From Recognition to Capacity Building: Has the World Started Investing in the Palestinian State Before Completing Its Sovereignty?

The Palestinian cause is currently experiencing a notable transformation in the nature of international engagement, characterized by an increasing interconnection between the pathways of political recognition and economic development. Concurrently with the widening circle of international recognition of the Palestinian state, the European Union and the European Investment Bank launched unprecedented financial initiatives to support the Palestinian economy, private sector, and national institutions. The significance of this transformation lies not only in its financial or political magnitude but also in its deeper implications, reflecting a growing international trend that perceives political legitimacy and economic capacity as complementary elements in supporting the Palestinian state and enhancing its resilience and continuity.

The results presented in this article are based on a public opinion poll conducted by the Palestinian Center for Public Opinion (PCPO) in November 2025 to measure Palestinians' attitudes toward international and European recognition of the Palestinian state and its political and economic ramifications. The poll was implemented using computer-assisted telephone interviewing (CATI) and random digit dialing (RDD) techniques to ensure representation from various segments of Palestinian society. The sample included 313 respondents from the West Bank and Gaza Strip, comprising 60.4% from the West Bank and 39.6% from Gaza, with the male response rate at 51.1% and females at 48.9%. The response rate was 68%, with a margin of error of ±5.5% at a 95% confidence level.

Additionally, the analysis in this article relies on the results of several opinion polls conducted by the PCPO during 2026 regarding economic conditions, living standards, migration, community resilience, and more, along with relevant international data and surveys, including the 2025 Reuters/Ipsos poll regarding American public opinion on recognition of the Palestinian state, aiming to contextualize the study's findings within a broader national and international framework.

International Recognition: From Political Symbolism to Legitimacy Enhancement

The years 2024 and 2025 witnessed an unprecedented development in the path of international recognition of the Palestinian state. A total of 143 countries in the United Nations General Assembly voted in favor of expanding Palestine's rights within the international organization, and the number of countries recognizing the State of Palestine rose to over 150 worldwide. During this period, Spain, Ireland, and Norway recognized the Palestinian state in May 2024, followed by influential Western countries such as Portugal, France, the United Kingdom, Canada, Belgium, Luxembourg, and Malta throughout 2025.

The importance of these recognitions lies not only in their symbolic dimension but also in reflecting a gradual shift in the international community's view of the Palestinian cause from regarding it as a long-standing political or humanitarian crisis to viewing it as a matter of a people's right to self-determination and the establishment of their independent state. Furthermore, the widening circle of Western recognitions provides Palestinians with additional political and legal momentum in international forums and enhances their ability to utilize available diplomatic and legal tools.

Survey results indicate that Palestinians recognize the importance of this transformation. About 62.9% of respondents believe that international recognition enhances Palestinian national rights, while 73.5% see it as strengthening Palestine's legal and diplomatic status. Additionally, 41.2% believe that the most significant impact of recognition lies in increasing political and diplomatic pressure on Israel.

However, the results reveal a high level of political realism among Palestinians. While they view international recognitions positively, 37.4% believe that recognition alone will not lead to any tangible change on the ground in the near future. Furthermore, 40.6% think that these recognitions may intensify political pressures and tensions before any new political dialogue, while 27.2% believe that they will not significantly affect the peace process. Conversely, 29.7% think they may contribute to reviving negotiations, while 38.7% believe that their main goal is to increase pressure on Israel to return to the negotiating track.

These results suggest that Palestinians clearly differentiate between legal legitimacy and actual capacity to realize statehood. International recognition is viewed as an important step in enhancing Palestine's political and legal standing, but is not seen as a substitute for building institutions or improving economic and living conditions. Hence, the importance of synchronizing the expansion of international recognition on one hand, and increasing investments and efforts aimed at enhancing the resilience and sustainability of the Palestinian economy and institutions on the other hand emerges strongly.

European Investment: From Crisis Management to Capacity Building

However, the more significant transformation may not lie solely in political recognition but rather in the accompanying increasing trend toward investment in the components of the Palestinian economy and its institutions. After decades during which most international support focused on humanitarian aid and crisis management, indicators began to emerge of a gradual shift toward an approach aimed at enhancing Palestine's economic and institutional capacity in the long term.

In this context, the European Union announced in April 2025 a multi-annual program for Palestine worth €1.6 billion for the period 2025–2027, which includes €620 million to support the Palestinian Authority and institutional reform, €576 million for recovery, development, and resilience projects, in addition to up to €400 million in financing allocated to the Palestinian private sector through the European Investment Bank.

