The Economics of Humanitarian Aid to Gaza

More aid trucks have been allowed into the Gaza Strip in recent days than at any other point since the war between Israel and Hamas started in October. Yet half the population of Gaza is now said to be suffering a famine, with the remainder experiencing acute food insecurity and malnutrition. And what remains of Gaza’s economy is now defined by abject need—humanitarian aid in the short term and reconstruction assistance down the road.

What long-term economic effects can famine be expected to have in Gaza? By what economic logic do relief organizations operate in Gaza? And what are the prospects for eventual reconstruction?

Those are a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast that we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your podcasts. And check out Adam’s Substack newsletter.

Cameron Abadi: What are the long-term economic effects of an experience of famine of the sort that we’re seeing in Gaza right now?

Adam Tooze: Famines are not easy to study because they often occur in conjunction with other disasters. But it’s interesting to study politically induced famines, which bring about sudden shocks. It gives us a chance to actually study a famine in a population that was ordinarily reasonably well nourished and that suddenly, for exogenous reasons—this is what economists look for—suddenly experienced this shock. And the results are really quite unambiguous, which is that the food shock has a long-lasting impact on the population in terms of its physical and mental health, its educational development, its human capital development. Younger folks who are exposed to these shocks tend to be shorter. They don’t grow to the same natural stature of other people. And the impact is most severe in pregnant women, in uterus. And it’s estimated that there are 60,000 pregnant women in Gaza right now whose babies will be suffering nutritional shock. And it’s really that group that is probably going to be most severely affected.

On younger kids, actually, short-term famine exposure appears to produce a kind of hardiness, a physical hardiness. It’s a tough thing to say, but it appears to be true. But what it does do is very severe damage to their socioeconomic prospects going forward. You see long-lasting impacts on schooling and social development, presumably deriving from the mental health implications of sudden insecurity and existential risk. So one shouldn’t, I think, underestimate the severity of this moment, even if food supplies ultimately were restored. The impact of this will be severe in the long term, and it will carry forward both as a biophysical shock to the body politic, literally, of the Palestinian population, as well, of course, a political and psychosocial mental health shock.

CA: Obviously, the physical devastation in Gaza has been vast. What kind of comparisons do we have historically for the extent of damage that we’ve already seen?

AT: When you’re looking at northern Gaza, you’re looking at one of the most intense bombardments in modern history. The estimates there are for damage in excess of 60 percent to 70 percent of the structures and inflicted over a period of months, not years. And this means that the relevant standards of comparison are the kind of destruction seen in German cities under Allied bombing, extremely intense Allied bombing from 1942 onward, which is really the first moment that modern aerial warfare became possible. The German bombing of London earlier in the war was a pinprick by comparison. And northern Gaza, as far as we were able to tell, ranks alongside the likes of Dresden. In fact, the level of destruction in northern Gaza seems to exceed that of Dresden, which was the victim, famously, of a ghastly firestorm. It’s up there with Hamburg and Cologne and Berlin, some of the most heavily bombed cities.

In the more recent past, you could look to the kind of urban warfare in the immediate region that was waged in the Syrian civil war. Aleppo, for instance, where 65 percent of the housing was damaged. Northern Gaza appears to have a level of destruction at least as high as those. So if you remember those images of Aleppo, which was like a city reduced to what looked like an ocean of rubble, we think in the case of northern Gaza, we’re talking about maybe 10 million to 20 million tons’ worth of rubble that will ultimately need to be moved, really staggering numbers. And then the other two places that come to mind are the hugely material intensive campaign that was waged by the United States and its allies against [the Islamic State]. So the cities of Raqqa and Mosul that were both subjected to extremely intense bombardment, and where we saw similar levels of physical destruction and rather fewer civilian casualties, though they numbered in the thousands in both those cities.

In other words, and I don’t think there’s really any doubt about this, we are dealing with one of the most dramatic instances of what one group of analysts has called “domicide.” So when the British were planning the aerial bombardment of Germany in 1940, ’41, and ’42, before they were actually able to mobilize the air fleets that are necessary to do this on the large scale, they talked about de-housing the German population. And the phrase that is now apparently in circulation is domicide, so the deliberate destruction of the houses, the homes of an entire population. It’s really an epic level of destruction. Early on in the war, we were making comparisons to Mariupol, but at least according to the data to my hands, the level of destruction would seem to be roughly two times as intense. The data for Mariupol are highly contested. I know the figure that I’ve found is a 32 percent destruction of structures there. Northern Gaza would appear to be about twice as intense as that.

LISTEN HERE: For the entire conversation, and episodes in the weeks ahead on this subject and others, follow Ones and Tooze wherever you get your podcasts. 

CA: How do aid workers operate in an economy like Gaza’s? What is the economic logic at work in the distributional system that they are required to create?

AT: I went online to the ReliefWeb, a site where they aggregate all of the different appeals for relief. And if you start looking at the daily flow of appeals for Gaza, it isn’t economics in the sense of, you know, x number of hundreds of millions or billions of dollars that then are going to be rationally allocated between the following purposes. It seems to be driven much more directly by how do we keep people alive and how do we empower other people to keep people alive.

