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Country Reports

Palestinian Territory Country Report

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Risk Level

Low
Moderate
Elevated
High
Very High
Severe
Extreme

Overview

Executive Summary

The separation of the West Bank between opposing political factions, paralysis of the peace process with Israel, economic inequality, and the failure of the current leadership to submit to scheduled elections, increasingly challenge the Palestinian Authority (PA)’s claim to lead the Palestinian people. Neither Fatah, which controls the Palestinian Authority in the West Bank, nor Hamas in Gaza, is willing to relinquish its respective control. Efforts to establish a unity government across the territories have repeatedly failed. PA President Mahmoud Abbas still has no declared successor at 81 years old, raising the likelihood of outright government disintegration if he were unable to continue his rule. The risk of a renewed escalation between Hamas and Israel will remain high into 2019, in response to intermittent Hamas rocket fire and incendiary kites being launched at targets in southern Israel, prompting retaliatory airstrikes by Israel. However, Hamas is likely to be willing to negotiate a ceasefire arrangement that will maintain calm over winter in return for financial support. Israeli airstrikes, artillery strikes, and limited ground incursions are probable in response to rockets fired from Gaza, but risks of escalation into wider inter-state war are mitigated by Hamas's continued limited security co-operation with Egypt. Economic growth is forecasted by IHS Markit to slow in 2019 to 3.0%, versus 3.1% in 2017, reflecting weak economic activity in Gaza. There are few signs of significant structural improvement in the business climate that could boost capital investment or reduce high levels of unemployment, let alone absorb the expanding labor force. An aggregate unemployment rate of close to 30% remains crippling, with unsurprisingly higher rates in Gaza than in the West Bank. Heightened political divisions between Hamas and Fatah, continued confrontation with Israel, the economic embargo by Israel and Egypt, and aid reductions from international donors continue to suppress economic activity. © 2019, IHS Markit Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
Last update: January 8, 2019

Operational Outlook

Business activity is severely hindered by Israeli border closures, weak infrastructure, corruption, and complex bureaucracy. The collapse of the unity government in 2007 and the subsequent takeover by Hamas in the Gaza Strip further compounded this situation.

Last update: November 30, 2018

Terrorism

Hamas is likely to continue to launch arson attacks against southern Israel, but is unlikely to escalate this to regular rocket or mortar bomb fire while Egypt and Qatar continue to back mediation with Israel. 'Price-tag' attacks by Jewish settlers are likely to continue in the West Bank, alongside a risk of isolated knife attacks and shootings at Israel Defense Forces (IDF) checkpoints.

Last update: November 21, 2018

War Risks

Israeli airstrikes, artillery strikes, and limited ground incursions are probable in response to rockets fired from Gaza, but the risks of escalation into wider inter-state war are mitigated by Hamas's continued limited security co-operation with Egypt. War risks are mitigated in the West Bank, where the PA security forces will probably continue co-operation with the Israeli military. One exception would be a third 'intifada' scenario, which would likely lead to the security forces ceasing co-operation.

Last update: November 21, 2018

Social Stability

Violent protests in Gaza and the West Bank are very likely in response to Israeli military operations, arrest campaigns, or settler attacks targeting Palestinians. These are highly unlikely to successfully challenge the control of either Hamas or the Palestinian Authority. Key triggers are likely to also include Jewish access to the Al-Aqsa Mosque compound, the unveiling of a US peace proposal on the Arab-Israeli conflict, and a prolonged economic crisis in Gaza.

Last update: November 21, 2018