On 3 June 2025, 27 Palestinians were killed and 147 injured while attempting to access one of the new, controversial aid distribution sites established in the devastated Gaza Strip by Israel and the United States. Just two days earlier, 31 others were killed and 170 injured under similar circumstances while seeking food for their families.
Ibrahim Shikaki is Associate Professor of Economics at Trinity College in Hartford, Connecticut. His research revolves around heterodox macroeconomics, growth and distribution, and the political economy of Palestine.
The immediate context of these tragedies is Israel’s decision to cut off all aid and supplies to Gaza beginning in early March, effectively using the starvation of over 2 million Palestinians as a means of exerting pressure on Hamas. The broader backdrop, of course, is a war that even some of Israel’s closest allies have now described as “unjustifiable”. According to the Palestinian Central Bureau of Statistics (PCBS), the Israeli military has killed approximately 54,000 Palestinians since October 2023. This staggering figure includes 30,400 women and children, 1,411 medical personnel, 800 educators, 219 journalists, and 203 UN staff members.
Yet even these numbers fail to capture the full scale of the horror. Stories of murder, torture, and starvation continue to reach the outside world — despite Israel’s ongoing ban on international journalists entering the Gaza Strip. These and other actions have prompted several European countries to call for an unprecedented arms embargo. Meanwhile, genocide scholars, nearly unanimous in their assessments, have aligned with the UN Special Rapporteur’s report concluding that Israel is committing genocide in Gaza.
Restricting basic human needs, particularly food, as a tool of coercion is not new. Israel has employed such tactics long before the events of 2023. This weaponization of economic necessity serves as a clear example of how those in power can manipulate access to resources for political gain. That said, here I am not primarily concerned with such direct forms of economic coercion, but rather focus on the broader landscape of economic thought, theory, and policy, arguing that dominant economic paradigms tend to depoliticize the field by presenting economic analysis as a value-free, objective science.
This technocratic approach has underpinned the strategies of international aid and development institutions in Palestine and shaped diplomatic discourse in the region. Its logic was perhaps most visibly embodied in Trump’s proposal to transform Gaza into the "Riviera of the Middle East" — an initiative that, even a few months later, deserves a closer look. After all, this depoliticized approach to economics is not unique to Palestine. It reflects a broader, centuries-old intellectual project aimed at defending capitalism and removing politics from economic inquiry altogether. In Palestine, it merely shows its most brutal side.
The Neoclassical Turn
The late nineteenth century witnessed one of the most influential paradigm shifts in economic thought: the marginalist revolution, which laid the foundation for neoclassical economics — the dominant school of thought that continues to shape mainstream economics today. Prior to the rise of marginalism, early economic inquiry was led by classical political economists and their critics, such as Karl Marx. These thinkers analysed the transition from feudalism to industrial capitalism in Western Europe, focusing on issues such as economic growth, technological change, and income distribution. Central to their analysis was the role of power, especially as new forms of class dynamics and authority emerged within industrial capitalism.
The subsequent neoclassical turn was driven by two key motivations. First, it represented a deliberate counter to Marxian critiques of capitalism — particularly his theories of surplus value, exploitation, and historical materialism. Neoclassical thinkers sought to reframe capitalism not as a site of struggle and inequality, but as an efficient, self-correcting system. John Bates Clark, for example, who initially held critical views of capitalism, became one of its most ardent defenders in neoclassical thought. He famously claimed that “the distribution of the income of society is controlled by a natural law, and that this law, if it worked without friction, would give to every agent of production the amount of wealth which that agent creates.”
In the Palestinian context, neoclassical economics — stripped of its historical and political dimensions — has served as the dominant framework for policy and planning since the early 1990s, coinciding with the beginning of the formal peace process.
Second, there was a concerted effort to cast economics as a value-free natural science. Inspired in part by the growing prestige of physics, neoclassical economists adopted the mathematical language of classical mechanics, emphasizing abstract concepts such as equilibrium. This scientific veneer helped position economics as a rigorous, apolitical field, distancing it from the more normative and interpretive roots of political economy.
