Israel’s financial siege on Gaza: A silent war weaponizing currency shortages, black markets, and inflation to economically strangle Palestinians.
An Economic Siege on Top of a Military Blockade
Since October 7, 2023, Gaza has been enduring one of the most devastating Israeli military campaigns in recent history. Beyond the bombs and destruction, a more silent yet equally lethal war is unfolding, a war on Gaza’s economy. Amid bombardment and famine, a severe cash liquidity crisis has emerged, paralyzing the local market, crushing purchasing power, and fostering an environment ripe for black markets and financial exploitation.
What’s happening is not a spontaneous crisis but rather a deliberate, systematic strategy to dismantle the Palestinian social and economic fabric. This slow-burning financial siege lacks the visual horror of airstrikes, yet its consequences are devastating and far-reaching.
“Cash-Out” Extortion: When Money Becomes a Commodity
With the collapse of the banking system and direct targeting of financial institutions, most banking services in Gaza have come to a halt. This has forced Palestinians to turn to a practice now known locally as “cash-out” extortion, where individuals must pay commission fees of up to 50% to access their own funds.
Currency traders, middlemen, and black-market dealers now control Gaza’s financial arteries. In this environment, money is no longer a means to survive; it’s become a commodity traded at a loss, used to exploit the desperate. What was once a basic pillar of dignity has now become a tool of economic domination and manipulation.
Israel’s Financial War Machine: Turning Economy into a Weapon
1. Gradual Currency Drain
According to banking insiders, the freeze in financial services didn’t occur randomly; it aligned with a coordinated Israeli strategy to gradually drain cash from Gaza’s economy without introducing alternatives. Instead of making a public political move, Israel quietly empowered a network of local economic agents who began refusing high-denomination bills like the 200-shekel note, further strangling liquidity.
This tactic is not just about money; it’s about control. What use are salaries or foreign remittances if they can’t be accessed or cashed out? The strategy is designed to suffocate, stripping the population of autonomy and dignity under the guise of economic management.
2. Money as a Weapon of Collective Punishment
In Gaza, cash has become a weapon of collective punishment. No bombs are dropped, yet the destruction is equally pervasive. Withholding liquidity and removing money from circulation directly impacts
- Local trade and commerce
- Distribution of humanitarian aid
- Public employee salaries
- Access to basic goods like food and medicine
The goal is clear: weaken Gaza from within by exhausting the poor, collapsing the middle class, and pushing the population to accept any imposed solution, no matter how unjust, just to regain basic survival.
3. Violating the Paris Protocol: Weaponizing Economic Agreements
Israel’s manipulation of Gaza’s liquidity directly violates the Paris Protocol, a key component of the Oslo Accords that guarantees the flow of money and goods between Israel and the Palestinian territories. But Israel has reinterpreted and weaponized the protocol, halting cash inflows and creating bottlenecks whenever it serves its interests.
The result is economic distortion: skyrocketing prices, eroded trust in currency, a paralyzed market, and a cash collapse that pushes Gaza toward complete financial breakdown.
The Rise of a Black Market Economy
In the absence of regulatory oversight and the paralysis of formal financial systems, black market networks have seized control of cash flow. Exchange rates, fees, and transaction timelines are now dictated by unregulated actors. The longer the Palestinian Monetary Authority and official banks remain inactive, the more entrenched this parallel economy becomes.
Reports indicate that the black market in Gaza has surpassed 1 billion shekels in turnover since the war began, an alarming figure that reflects not just financial desperation but systemic collapse. This market has even become tied to the opening and closing of Gaza’s commercial crossings: when crossings open, fees drop; when they close, commissions skyrocket.
Pushing Gaza Toward Hyperinflation and Collapse
When people are forced to give up half their income just to access it, the result is compounded inflation. Consider:
A 100-shekel note effectively becomes worth only 50 shekels after cash-out fees.
A 30% rise in food prices reduces purchasing power by nearly two-thirds.
This dynamic is unsustainable. Gaza is heading toward total economic paralysis, where even basic necessities become unaffordable. The middle class is disappearing, unemployment is surging, and humanitarian conditions are rapidly deteriorating.
Where Is the Palestinian Monetary Authority? Where Are the Solutions?
Despite the gravity of the crisis, the Palestinian Monetary Authority (PMA) and the formal banking sector have yet to introduce any emergency response plan. No efforts have been made to regulate the black market or to launch financial recovery programs.
Economists agree that solutions must include
1. Partially and securely reactivating bank branches in Gaza
2. Injecting cash into the market via secure, traceable channels
3. Enforcing strict oversight over cash-out practices and commission rates
4. Coordinated pressure on Israel from international stakeholders to uphold financial agreements
5. Expanding digital payment infrastructure as a contingency for crises
Without these steps, the financial siege will worsen, and Gaza will fall deeper into poverty, instability, and dependency.
Conclusion: Money as a Tool of War and Oppression
The liquidity crisis in Gaza proves that economic warfare is real and brutally effective. Israel’s strategic use of cash flow restrictions has weaponized money, turning it from a symbol of stability into an instrument of submission. This silent financial siege complements the physical blockade, creating a total war on Palestinian life.
Yet despite this suffocating reality, Palestinians in Gaza continue to resist, fighting for dignity amid deprivation. Their resilience in the face of financial asphyxiation is a powerful reminder of the human cost of silent warfare.
Reclaiming Gaza’s financial system is not merely an economic necessity; it is a moral and political imperative. Every day that passes without cash is another day of surrender to collapse. The world must act, not only to send aid but also to dismantle the systems that allow cash to be used as a weapon.