And the economics element enters in when you start asking, well, in a society like this, what is the price of water and food? Because things do have a price, even when they are as scarce as this, because, after all, you can appropriate relief aid. And one figure I’ve seen is that 25 kilos, or a 50-pound bag, of flour—and because this is a population that eats bread—a 25-kilo bag of flour, 50-pound bag of flour, goes for $1,000 in Gaza right now. And if that’s the case, then another element enters the story here, which is protection. How do you ensure that these supplies, which are as desperately needed as this, are protected? And at that point you enter into politics, because at that point, the distribution of food, when it acquires a black-market value of this kind of price, becomes hugely, hugely political. And this is where then the politics of the campaign, which is a campaign, after all, being waged by Israel for the destruction of Hamas and essentially, as far as we can see, the uprooting of the society in Gaza that supported Hamas—at this point, then, the question becomes, can you sustain this population if, as you’re saying, all political order is being put in question? And it is true, of course, that feeding aid through political authorities on the ground, police authorities on the ground, means working with groups that have necessarily for years now—since 2007, at least, whether they liked it or not—collaborated with Hamas, which has been the power in the Gaza Strip. If you are refusing to supply aid by way of them, then the question is how on earth can you protect it and how on earth do you get it to the population?

So at that point, the question of relief merges with the political question of reconstruction that is to come afterward. And really, I think, the test case of the difficulty of doing this is Somalia and Mogadishu, where for decades now very large populations of displaced persons have had to be maintained by aid. And it’s extraordinary. There is really an entire not so much economics, but political economy of the relationship between aid agencies and what are called ISMs, or informal settlement managers, because what emerges is that guys with guns and control over land and tents and places in which displaced people could live become, whether you like it or not, essential intermediaries between the aid agencies that are bringing the essential supplies of water, the pipes that are necessary to do that, and the food and the population that you’re trying to relieve. And so you simply cannot escape this combined kind of political economy of relief.

If you try to move around that and challenge the political structures which are forming, you have to have an alternative vision of what you’re going to put in place, and you have to have the determination and the resources and the willingness to put aid workers in harm’s way. Or the willingness of aid workers to collaborate with soldiers who are going to have to impose themselves on informal structures of power, which are shaping up in the crisis region. Otherwise, your only alternative, essentially, is to collaborate with these intermediaries. And experienced aid staff on the ground, when they look at Gaza, just immediately think, Mogadishu, how is this going to work? How are we going to keep a population of 2.5 million people alive unless we are going to have essentially political and political economic relations with powers on the ground? Are we actually going to try to administer this whole region?

And if you’re not offering a vision for that, what is your vision of the destiny of these people? What hides behind your silence on this question? What actually do you intend, if you don’t intend to offer an answer to this question of how on earth do you get this food, this water, down to a desperate population where people are willing to spend $1,000 for a 50-pound bag of flour?

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CA: What would reconstruction look like against the background of this scale of destruction? And what are then the prospects for anything resembling optimistic conditions for reconstruction getting fulfilled?

AT: Well, Gaza has been through destructive Israeli invasions before and has rebuilt. But we’re talking about something far more comprehensive now in terms of destruction. So there really isn’t a template for doing this. There have been a bunch of reports done by UNCTAD (United Nations Conference on Trade and Development) and the World Bank earlier in the year. But if you dig into those, they have a sort of shadowy unreality to them at this point. They use estimates for Gaza’s pre-crisis GDP. They adjust for Gaza’s pre-crisis growth rate. They make adjustments along the level of previous Israeli incursions and the damage those did to Gaza’s GDP.

And then you look at the pictures of Gaza now, and you realize that the overwhelming majority of the population is displaced or harboring people who are displaced. And you simply ask yourselves, what on earth are you talking about? Like what image of an economy do you actually have in mind when you talk about reconstruction here? How is this going to be done? And what is the political frame? And this is the essential question: What is the political frame that this is going to be done in? And Israel, you know, at the end of February, issued a one-page statement about its vision of Gaza’s future, what they envision after the final destruction of Hamas. And it at least provides a one-line pointer, which is to say that they expect Gaza to be administered by Palestinians with some experience in government. But they, of course, reject the possibility of a return of Hamas, which they want to destroy. They reject also, however, the possibility of the engagement of the Palestinian Authority governed by Fatah, from the West Bank. Also not an option. They say they’re going to rely on support from external powers that are agreeable to Israel to do this enormous job. But, of course, the Arab states have all completely disowned this project unless Israel is willing to engage in serious conversations about a two-state solution.

And in the background, apparently, there is a strain of Israeli thinking about Gaza’s future, and indeed Palestine’s future, which denies Palestinian statehood in the sense that it in fact insists that Palestinian people belong in a kind of tribal culture. And the idea is that rather than a two-state, a two-nations solution, the future of Palestine consists of indirect rule, colonial style, in which Israel delegates the matter of authority to powerful clan and tribal groups, notably within Gaza. And between ’67 and 2005, this was apparently one of the strategies Israel employed, was to maneuver its way around the PLO [Palestine Liberation Organization] by working as closely as possible with major clan structures.

We’re talking now about families like Doghmush who are key clan groups in Gaza. And one of the nightmarish disasters that unfolded as recently as Feb. 29, apparently, was the so-called flour massacre, when the Israelis made a first attempt to ship several truckloads of flour into Gaza under the control of one of these clan groups. They found themselves overwhelmed by a hungry mob of Palestinians desperate to get their hands on the food, and either the clan militia or the Israelis opened fire. And well over 100 people were killed in the melee. And it was a complete fiasco of this effort of relying on empowered local authorities and agents to act. I don’t think there is a vision here, and it’s the absence of a vision which in some senses I think is as terrifying as anything, because it implies a vision which ultimately means the erasure of Gaza as a functioning society that is in any sense a steppingstone, let alone the realization, of Palestinian self-determination.