The Palestinian-European Investment Platform also launched a financing program worth $395 million to support small and medium Palestinian businesses through five major Palestinian banks, where Bank of Palestine received $150 million, Al-Quds Bank $100 million, the Palestine Investment Bank $70 million, the National Bank $50 million, and Cairo Amman Bank $25 million. Additionally, €3.5 million have been allocated for technical assistance and institutional capacity building, of which €2.1 million have been implemented so far, leaving €1.4 million to complete the scheduled programs.

The significance of these initiatives transcends the size of the allocated funds, as they reflect a transformation in the nature of international support for Palestine from focusing on short-term relief to investing in building more sustainable institutions and enhancing the role of the private sector as a key driver of economic growth and job creation. Moreover, directing a significant portion of this funding through Palestinian banks indicates a high level of international confidence in the Palestinian financial sector's ability to manage resources and direct them towards productive activities.

In this context, Palestinian Minister of Finance and Planning, Dr. Istifan Salameh, and Deputy Governor of the Palestinian Monetary Authority, Muhammad Mansara, emphasized the importance of these agreements in expanding private sector access to financing and enhancing its ability to confront current economic challenges. They were joined by Vice President of the European Investment Bank, Gelsomina Sillioti, and acting Director-General for the Middle East, North Africa and Gulf Directorate at the European Commission, Michael Carnitcheng, who stressed that these initiatives aim not only to provide financing but also to strengthen Palestinian economic resilience and stimulate growth and job creation, based on a vision linking economic development, institutional reform, and political stability.

From this perspective, these investments should not be viewed merely as separate financing programs, but rather as part of a broader international trend seeking to enhance the ability of the Palestinian economy to function and sustain itself despite existing constraints and challenges. Just as international recognition grants Palestine greater political legitimacy, investment in its institutions and economy provides it with a greater capability to translate this legitimacy into a more sustainable economic and institutional reality.

The United States: Between Traditional Support and Possible Transformations

Despite the prevailing belief that the United States will remain Israel's main supporter, with 57.2% of Palestinians believing that Washington will continue its support for Israel, signs of gradual changes in American public opinion may carry important implications in the long term. A 2025 Reuters/Ipsos poll indicated that 59% of Americans support the recognition of the Palestinian state by the United States, reflecting a growing acceptance of the idea of a Palestinian state within American society.

Conversely, 20.4% of Palestinians believe that the United States may adopt a more balanced role in the Palestinian-Israeli conflict in the future, while 19.5% think it may gradually adjust its positions. While these indicators do not imply an imminent radical shift in American policy, they reflect a Palestinian recognition that the international environment surrounding the Palestinian cause is undergoing gradual changes that may, in the future, enhance opportunities for international recognition and political and economic support for the Palestinian state.

In this context, a significant question arises regarding the future of American aid to Palestinians and its role in supporting the Palestinian economy in the coming years. While Europe is currently leading increasing efforts to invest in Palestinian institutions and the private sector, the American role in the development field remains less clear. Hence, the issue is not only about whether American aid programs can be resumed or expanded, but also about the extent to which Washington is willing to engage in the growing international trend that links support for Palestinian economic development with enhancing the prospects of establishing a viable Palestinian state.

From this perspective, current transformations are not limited to the widening circle of international recognitions or increased European investments, but also encompass indicators of a broader change in the international mood toward the Palestinian cause, which could pave the way for a more supportive international environment for the Palestinian state project in the upcoming years.

The Palestinian Economy Under Pressure

These European initiatives come at a time when the Palestinian economy is facing unprecedented challenges, explaining the growing importance of economic and investment support in the eyes of Palestinians. Study results showed that 57.7% of Palestinians describe their economic situation as poor or very poor, compared to only 42.3% who view it as good or somewhat good. Additionally, 59% of Palestinian households live on a monthly income of less than 2000 shekels, while only 3.3% of households have a monthly income exceeding 6000 shekels.

These conditions are clearly reflected in the labor market; only 37% of the sample are employed, compared to 32.8% who are unemployed. The seriousness of these indicators is heightened by international estimates indicating the loss of more than 500,000 jobs due to the war and Israeli restrictions, with expectations of unemployment rates rising to about 57% if current conditions persist.

