When the Crisis Becomes a Job: How Has War Revealed the Model for Managing the Economy?

The economic crisis in Palestine did not begin with the outbreak of war, but at this moment it has emerged without masks. The war, despite its brutality, does not create economic models but rather exposes what has been existing and postponed. In the Palestinian case, the war has brought back the spotlight on a model we have long become accustomed to: an economy managed as a permanent state of emergency, rather than a path that is viable for planning and transformation.

In this context, the question is not why the crisis has worsened, but how it has persisted to the extent that it has become part of the institutional routine. Crisis management has ceased to be a temporary tool for overcoming shock; it has gradually transformed into a self-sustaining function that governs public finances, economic policies, and even societal expectations.

An Economy Hanging on the Edge

For years, the Palestinian economy has been treated as a temporary economy in a state of open exceptionalism. The budget deficit was managed by deferral, debt service was covered by borrowing, and liquidity was managed on a monthly basis rather than within a medium-term outlook. Today, with a public debt nearing 15 billion dollars, which exceeds 100% of the GDP, this pattern is no longer sustainable without significantly high structural costs.

In addition, there is a monthly salary bill nearing 900 million to a billion shekels for about 150,000 employees and retirees, as well as debt service draining between 250 and 300 million shekels monthly. These figures not only reflect financial pressure but also explain how economic policy has been governed by managing existing commitments, rather than creating new choices.

The war did not change this equation, but it made it more acute. The conversation is no longer about stimulus or investment, but about the ability to continue. When survival becomes the only goal, thinking about solutions diminishes, and the logic of containment prevails.

Surplus Cash: Money Without a Job

One of the most dangerous manifestations of this model is the accumulation of cash without the capacity to deploy it. While public finances suffer from liquidity blockages, estimates indicate that the cash circulating in the Palestinian economy amounts to about 20-25% of GDP, and may rise during periods of war and recession to around 30%, which is a high percentage compared to normal economies.

What is more alarming is that a significant part of this liquidity is not actually working within the economy. Unofficial estimates, based on the behavior of the banking sector, indicate that between 3 and 5 billion shekels of circulating cash are considered functionally inactive liquidity; they do not find their way to lending, investment, or transfer, due to restrictions on dealing in shekels, declining credit, and heightened risks in wartime.

This accumulation does not mean financial abundance but rather structural dysfunction. The money exists, but without economic function. Here, liquidity transforms from a stimulation tool into a paralyzing factor, and keeping cash becomes an alternative to investment in an economy managed with an emergency mentality rather than a decision-making mentality.

Emergency Mentality and Erosion of Planning

In normal economic experiences, emergencies are used to face a specific shock, and then planning is restored. However, when emergencies become a permanent state, the planning itself erodes. This is what the Palestinian situation reflects today, where decisions are made under the pressure of the moment, and public finances are managed on a logic of weeks rather than years.

This pattern did not emerge with the war but is the result of years of adaptation to crises instead of moving beyond them. Thus, an economy forms that excels at managing recession more than it does at creating growth, and is skilled at distributing losses more than at building value.

The Cost of Inaction in Times of War

The most dangerous aspect of this model is not just financial deficiency, but the cost of inaction. The absence of strategic decision-making means not only postponing solutions but also accumulating invisible losses: investments not executed, small projects not launched, jobs not created, and trust eroded among investors and citizens.

Estimates indicate that private investment may decrease by 20-30% during periods of uncertainty, which translates to the loss of thousands of job opportunities annually in an already limited economy. In wartime, these costs multiply, as postponement becomes a general behavior, and the economy finds itself in a state of psychological freeze before a financial freeze.

The War as a Mirror, Not an Excuse

It is a mistake to reduce the economic crisis to war alone, just as it is a mistake to ignore its effects. Here, the war is not an excuse but a mirror that has revealed the limitations of tools, the weak ability to plan, and the long reliance on crisis management instead of addressing its roots. The real concern begins after the war; if the confrontation ends and the management model remains the same, we will transition from one crisis to another without breaking the cycle.

Conclusion

The war did not end the solutions, but it revealed that many of them were already postponed. The Palestinian economy suffers not only from a shortage of resources but from a management model that has grown accustomed to living within the crisis, to the extent that money accumulates without function, and planning recedes in the face of the logic of containment.

The real question today is not how we manage the war economically, but whether we have the courage, after it ends, to shift from emergency management to rebuilding the path. Because an economy that excels at crisis management may survive, but it does not thrive, and a state that turns crises into jobs prolongs the crisis more than shortens it.