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In the West, it is all about economy — nowadays marked by manufacturing, service industries, finance, and hi-tech.
The United States can boast that it has the highest per-capita gross domestic product (GDP), the total value of finished goods and services produced within a country’s borders during a specified period.1
Heck, even New York, California, and Texas — mere states in the U.S. — have a higher per-capita GDP than the next three countries on the list: Canada, Germany, and the UK.
The Palestinian Territories, according to the per-capita GDP scale, would likely fall in one of the last places, yet their leaders, administrators, and some of their supporters flaunt lavish lives of sheikhs despite having no access to crude oil, other lucrative natural resources, or any real economy. How is this the case?
Two words: Palestinian terrorism.
While the term “Palestinian” dates back to the 1800s, the actual “Palestinian people” in search of (seemingly) a common goal is a rather novel idea that began in the 1960s. The Palestine Liberation Organization (PLO) was founded in 1964 in Egypt, and among its first order of operations was terrorism against Israel — supported by the Soviets, their most enduring success against the “free world” according to Major General Ion Mihai Pacepa, the highest-ranking Soviet defector during the Cold War.
Pacepa wrote that, for nearly four decades, the PLO was the largest, wealthiest, and most politically connected terrorist organization in the world. It used drug trafficking, arms smuggling, money laundering, and counterfeiting to amass a fortune estimated to be $10 billion by the early 1990s (nearly $25 billion if adjusted for inflation today). The PLO collaborated with international criminal organizations, drug cartels, other terror groups, and rogue states such as Libya, Iran, Iraq, North Korea, and Sudan.
Yasser Arafat, who became chairman of the PLO in 1969, was notoriously corrupt, using public funds for his own purposes, which ranged from financing an expensive lifestyle in Paris for his wife, to buying and retaining the support of Palestinian politicians, to funding 13 so-called “security” organizations — which Israeli Prime Minister Ariel Sharon used to call “security-terror organizations.”
Then, in the 1990s, when the Israelis and Palestinians signed two peace accords in Oslo and the Palestinians were supposed to “grow up,” Palestinian corruption didn’t subside. It intensified.
“Since the signing of the Oslo Accords,” said Hasan Khreishah, the deputy speaker of the Palestinian Legislative Council, “we have had 12 Palestinian governments. Each government has at least 24 ministers. This means we have had 228 ministers, in addition to advisors. All receive high salaries and luxurious vehicles.”
During the 1990s, U.S. President Bill Clinton’s administration invited Arafat to the White House 13 times, more times than any other foreign visitor, “and you can be sure that among the many possible subjects being discussed his personal corruption did not appear on the list,” according to Elliott Abrams, a Senior Fellow for the Middle Eastern Studies Council on Foreign Relations.2
“That was a very damaging position for our country to take, for it just encouraged even more corruption,” Abrams added. “It signaled to Palestinians who were disgusted with public corruption that we were not interested and were not going to hold Arafat to account.”
After the 2000 Camp David Summit in the U.S. failed to produce meaningful progress toward a two-state solution, the Second Intifada (a violent Palestinian uprising) immediately ensued, resulting in more than a thousand Israeli deaths, at the time the worst result since Israel’s War of Independence in 1948.
It was at this time that the Palestinian Authority (a formality of the PLO following the Oslo Accords) underwent another change: incorporating Islam into its political rhetoric and adding jihad to its agenda. As a result, the Palestinian Authority gained even more support financially and politically within the Arab and Muslim worlds.
According to a report from 2001, the amount of money officially donated to the Palestinian Authority during the Second Intifada jumped 80 percent, from $555 million to more than $1 billion.
Toward the Second Intifada’s end, Arafat died and Mahmoud Abbas replaced him. Abbas outwardly seemed like a “better partner for peace,” but leaked records from a Panamanian law firm showed that he and his two sons went on to use power and influence to control the two major Palestinian economic boards and built a West Bank economic empire worth more than $300 million.
All this while the Palestinian Authority refuses to use its considerable international aid to relocate more than 100,000 Palestinians from Palestinian-controlled refugee camps to residential locations in the territories, preferring to leave them confined under extremely unpleasant conditions.
The international community’s refusal or incompetence in not holding Abbas and the Palestinian Authority accountable for nepotism and corruption drove Gazan Palestinians into the open arms of Hamas, the terror group which promised them reform.
