Introduction

The Gaza Strip has always been characterised by changing political and economic realities. To grasp and understand the current reality of the Gaza Strip, this chapter aims to look at the political economy of the territory over five periods since the Israeli military occupation in 1967: the First Intifada (1987–93), the Oslo Accords (1993), the Second Intifada (2000–5), the Israeli withdrawal from Gaza (2005) and finally Hamas's victory in the Palestinian parliamentary election (2006) and its taking control of the territory. The political economy of each period exhibited particular characteristics that impacted the overall living conditions of the territory; de-development has been a common feature throughout. The chapter therefore aims to contextualise this process of de-development under occupation by examining the course of political events and their impact on shaping the economic life of Palestinians living in Gaza.

Before addressing the ways foreign (especially Western-donated) aid contributed to and consolidated a process of control and de-development similar to that under occupation, it is first important to differentiate between two important terms: de-development and underdevelopment. Each term refers to different reasons why adequate development was not achieved, thus justifying the use of one term over the other. Second, it is important to give a historical background to this process as it occurred under the occupation. This is to help us understand how donor countries post Oslo Accords (1993), particularly the United States, have not only failed to alleviate this systematic process of control and de-development, but have also indirectly contributed to this by: (a) accepting the status quo imposed by Israel and (b) adopting the Israeli security narrative in its relationship with the territory. Accordingly, the chapter will establish that Gaza's economic failure cannot be attributed to its poor economic performance or the lack of either financial or human resources, but rather to a deliberate and systematic process of economic warfare undertaken by Israel as the occupying power of the Palestinian territories in the WB and Gaza Strip. In this context, the chapter illustrates how Israeli's policy towards Gaza has always been one of ‘de-development’, where Israel has worked continuously to destroy Gaza's indigenous economy (Roy, 1995).