Perhaps most significantly — and most relevant to this article — was the redefinition of the field’s purpose and scope. Political economy, with its emphasis on power, class, distribution, and conflict within the production process, was considered too ideological and too open to contestation. In contrast, the newly defined discipline of economics was framed as a “positive” science — one that studied markets, exchange, and efficiency through the lens of mathematical modelling and theoretical abstraction. In this way, politics was systematically separated from economics.
Apolitical Economics Comes to Palestine
Mainstream economic scholarship is largely produced by white men in the Global North, and often fails to reflect the lived experiences of the vast majority of people around the world. Beyond this demographic imbalance, there exists a rich body of critical scholarship that challenges the colonial foundations of economics, exposes the harmful legacy of international financial institutions in the Global South, and links mainstream economic thought to austerity policies, authoritarianism, and market fundamentalism. Scholars have explored how the creation of the Nobel Prize in Economics was itself a political act meant to bolster neoliberal ideology and undermine alternatives like social democracy. Others have shown how economic frameworks frequently erode notions of community and solidarity.
In the Palestinian context, neoclassical economics — stripped of its historical and political dimensions — has served as the dominant framework for policy and planning since the early 1990s, coinciding with the beginning of the formal peace process. The World Bank played a central role in shaping this agenda. Although its reports have gradually acknowledged the economic consequences of the Israeli occupation, they consistently refer to it euphemistically as “Israeli restrictions”, avoiding explicit recognition of its structural and colonial nature. Despite this understatement, the World Bank has continued to advocate for unregulated market integration between the Palestinian and Israeli economies, suggesting that such arrangements would generate positive spill-over effects, enhance Palestinian development, and create incentives for “economic peace”.
In practice, however, the gap between the two economies has only grown. What exists is a deeply asymmetrical relationship of one-way dependency: the Palestinian economy relies heavily on the Israeli labour and goods markets, Israeli-controlled financial transfers, and increasing flows of international aid and private debt. These dynamics have deepened rather than diminished over time.
Over the past 15 years, three major economic plans have been proposed by Western actors: the Office of the Quartet plan (2011), the John Kerry initiative (2014), and the Kushner plan (2019). All of these initiatives were rooted in the same flawed premise: namely, that a political conflict could be resolved economically. Unsurprisingly, none of these plans were fully implemented, most failed to progress beyond the proposal stage. The latest proposal emerging from Washington, however, may stand as the clearest example yet of how economic discourse can be weaponized in service of injustice.
Economics as a Tool for Evil: Trump’s Gaza “Plan”
On 4 February 2025, in a joint press conference with the Israeli Prime Minister, President Donald Trump publicly unveiled the US “day-after” plan for Gaza. In brief, it involved the forcible transfer of nearly 2 million Palestinians and the transformation of the Gaza Strip into a massive real estate development project.
Like many of his second-term policies, Trump has partially walked back aspects of the plan — most notably the relocation of Palestinians to Jordan and Egypt. Observers have characterized this as another example of the “flood the zone” strategy, popularized by former Trump adviser Steve Bannon. In this view, the proposal is less a concrete policy and more a bargaining chip to extract political and economic concessions from directly affected countries like Jordan and Egypt, as well as more fragile states like Syria.
Notably, Israeli Prime Minister Benjamin Netanyahu’s reserved demeanour during the press conference was interpreted not as opposition but strategic restraint. The Israeli government's dehumanization of Palestinians has been deeply institutionalized, as reflected in multiple rulings from the International Court of Justice (ICJ) on genocide and the illegality of the occupation, as well as International Criminal Court (ICC) arrest warrants issued for Netanyahu and former Defence Minister Yoav Gallant.
