A tale of two economies: Israel’s market-based growth vs. Palestinian kleptocracy
Tiana Lowe Doescher
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In addition to Israel’s military superiority over Hamas and national resolve to obliterate the Gaza-based military junta, the Middle East’s only democracy has a huge advantage over its enemies for another reason: pure economics.
The Hamas terrorist attacks launched Oct. 7 on southern Israel, claiming 1,400 lives, were carried out in grisly fashion with a barrage of rockets, beheadings, and cold-blooded executions of civilians and soldiers. Israel has, of course, begun defending itself with airstrikes, raising predictable protestations about Palestinian casualties as Hamas uses Gazans as human shields.
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As of this writing, Israel is preparing to launch its ground incursion in Gaza after days of urging Palestinian noncombatants to evacuate and seek refuge across the Rafah passage into Egypt. However, the economic destruction done unto Gaza is already a cautionary tale for kleptocracies centered on wartime economics rather than free markets.
Hamas has famously diverted international aid meant for Gaza residents to missile building and carving out a labyrinth of underground tunnels to burrow into Israel and stage attacks. Israel, by comparison, is a thriving market economy boosted by a world-class high-tech sector.
A Self-Inflicted Infrastructure Crisis
A consistent complaint levied against Israel by the international community is having temporarily shut down its water pipeline to Gaza. The strip relies on one-third of all its clean water to be provided by Israel for free because Hamas and allies have consistently repurposed Gaza’s existing plumbing to make rockets instead.
Don’t take my word for it.
“The silent world should know that our weapons, by which we face the most advanced arsenal produced by American industry, are water pipes that engineers of the resistance turned into the rockets that you see,” said Ziyad al Nakhalah, secretary-general of Gaza-based Palestinian Islamic Jihad, in 2021.
The situation is similar regarding electricity, prompting international handwringing that Israel is supposedly responsible for Gazan hospitals going dark. But Gaza has only become reliant on free electricity exported from Israel because Hamas rockets from Gaza have repeatedly fired into their own electric lines, leaving them reliant on the very civilians whom Hamas has tried to exterminate.
Gaza is also reliant on international aid for cash, the currency denominated in Israeli shekels and U.S. dollars, as neither the Gaza Strip nor the West Bank, controlled in part by the Palestinian Authority, has a central bank.
And while terrorist sympathizers also will use Israel’s necessary weapons blockade on Gaza as justification for its perennial penury, the patriarchal Hamas has intentionally sacrificed the potential for economic growth on the mantle of Shariah. In no way is this more obvious than the second-class status of Palestinian women.
Much like the fictional theocracy in Margaret Atwood’s dystopian classic The Handmaid’s Tale, the Hamas charter explicates the role of women solely as “the maker of men” and “guiding and educating the new generations.” As a result of the ensuing discrimination, the female labor force participation rate for women in the West Bank and Gaza is not quite 19%, among the lowest in the world, according to the World Bank.
Compare that to Israel, where the female labor force participation rate is more than 60%, higher than that of the United States or Germany. The workplace equality of Israeli women is all the more staggering when you consider that, unlike the rest of the women in the West, choosing their careers has not come at the expense of having children. Israeli women have more than three children on average, well above the replacement rate and the global average of around two children per woman.
The social illiberalism of Palestinian theocrats hampers its economic opportunities in less dramatic ways. As an example, although wine production has thrived in the Fertile Crescent and surrounding regions since antiquity, Hamas has banned all alcohol sales, eliminating this historic industry that famously once thrived in Gaza. Despite persistent demand for Palestinian wine, especially among the region’s Christians and Jews, Hamas is willing to destroy the inventory of wine discovered in Gaza.
In a developed or service-based economy, this wouldn’t be a problem. However, given the fundamentalist and exclusionary education in Gaza, which intentionally places a ceiling on the potential for human capital among the population, agriculture is responsible for the overwhelming majority of Gaza’s informal employment.
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For years now, Israel has attempted to relax relations across its border with Gaza, issuing new work permits to Palestinians from the strip, who could earn roughly four times as great a wage in Israel as in the territory. When Israel attempted this liberalization last year, exports from Gaza nearly doubled while it brokered deals with the Qataris to increase humanitarian aid to the Palestinians.
Of course, no good deed goes unpunished by today’s Nazis. Evidently, Hamas terrorists care more about committing genocide against the Jews than the prosperity of their own people, let alone peace. Luckily for Israel, even before a single soldier is sent across the border, Gaza’s starvation proves that capitalism always wins.