctions, significantly blocking the crossings, the Palestinian Authority would stop paying salaries and Palestinian production would slow down.

The Palestinians know that Israel cannot push the situation to that point, and they use this fact as leverage.

The Palestinians also know how to overcome, at least partially, Israeli restrictions. Gazans have resisted restrictions in the past with the help of tunnels dug beneath the border with Egypt. These tunnels allowed fuel that is subsidised in Egypt and therefore very cheap, as well as food and construction materials. Hamas regulated the entry of goods through the tunnels and charged customs fees.

Introducing serious economic sanctions on both Gaza and the West Bank Palestinian Authority is essentially impossible. It would be unthinkable to block the crossings between Israel and the Palestinian territories.

The Palestinians have accumulated a large debt to the Israeli national electricity utility, and now Israel is seeking to offset it with tax money it collects from Palestinians. But this could only be a temporary measure and would not incur any significant damage to the Palestinian government that has already received Arab League guarantees for compensation. For the Israeli utility, by the way, the Palestinian debt is a drop in the debt bucket.

So as long as the Israeli government controls the Palestinian territories’ external borders, there is no other option but to define this as a state of occupation, in line with international law that imposes responsibility for what’s happening in these territories on the occupying force.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.


Will China Invade Taiwan? Volkswagen's €180 Billion Bet Says 'No'

German automobile giant Volkswagen will invest billions in China to manufacture electric vehicles. It has deemed the risk of China invading Taiwan "unlikely," a peek into the calculations that private-sector conglomerates make, just like state actors.

Photo of workers at the production line of SAIC Volkswagen in Shanghai

Workers at the production line of SAIC Volkswagen in Shanghai

Pierre Haski


PARIS — Automaker Volkswagen has decided to accelerate its investments in electric vehicles: €180 billion, mainly in the United States and China. The Financial Times has reported that the company's management evaluated the risk and concluded that China would not invade Taiwan in the short term. It decided as a result that it was reasonable to invest in China, one of its main markets.

It's an interesting vantage point to undertand events. Governments around the world are questioning China's intentions towards the island of Taiwan, which Beijing claims as its own. What is less known is that large companies also need to calculate geopolitical risk and conduct their own analyses.

A few months after Russia's invasion of Ukraine, the President of the European Chamber of Commerce in China, which represents thousands of companies, sounded the alarm in an interview with an economic magazine. Joerg Wuttke mentioned the trauma of Western companies forced to leave Russia and lose everything, and warned Chinese authorities that the same thing could happen if China invaded Taiwan.

Keep reading...Show less

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

The latest