The idea of “cleansing the colony” of its “native inhabitants” is not alien to Netanyahu. The codename for Israel’s current military operation in the West Bank is “Iron Wall,” a direct reference to Ze’ev Jabotinsky’s 1923 infamous essay. In the essay, Jabotinsky, a key ideological forefather of Netanyahu’s Likud party who has 57 streets, parks, and squares named after him in contemporary Israel, suggests to his readers to study the history of colonization and “see whether there is one solitary instance of any colonization being carried on with the consent of the native population. There is no such precedent. The native populations, civilized or uncivilized, have always stubbornly resisted the colonists”. As such, he states that “Zionist colonization … can proceed and develop only under the protection of a power that is independent of the native population – behind an iron wall, which the native population cannot breach”.
Like many of his second-term policies, Trump has partially walked back aspects of the plan — most notably the relocation of Palestinians to Jordan and Egypt.
What has been largely overlooked by media coverage, however, is the economic ideology underpinning Trump’s plan. The source of Trump’s supposedly “out of the box” and “creative” proposal turns out to be an academic paper titled An Economic Plan for Building Gaza: A BOT Approach. Authored by an economist at The George Washington University and shared with the Trump administration in July 2024, the paper envisions a multi-trillion-dollar investment initiative that effectively transfers Gaza’s sovereignty to foreign investor “stakeholders”, placing the Strip under full AI-driven supervision. According to the paper, “foreign investors are given equity shares in Gaza for a 50-year period where their investment will reconstruct Gaza. ... Sovereignty for the inhabitants (Transfer) in Gaza will be determined by these stakeholders after the 50-year leasing arrangement is completed.”
The paper is riddled with historical inaccuracies, unsupported claims about Palestinian casualties and infrastructure destruction, vague assertions about Gaza’s population size, and questionable sources including Wikipedia entries. It misrepresents Palestinian public opinion, and even claims that Israel’s military actions have been consistent with international law. That such a document was published in an academic journal is astonishing.
More fundamentally, the paper is steeped in the market fundamentalism and depoliticized economic logic. In its opening paragraph, the author proudly assert his intent to “use a more reasonable economic methodology devoid of political factors as constraints”, aiming to create “a civil governing system based on the general philosophy of private provision of public services”. Gaza, they argue, should be approached as a post-bankruptcy scenario that can be solved via “investment solutions”.
The cost of this real estate megaproject is estimated at 1–2 trillion dollars, with a projected completion time of five to ten years. Investors would hold a direct equity stake in Gaza via a 50-year lease. While the paper avoids explicitly calling for population transfer, Section Four includes troubling implications. It proposes to “dig up the entire 365 square kilometer Gaza land mass” and establish a three- to five- kilometre buffer zone. Coupled with high population density figures and a five-year construction timeline, these plans provided rhetorical ammunition for Trump’s ultimate aim: ethnic cleansing.
Further details are equally alarming. The paper suggests that Gaza’s civil administration be “subcontracted by the selected investors and/or their representatives”, and calls to “create the common law principles known as the ‘rule of law’ as it is applied to property, contract, criminal and tort law under a market system”. It should be noted that aside from the troubling history of the rule of law notion, common law is in fact alien to the legal system in the Arab world outside of Israel (which is influenced by both common and civil law systems). Finally, education, it proposes, should be overseen by foreign experts with the authority to design a “balanced” curriculum.
Heterodox Visions for a Free Palestine
The plan described above should be discredited outright, and yet, the fact that it originated from a paper rooted in mainstream economic methods such as Computable General Equilibrium (CGE) modelling lends it a veneer of legitimacy. This is not to suggest that all mainstream economics is necessarily harmful, but rather to caution that its apolitical logic can be weaponized for profoundly unjust ends. Thus, when seeking to formulate visions for Palestine after the war, it is vital that we look to heterodox economic ideas for inspiration.