But for the average Gazan, the situation is economically far worse than in the West Bank, so you’d think Hamas would have to build strong social systems to support their constituents when it violently came to governing power there in 2007. Instead, the terror group took lessons from the Palestinian Authority’s kleptocracy and doubled down on them, using terrorism against Israel and its own people as the impetus.
Hamas, an off-shoot of the Muslim Brotherhood, started out in 1988 as a social-religious organization, not a political one. But over time, Hamas leadership realized that, if it was going to stay in control of Gaza, it needed to adopt a sociopolitical program that would at least appease the average Gazan.
Social services, which are laboriously difficult and cost-intensive, can make or break a government, especially one that doesn’t have enough tax revenue to foot the bill. After all, some reports suggest half of Gaza’s population is unemployed, and per-capita GDP is around $5,600, making it one of the poorest places in the world.
So what did Hamas do? It hijacked international organizations like the UN Relief and Works Agency for Palestine Refugees (UNRWA) in Gaza, overinflated their budgetary needs, and even put many of its own operatives on the agency’s payroll (as well as in positions of power and influence).
Today, this organization — which remains the world’s only refugee agency dedicated to a specific population — has an annual operating budget of more than $1 billion because, in 1982, it began changing the definition of a Palestinian refugee and expanded it to include every generation of descendants.
In other words, even the great-grandchild of a refugee is also considered a refugee and can therefore receive benefits from the UN agency, such as healthcare, education, welfare, micro-loans, and refugee camp infrastructure improvement.
Thus, this UN agency does one of the most vital jobs for Hamas — all with international aid — which allows the Palestinian faction to focus its finances on doing what it does best: terrorism.
And those who run this UN agency, such as its secretary-general Philippe Lazzarini, are completely unincentivized to end some of the Palestinians’ “refugee” status — which should be the goal of any refugee organization. Why is this the case? Because Lazzarini and other top executives make something like $700,000 per year for their “charity work.” And half of UNRWA salaries are above $127,695 — a crazy amount of money in the Palestinian Territories.3
What’s more, the agency has a monthly salary bill of approximately $60 million for 30,000 staff.4 In other words, UNRWA makes money where there are “refugees.” The more suffering — regardless of who imposes it on them, i.e. Hamas — the more money they make.
Meanwhile, estimates of Hamas’ annual “military” budget — its terrorism budget, really — range from $100 million to $350 million, including major financing from Iran. Much has been reported about Hamas’ vast network of terror tunnels, but what seldom hits the headlines is how Hamas monetizes them.
In addition to terror activity and infrastructure, Hamas uses these tunnels to smuggle Egyptian goods from Gaza’s southern border, which generate multiple millions of dollars per month. And senior Hamas figures levy taxes on all of the trade and other activities passing through the tunnels, for a combined income of up to $450 million per year, which has transformed some 1,700 senior Hamas officials into millionaires.5
Meanwhile, the everyday Gazan is heavily dependent on foreign aid, with Qatar topping the list of donors. The Gulf monarchy is estimated to have contributed over $1.5 billion during the past decade, although the money has mainly been disbursed as stipends for public officials and poor families, not to develop the economy.
Experts and Western governments question whether Hamas commingles funds for its military and other operations, but Hamas representatives have said that the group strictly separates funding for the administration of Gaza from funding for its military wing. I will let you decide which side you want to believe.
Regardless, what is not up for debate is the allocations that both Hamas and the Palestinian Authority offer to Palestinian terrorists detained in Israeli prisons, and their families. Monthly salaries and benefits reward imprisoned and released terrorists, as well as the families of “martyrs” — amounting to hundreds of millions annually. To be sure, these grants are subject to a rigorous cost-benefit analysis of if and how beneficiaries will support the capital allocators.
In schools, community centers, and mosques throughout Gaza and also the West Bank, many of which are funded by international organizations like the UN, Hamas infiltrates their content with anti-Jewish and pro-terror propaganda. Administrators, teachers, clerics, and community leaders are not just there to do a job, but to serve as megaphones for Hamas’ genocidal, fascist, Islamic fundamentalist ideology. Dissidents are tortured and killed, often publicly to ensure others know what’s good for them.
