Palestinian Territory Country Report
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.
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.
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.
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.