Gaza's economy is collapsing. It needs liquidity now.

Lessons from Syria’s collapse

Syria is not invoked here as a mirror image of Palestine. The two crises differ in context, intensity, and geopolitics, and deserve to be treated as distinct. However, Syria is the most recent case of prolonged financial degradation followed by near-unanimous international support for rebuilding.

Since 2011, Syria’s economy has contracted by more than 60%. Sanctions from the U.S., EU, and Arab League targeted its central bank, oil revenues, financial networks, and key state entities. As the war dragged on, restrictions hardened. Informal markets flourished and civilian infrastructure eroded. Hyperinflation gutted purchasing power; by 2025, the “Syrian pound has lost more than 99% of its value since the war erupted in 2011,” leaving banknotes almost worthless and public trust in tatters.

It was only after Assad’s ouster in December 2024 that the global community moved swiftly to reverse course. Sanctions relief was implemented across major jurisdictions. The diaspora mobilized to reinvest, and donors pledged support. In August 2025, the Syrian Central Bank redenominated the pound, “removing two zeros from its currency in an attempt to restore public confidence.”

But, even with coordinated relief and reform, recovery is far from assured. Regulatory opacity, historic investor flight, and fractured financial controls mean that public confidence in financial institutions has not returned. That is what makes Syria instructive: it shows just how difficult recovery becomes, even when the economic restrictions are lifted and the world aligns behind it. In Palestine, where neither the infrastructure nor the unanimous international support we now see in Syria exists, the task may just be Sisyphean.

This contrast becomes even sharper when considering the basic monetary tools Syria still possessed throughout its collapse. Syria had a sovereign currency, a functioning, if seemingly opaque, central bank, reserves to restructure, and the institutional authority to redenominate the currency.

In contrast, due to Israel’s complete control over Palestine’s financial levers, the latter has no traditional central bank, no independent currency, and no unilateral control over fiscal inflows. The Palestinian Authority’s budget and ability to pay salaries depends on clearance revenues, or taxes, collected (and often withheld) by Israel. The economy can only operate under the four main circulating currencies — shekels, U.S. dollars, Jordanian dinars, and Euros. Palestine has no authority to issue a trusted domestic currency and no true fiscal pathways to manage reserves, foreign exchange risk, or bond markets.

Reconstruction plans estimated at $70 billion are being developed in Palestine; yet even with the anticipated increase in the presence of the four foreign currencies coming in to support these efforts, they alone cannot insulate the economy from collapse: Israel has deliberately restricted shekel-to-dollar conversions, creating a surplus that has turned banks into cash warehouses. Transactions between Palestinian and Israeli banks still hinge on a single Israeli waiver, shielding the Israeli banks from liability.

That waiver, which was set to expire at the end of November 2025, was recently granted only a two-week extension, which is far from a permanent solution.

A banking system cannot function when its survival depends on a discretionary political instrument. The economy and the humanitarian system cannot function either. The only solution is Palestinian independence and control over its financial system and currency.

Indeed, absent this, Palestine risks inheriting Syria’s fragility in a much harsher form. The minimal monetary scaffolding Syria had before recovery does not exist in Palestine. A system that cannot convert its main legal tender into usable foreign currency is not dollarized or diversified; it is trapped. A viable sovereign currency may be an important marker of long-term statehood, but it is not a near-term option, and the remaining pathways are constrained by Israel’s complete financial control over financial rails. Therefore, the most salient recommendation is to create sustained mechanisms and pathways that are not susceptible to Israeli interruption or political will.

The currency of Palestinian statehood

Ultimately, liquidity is not only the lifeblood of tomorrow’s statehood; it is what makes humanitarian assistance function today.

Some will argue that the answer is simply to make aid more comprehensive. However, aid was never designed to replace an economy. Trucks can deliver flour and medicine, but not the shoes in a child’s size, the bus fare to reach a hospital, or the fuel to keep it running. Liquidity is what allows families to turn partial aid into actual survival. It is what allows aid agencies to pay suppliers, hire staff, and keep operations afloat. More aid trucks, or lifting the humanitarian blockade alone will not change that. These steps must be taken in tandem with restoring financial channels as a priority.

The international community must act before collapse ossifies. Palestinian transactions cannot remain hostage to a single, two-week or short-term waiver. Alternative correspondent banking channels, developed with regional or multilateral actors, are essential. So, too, are safeguards for clearance revenues. Independent oversight mechanisms could both insulate these transfers from political interference and give donors confidence that budgets will be honored and compliance will be upheld.

These tools must be deployed not in reaction to complete collapse, but in anticipation, and prevention, of it. Syria’s experience shows how hard it is to regain economic footing once financial infrastructure and trust are lost. For Palestine, the scaffolding for this infrastructure is hard wrought and fledgling. If recovery is to be possible in the future, what is left of Palestinian liquidity must be protected in the present, and the current damage must be urgently addressed to halt the trajectory toward a complete, economy-wide financial and humanitarian spiral.

To ensure this, the New York Declaration, and the accompanying U.N. General Assembly Resolution affirming it, cannot be diplomatic theater. A flag and a seat at the United Nations are vital markers of recognition, but statehood cannot be sustained by these displays alone. It requires the basic institutions of financial governance.

Palestinians have too often been handed words without the means to act on them. Without real economic support, the world will not be building a state. It will be scripting its next collapse.