“For Hamas, being Muslim means supporting Hamas, and people who do not support Hamas aren’t Muslims,” wrote Ala Mohammed Mushtaha, whose family has lived in Gaza for generations. “If you don’t abide by what Hamas tells you, you’ll lose your job or worse.”6
Mosques are used by Hamas as warehouses to stash money, weapons, and equipment. Large, wrapped-up prayer rugs are “donated” to mosques — except only “special volunteers” are allowed to open them or transport the rugs in and out. Big boxes are marked as food aid, but “there wasn’t food inside,” just “something made of iron,” Mushtaha said.
To add insult to injury, Hamas doesn’t return the favor. It uses (and loses) hundreds of Palestinian children each year digging its tunnels. In addition to taking a big cut of all the goods entering Gaza, Hamas limits their flow to keep the population angry and dependent. And sometimes, to make a point, Hamas blows up the pipes that bring fuel into Gaza and bombs the border crossings through which aid and aid workers pass.
Yet, despite all of the misery Hamas has inflicted on the population of Gaza, it has “remained exceedingly popular among the people,” according to Michael Oren, a former Israeli ambassador to the United States.7
This is because Hamas, as well as the Palestinian Authority, have composed a popular, persuasive, and pervasive narrative: Despite or in spite of such mind-boggling corruption, nepotism, and kleptocracy, the Palestinians’ problems are predominantly Israel’s fault. Just as there is Maslow’s Hierarchy of Needs, there is the “Palestinian Hierarchy of Hate.”
Many Palestinians know that Hamas and the Palestinian Authority purposely deprive their constituents, but Israel remains at the pinnacle of everything that is abhorrent about the world. If only the Jewish state didn’t exist, the Palestinians would have a life full of opportunity, prosperity, and everything that is good in the world.
However, a couple of years ago, perhaps sensing its support slipping in the strip, Hamas decided to engage with Israel on a deal that ultimately allowed 18,000 Gazans to cross into Israel and the West Bank and work in sectors like agriculture or construction, which typically carry salaries up to 10 times what a worker could earn in Gaza.
Hamas, though, wasn’t simply operating from the so-called kindness of its heart; it saw another revenue opportunity. One Gazan woman, who worked as a housekeeper in Israel, said Hamas took 75 percent of the wages she earned.
Abroad, the Palestinians work their economic exploits as well. They have lobbyists like many other groups, but they have something even more effective: unofficial lobbyists. Throughout the Middle East, North Africa, and much of the West, Palestinian propaganda is plentiful, attractive, and intoxicating.
Influencers flood social media with “pro-Palestinian” content, which outnumbers “pro-Israel” content 36-to-one on TikTok, according to one statistician.8 College students and activists organize bombastic marches on campuses and in Western capitals. Gullible academics, reporters, and media personalities disseminate empty clichés and nuance-less narratives that make much of their audiences sympathize with the “uninvolved” and “poor Palestinians.”
By having so many influential folks promote the Palestinian cause around the world, Palestinian leaders accomplish two game-changers. First, they extract money from the West, a tactic that plays on the guilt of Western elites and politicians who inaccurately see the Palestinians as a colored group of people at the mercy of White colonial-settler Zionists. After all, Western elites and politicians do not hold accountable those who commit crimes that they blame themselves for.
Palestinian leadership, perfectly understanding this cunning psychology, continues to use Israel — again, “White colonial-settler Zionists” — as a scapegoat for all their people’s troubles, which means the Palestinians don’t need to use the money they pocket from Western sources to develop institutions that would in turn lead to a state.
Think about it: Running a state requires hard work to make things function every day, and it would tremendously limit the personal ambitions of these Palestinian leaders. Since the world is willing to pay the Palestinians for whatever they seem to need, there is no good financial incentive to give up the forever-state of victimhood if you are among Palestinian leadership.