The results also showed that 43.3% of Palestinians are dissatisfied to varying degrees with their current lives, with 30.5% reporting complete dissatisfaction, reflecting the extent of the economic and social pressures the Palestinian community is experiencing. Under these circumstances, the significance of European investment packages goes beyond their direct financial value, as they are not merely seen as tools for supporting economic growth, but as means to help safeguard job opportunities, enhance social stability, and reinforce Palestinians' resilience and ability to remain in their land.

Thus, investing in the Palestinian economy becomes part of a broader process that transcends traditional economic development, directly connecting with building the foundations of a future Palestinian state. Just as international recognition enhances Palestine's political and legal legitimacy, economic investments contribute to strengthening its institutional and developmental capacity, allowing the state project to be more viable and sustainable when suitable political conditions arise.

Challenges of Clearance Revenues and Shekel Crisis: The True Test of Economic Sustainability

Despite the importance of recent European investment initiatives, the Palestinian economy still faces deep structural challenges that go beyond the issue of direct funding, foremost among them the crisis of clearance revenues and the complex financial relationship with Israel, alongside the problem of accumulated shekel surplus in the Palestinian banking system.

Results from a previous survey conducted by the Palestinian Center for Public Opinion (PCPO) indicated that 69.4% of Palestinians believe Israeli restrictions on the banking sector carry political objectives aimed at pressuring the Palestinian Authority, while 68.7% viewed the restrictions on converting the shekel surplus to Israel as the main reason for exacerbating the monetary crisis. Also, 62.3% expressed significant concerns about the worsening problem of shekel accumulation within Palestinian banks, while 82.4% anticipated that ongoing financial crises would delay or disrupt salary payments in the future.

These indicators gain special importance as the Palestinian economy continues to rely heavily on clearance funds, which constitute the primary source of public revenues, and on maintaining banking relationships with Israeli banks to settle commercial and financial payments. Therefore, the success of new European investments will not only depend on the size of available funding but also on the Palestinian economy's ability to function within a stable financial environment that ensures the smooth flow of payments, trade, and money transfers.

From this standpoint, building a more resilient Palestinian economy does not only require investment in projects and job opportunities but also necessitates addressing financial bottlenecks and structural constraints that limit the Palestinian economy's capacity for growth and full benefit from any new investment opportunities. A viable state requires strong institutions and productive investments, but it also needs a stable financial system capable of functioning efficiently and independently.

What Do Palestinians Want?

Perhaps one of the most significant aspects of these results is their striking intersection with the nature of the ongoing transformation in international support for Palestine. While European and international institutions have begun directing more resources toward investment in the Palestinian economy and private sector and building institutional capacities, survey results showed that Palestinians themselves view economic and investment support as the most urgent priority at this stage. About 39.6% of respondents considered economic and investment support the top priority, compared to only 31% who prioritized political and legal recognition, while 28.1% viewed both paths as equally important.

These results do not imply a diminishing importance of international recognition but reflect a growing Palestinian realization that state-building does not depend solely on political legitimacy but also requires an economy capable of providing job opportunities and improving living standards and enhancing institutional sustainability. Therefore, the synchronization between the widening international recognition of Palestine and the increasing investments and economic support directed toward its institutions and private sector seems more in line with the priorities of the Palestinians themselves.

What these numbers indicate is that Palestinians do not view recognition and investment as competing pathways but as complementary elements in the state-building project. Recognition grants legitimacy, while investment provides the practical components that make this legitimacy transformable into a sustainable economic and institutional reality. Perhaps that is why 36.4% of respondents expect international recognition to improve economic and living conditions, while 38.7% believe its positive effects will manifest in the long term, reflecting widespread awareness of the close relationship between political legitimacy and economic development.

Resilience and Staying on the Land

Despite increasing economic and political pressures, resilience remains one of the most prominent features of Palestinian consciousness. Results showed that 84.6% of Palestinians believe there are policies aimed at pushing them to leave or undermining their social stability, while 38% see economic pressures as the primary tool for achieving this.

Nonetheless, 56.4% of Palestinians confirmed that they are not thinking about migration at all, compared to only 35.4% who consider migration to varying degrees. These results are particularly significant in light of recent developments related to international recognitions and European investments, as they indicate that enhancing Palestine's political legitimacy on one hand, and supporting the Palestinian economy and creating job opportunities on the other, together form two essential pillars for reinforcing Palestinians' resilience and enabling them to remain in their land. Every international recognition augments Palestine's political and legal status, and every economic investment contributes to improving living conditions and expanding job opportunities, making resilience more capable of sustainability.