Heterodox schools of thought emphasize the interdisciplinary nature of economics, and challenge the assumption that more data and computational power automatically result in better, more “scientific” policy. In the Palestinian context, local research institutions have underscored the political economy of the Israeli occupation and the potential pathways towards Palestinian disengagement from the Israeli economy. Globally, new institutions like the Center for Heterodox Economics (CHE) are advancing alternatives focused on workers’ rights, housing justice, and inclusive development — prioritizing the welfare of society over the maximization of shareholder value.
It is within this critical tradition that I propose three short-term economic policy measures aimed at easing the burden on Palestinians living in the world’s largest open-air prison, and helping re-establish basic human dignity. It goes without saying that in the midst of an ongoing genocide and humanitarian catastrophe, the immediate priority must be to put an end to the war, pressure Israel to withdraw from the Gaza Strip, and facilitate the entry of basic humanitarian aid. But after that, Gaza will need a fundamental transformation of its economy.
In the long term, the objective must be to dismantle Palestine’s entrenched economic dependency on Israel — an outcome of asymmetric power dynamics and unilateral control over resources and policy space.
When this war finally ends, a basic income should be provided to all adults living in Gaza for two years. Given the destruction of physical infrastructure, economic capacity, and educational institutions, such a measure is essential for restoring purchasing power. With an average household size of 5.5 and a population of 2.1 million — half of whom are under 19 — a 500-dollar monthly household stipend would cost approximately 4.5 billion dollars over two years, and could be administered through existing platforms such as the Ministry of Social Affairs.
A baby bond program would allocate an initial endowment starting at 2,000 dollars for each child born in Gaza, to be invested in a secure, interest-earning fund. These funds would be accessible between ages 18 and 25 for major life needs: housing, business investment, education, or retirement. With a crude birth rate of 32 per 1,000, Gaza sees around 67,200 births annually. Based on international estimates for similar programs, the cost would range from 1 to 1.5 billion US dollars per year.
A third initiative would establish productive-sector projects — particularly in manufacturing and agriculture — under a cooperative ownership model. Workers would earn fair wages, participate in management, and reinvest profits democratically. This model draws inspiration from the SAMED projects started by the Palestinian Liberation Organization (PLO) in Lebanon to support families of fallen fighters, as well as successful international models like the Mondragon Corporation in the Basque region and the Rojava economic experiment in Kurdish Syria.
Clearly, these policies will be costly, and will require substantial external financing. It is important to note, however, that the only alternative to Trump’s plan is the Egyptian-led Arab reconstruction initiative, currently estimated at 53 billion dollars. For context, the last major donor conference for Palestine in 2007 successfully secured over 7 billion in pledges. A similar effort could be revived to initiate a broader investment campaign, with a pivotal role played by Arab states and Palestinian investors from the diaspora.
While these policies are neither perfect nor intended as long-term solutions to the deep structural distortions caused by decades of Israeli occupation, they do offer meaningful short-term responses to the pressing challenges of poverty, unemployment, and economic dependency on Israel. In the long term, the objective must be to dismantle Palestine’s entrenched economic dependency on Israel — an outcome of asymmetric power dynamics and unilateral control over resources and policy space. Strategic goals should include reducing reliance on Israeli labour, goods, and capital markets, and launching a comprehensive push that mobilizes both public and private sectors. This would involve targeted investment in productive industries, the knowledge economy, and significantly increasing female participation in the labour force, which remains strikingly low at just under 20 percent.
The feasibility of such long-term policies must be examined within a broader political and stakeholder framework, akin to the analysis conducted by the Palestine Economic Policy Research Institute (MAS) in its recent report, The Political Economy of Palestinian Nationhood, Independence and Development in the Wake of War. That report, alongside a subsequent academic symposium titled Priorities for Palestine’s Economy in the Midst of War, stands in contrast to the apolitical lens of neoclassical economics. Together, they represent a rare yet essential body of local work that diagnoses the underlying conditions, symptoms, and remedies with much-needed clarity and intellectual integrity.