The economic situation of the West Bank and the Gaza Strip is to a large extent determined by its security condition. Given that a considerable part of Palestinians work on Israeli territory, the 2000 intifada followed by the closure of the borders, stringent checkpoint controls and eventually leading to the construction of a security barrier physically barring Palestinians from crossing to Israel outside regular checkpoints, brought a 16 % increase in unemployment and 33 % drop in average per capita income by 2003.

Although data on poverty rates in the West Bank and Gaza are scarce (even the annual World Indicators volumes by the World Bank leave the West Bank and Gaza Strip in the Poverty rate table blank), it can be estimated from other sources at around 50 %, with fluctuation of 10 percent to each side (European Union, World Bank). This indicator has doubled since the outbreak of the 2000 intifada (some 23 % were considered to live in poverty in 1998); the Gaza Strip is deemed to be more stricken with poverty than the West Bank.

Territories under the administration of the Palestinian Authority (PA) are particularly vulnerable to the way poverty is defined, as a considerable portion of the population live just above the official poverty line, which is estimated at 1 USD a day (Iqbal 2006, 4). More accurate measurements of poverty in the West Bank and Gaza conclude that some 16 % of the population live in subsistence poverty, i.e. with less income than 205 New Israeli Shekal (NIS) a month, which leaves them below the minimum caloric intake and without sufficient clothing and shelter (Poverty in the WBG 2005, 1).

The same study however concludes that emergency assistance has succeeded to reduce the number of impoverished people by almost 1/3 (from a possible 22 %). Although it could have been allocated more effectively, exceeding in total the minimum aggregate needs by 40 % and hitting a leakage rate of 55 %, it still reached the most needy quite well in comparison with other regions. Nevertheless, it is not the purpose of this article to measure the efficiency of emergency aid provided to PA, although it might be quite important . Finally, simulation scenarios have revealed that major economic recovery would not alleviate poverty by much, given that a significant share of poor people already have jobs and some 10 % remain in structural, not temporary poverty.