Gaza Strip vs. Israel

Inhabited since at least the 15th century B.C., the Gaza Strip has been dominated by many different peoples and empires throughout its history; it was incorporated into the Ottoman Empire in the early 16th century. The Gaza Strip fell to British forces during World War I, becoming a part of the British Mandate of Palestine. Following the 1948 Arab-Israeli War, Egypt administered the newly formed Gaza Strip; Israel captured it in the Six-Day War in 1967. Under a series of agreements known as the Oslo accords signed between 1993 and 1999, Israel transferred to the newly-created Palestinian Authority (PA) security and civilian responsibility for many Palestinian-populated areas of the Gaza Strip as well as the West Bank. In 2000, a violent intifada or uprising began, and in 2001 negotiations to determine the permanent status of the West bank and Gaza Strip stalled. Subsequent attempts to re-start negotiations have not resulted in progress toward determining final status of the Israeli-Palestinian conflict.

Israel by late 2005 unilaterally withdrew all of its settlers and soldiers and dismantled its military facilities in the Gaza Strip, but it continues to control the Gaza Strip's land and maritime borders and airspace. In early 2006, the Islamic Resistance Movement (HAMAS) won a majority in the Palestinian Legislative Council election. Attempts to form a unity government between Fatah, the dominant Palestinian political faction in the West Bank, and HAMAS failed, leading to violent clashes between their respective supporters and HAMAS's violent seizure of all military and governmental institutions in the Gaza Strip in June 2007. Since HAMAS's takeover, Israel and Egypt have enforced tight restrictions on movement and access of goods and individuals into and out of the territory. Fatah and HAMAS have since reached a series of agreements aimed at restoring political unity between the Gaza Strip and the West Bank but have struggled to enact them; a reconciliation agreement signed in October 2017 remains unimplemented.

In July 2014, HAMAS and other Gaza-based militant groups engaged in a 51-day conflict with Israel culminating in late August with an open-ended truce. Since 2014, Palestinian militants and the Israel Defense Forces have exchanged projectiles and air strikes respectively, sometimes lasting multiple days and resulting in multiple deaths on both sides. Egypt, Qatar, and the UN Special Coordinator for the Middle East Peace Process have negotiated multiple ceasefires to avert a broader conflict. Since March 2018, HAMAS has coordinated weekly demonstrations along the Gaza security fence, many of which have turned violent, resulting in one Israeli soldier death and several Israeli soldier injuries as well as more than 200 Palestinian deaths and thousands of injuries.

note: effective 3 January 2009, the Gaza maritime area is closed to all maritime traffic and is under blockade imposed by Israeli Navy until further notice

Movement and access restrictions, violent attacks, and the slow pace of post-conflict reconstruction continue to degrade economic conditions in the Gaza Strip, the smaller of the two areas comprising the Palestinian territories. Israeli controls became more restrictive after HAMAS seized control of the territory in June 2007. Under Hamas control, Gaza has suffered from rising unemployment, elevated poverty rates, and a sharp contraction of the private sector, which had relied primarily on export markets.

Since April 2017, the Palestinian Authority has reduced payments for electricity supplied to Gaza and cut salaries for its employees there, exacerbating poor economic conditions. Since 2014, Egypt's crackdown on the Gaza Strip's extensive tunnel-based smuggling network has exacerbated fuel, construction material, and consumer goods shortages in the territory. Donor support for reconstruction following the 51-day conflict in 2014 between Israel and HAMAS and other Gaza-based militant groups has fallen short of post-conflict needs.

Israel has a technologically advanced free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.

Since March 2020, economic growth has slowed compared to recent historical averages, but Israel's slump has been less severe than in other Middle Eastern countries because of its swift vaccine roll-out and diversified economic base. Between 2016 and 2019, growth averaged 3.6% per year, led by exports. Israel's new government is hoping to pass the country's first budget in two years, which, combined with prudent fiscal policy and strong global trade ties would probably enable Israel to recover from economic challenges caused by the COVID-19 pandemic.

Natural gas fields discovered off Israel's coast since 2009 have brightened Israel's energy security outlook. The Tamar and Leviathan fields were some of the world's largest offshore natural gas finds in the last decade. In 2020, Israel began exporting gas to Egypt and Jordan.

Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel's income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of "tycoons" have a cartel-like grip over the major parts of the economy. Government officials have called for reforms to boost the housing supply and to increase competition in the banking sector to address these public grievances. Despite calls for reforms, the restricted housing supply continues to impact younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high. Private consumption is expected to drive growth through 2021, with consumers benefitting from low inflation and a strong currency.

In the long term, Israel faces structural issues including low labor participation rates for its fastest growing social segments - the ultraorthodox and Arab-Israeli communities. Also, Israel's progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services - sectors which face downward wage pressures from global competition. Expenditures on educational institutions remain low compared to most other OECD countries with similar GDP per capita.

see entry for the West Bank

see entry for the West Bank

see entry for the West Bank

Israel has a highly developed economy with focus on technology products; investment in cyber-security industry and hub for start-ups; near universal broadband delivery to households and mobile penetration; LTE coverage, expanded fiber network with plans for 5G; emergency law allows mobile tracking; importer of broadcast equipment, integrated circuits, and computers from China; submarine cable connectivity to Europe (2021)

note: see entry for the West Bank

the status of the Gaza Strip is a final status issue to be resolved through negotiations; Israel removed settlers and military personnel from Gaza Strip in September 2005

West Bank is Israeli-occupied with current status subject to the Israeli-Palestinian Interim Agreement - permanent status to be determined through further negotiation; in 2002, Israel began construction of a "seam line" separation barrier along parts of the Green Line and within the West Bank; as of mid-2020, plans were to continue barrier construction; Israel withdrew its settlers and military from the Gaza Strip and from four settlements in the West Bank in August 2005; Golan Heights is Israeli-controlled (Lebanon claims the Shab'a Farms area of Golan Heights); in March 2019, the US Government recognized Israel's sovereignty over the Golan Heights; since 1948, about 350 peacekeepers from the UN Truce Supervision Organization headquartered in Jerusalem monitor ceasefires, supervise armistice agreements, prevent isolated incidents from escalating, and assist other UN personnel in the region