As such, the Palestinian Authority has received an estimated $25 billion in financial aid from the U.S. and other Western countries, the highest-per-capita assistance in the world. Although the U.S. and the European Union have designated Hamas as a terrorist organization, “they’re not effectively cut off from the international financial system,” said Hans-Jakob Schindler, senior director of the Counter Extremism Project. “They actually are able to invest funds in companies and in real estate.”9
And boy does Hamas invest. It has owned Sudanese companies that dealt in mining, chicken farming, and road construction, two skyscrapers in the United Arab Emirates, and other property-related business ventures in Algeria and Turkey. In 2015, Israeli intelligence officials found what they termed Hamas’ “secret investment portfolio” totaling some $500 million.10
The second game-changer for Palestinians is the “war of information” — a war on reality, really — the only arena in which they can come close to “defeating” (that is, delegitimizing) the Jewish state. By waging this “war of information” (a war the Palestinians know Israel cannot win), the so-called international community allows Israel to fight the Palestinians to a draw, but rarely to a victory, which is “one reason why the wars keep occurring,” wrote Douglas Murray in the publication Sapir.
For Palestinian leadership — both in Gaza and the West Bank — this is precisely in accordance with their economic playbook. The game plan looks something like this: Palestinian terrorists brutally attack Israel to force a significant military response from the Israeli government, which translates into mass misery for the Palestinian civilian population, captured by a news media eager to disseminate this agony far and wide.
Suddenly, every Palestinian is a “journalist,” “woman,” or “child.” Nobody belongs to any terror group. Even if they are Hamas or the Palestinian Authority, they somehow become an underage female journalist when they’re killed. (Ha ha ha.)
In turn, Palestinian leaders use these innocent deaths and mass misery to generate new recruits, propaganda, and support — both diplomatic and financial — from allies in the region and across the world. The West, easily fooled by the news media and social media, encourages their countries and humanitarian organizations to continue funneling billions of dollars to the Palestinian Territories, thereby giving Hamas and the Palestinian Authority a very literal free pass from spending its money on socioeconomic initiatives for the everyday Palestinian.
This means more money for terrorism and other illegal activities, and the process repeats itself, taking on a lethal flywheel whose momentum will be harder to stop with every round of violence, irrespective of the circumstances.
Palestinian leaders and politicians preach all-things Islam, Allah, jihad, and martyrdom, but they are not as “impressionable” as some of their supporters. They themselves do not engage in terrorism, and they surely would not blow themselves up, go on a shooting spree, or infiltrate Israel on a death conquest in the name of their genocidal, fascist, Islamic fundamentalist ideology.
Some of them do not even live up to the religion to which they profess submission. According to a report on the Saudi news website, Elaph, the sons of Hamas leader Ismail Haniyeh drink alcohol (which is forbidden by Islam) and spend time with women other than their wives in luxury nightclubs.
Ironically, though, Hamas has put enormous pressure on imams, since its current war with Israel started, to persuade Gaza’s population that their only choice is “the resistance” — Hamas, in plain diction. And since many schools and universities are not functioning, the one thing that draws people in is prayer.
“Hamas exploits our religion, pretending to be modern-day prophets, likening themselves to the companions of the prophet Muhammad, meaning Hamas and only Hamas is the only way to alleviate our suffering,” wrote Ala Mohammed Mushtaha. “We’re all paying the price.”
“The Top 25 Economies in the World.” Investopedia.
“Palestinian Foreign Aid: Where Does the Aid Money Go?” Jewish Virtual Library.
Comparably. https://www.comparably.com/companies/unrwa/salaries.
“Head of UN agency for Palestinians defies Israeli calls to quit.” Financial Times.
“Far from Gaza hardships, Hamas chief and family enjoy easy life in Qatar.” The Times of Israel.
“Hamas Kidnapped My Father for Refusing to Be Their Puppet.” The Free Press.
“Why the Body Cams?” Clarity with Michael Oren.
“Inside the Israel-Hamas Information War.” TIME.
“Gaza is plagued by poverty, but Hamas has no shortage of cash. Where does it come from?” NBC News.
“Israel Found the Hamas Money Machine Years Ago. Nobody Turned It Off.” The New York Times.
A strong economy is the foundation of national strength. It was England's sophisticated financial system and maritime trade that allowed it to resist Napoleon when he controlled most of Europe. It was American industrial might that allowed it to build a massive military in record time for WW2. And it is Israeli high tech that makes it an important power in the Middle East.
A strong economy depends on rule of law and effective government. It was wonderful news to read this article and realize, once again, that the Palestinian territory will not have an economy like Singapore or Taiwan any time soon. In that, the Palestinians have indeed gotten the government they deserve.