TOPIC 7.2
Structural Constraints
⏱️ 40 min read
🔒 Constraints Analysis
⚠️ Critical Context
🚧 The Digital Occupation
The development of the digital economy in Palestine is fundamentally constrained by policies that limit physical infrastructure build-out, control spectrum access, and restrict international connectivity. These issues affect the entire connectivity value chain—from the international connection ("First Mile") to the end-user access ("Last Mile").
A. The Spectrum Bottleneck and Technological Lag
📡 4G/5G Denial
Palestinian mobile operators remain at a significant competitive disadvantage due to systematic delays and denial of sufficient radio frequency allocation, particularly for 4G and 5G spectrum. The lack of access to these modern frequencies is seen as a key restriction that limits economic growth and the ability to compete with regional peers.
Unequal Spectrum Access
Analysis shows that Israeli operators have access to 538 MHz for use in settlements. While only 205 MHz is needed for these settlements, this leaves the potential for at least 300 MHz to be made available for Palestinian operators without affecting the utilization by settlements.
538
MHz Available to Israeli Operators
205
MHz Needed for Settlements
300+
MHz Could Be Allocated
📡 Explore: Complete Spectrum Bottleneck Analysis
Dive into the comprehensive visualization showing spectrum inequality (538 MHz vs 0 MHz for 4G/5G), technological lag across mobile generations, and the economic impact of this infrastructure constraint:
International Efforts
The ITU's Radiocommunication Conference passed Resolution 12 in November 2019, which called on Israel to deploy 3G and establish an adequate timeframe for the allocation of 4G and 5G frequencies for Palestinian operators, but this resolution remains unimplemented.
B. Control Over Infrastructure and Policy
Government of Israel (GOI) policies affect key elements of the connectivity value chain, including:
- Restrictions on the import and installation of ICT equipment
- The requirement for Palestinian operators to use Israeli companies to access international submarine cables, preventing them from owning an international gateway
- Restrictions on access to infrastructure and transmission sites in Area C, which often link cities and villages in Areas A and B
- The reliance on the Joint Technical Committee (JTC), described as a dysfunctional bilateral platform that hinders resolution on critical telecoms issues
⚡ The Great Bifurcation: Post-October 2023
The conflict beginning in October 2023 resulted in a "complete bifurcation" of the digital economy, shifting the focus from growth to survival and reconstruction.
🏚️ Gaza: Systematic Annihilation
Gaza's digital ecosystem transitioned from a nascent commercial market into a pure humanitarian lifeline.
Infrastructural Catastrophe
- Up to 75% of Gaza's telecommunications assets have been damaged or destroyed
- The sector's value added plummeted by 89%
- The destruction has been massive and systematic
Humanitarian Impact
The systematic blackouts and loss of connectivity represent a direct threat to life:
- Connectivity breakdowns have prevented humanitarian aid workers (including those from UNRWA and WFP) from coordinating aid delivery and distribution
- Civilians are unable to call for ambulances or access critical information on medical services
- Communication infrastructure essential for survival has been systematically destroyed
Digital Access Collapse
Preliminary data from late 2024 labor force surveys indicate a "sharp decline in Internet usage in Gaza Strip", with 39% of individuals (10 years and above) reportedly "unable to access the internet even once" during that period.
📉 West Bank: Recession and Stalled Projects
The West Bank's digital sector was subjected to systematic strangulation rather than physical bombardment.
Economic Contraction
The Information and Communication sector in the West Bank contracted by a severe 17.1% in the first half of 2024, contributing to the overall 35% decline in real GDP.
Policy Implementation Status
The World Bank's flagship Digital West Bank & Gaza Project (P174355) was rated "Moderately Unsatisfactory" as of December 2024:
- Only 33.4% of the $20 million funds disbursed, despite being past its mid-term point
- A key priority for 2025 is the full operationalization of the Telecommunications Regulatory Authority (TRA) to regulate the newly liberalized fiber market
75%
Gaza Telecom Assets Destroyed
-89%
Gaza Sector Value Decline
-17.1%
West Bank ICT Contraction
39%
No Internet Access (Gaza)
💳 Digital Finance as a Lifeline
The catastrophic failure of physical banking infrastructure acted as an accelerant for crisis-driven digital financial transformation.
E-Payment Resilience
Digital finance emerged as an essential mechanism for accessing basic services and humanitarian assistance, especially amidst the cash shortage and banking disruption in Gaza.
PMA Response: I-BURAQ System
The Palestine Monetary Authority (PMA) launched the Instant Payments and Transfers System (I-BURAQ) in the Gaza Strip ahead of the West Bank, specifically to:
- Enable citizens to carry out electronic transactions without the need for physical cash
- Facilitate the disbursement of humanitarian aid and salaries
- Provide a critical lifeline when traditional banking operations became impossible
Growth in E-Wallets
The value of executed transactions in the e-payment sector saw significant increases in 2024:
- The value of e-wallets reached $1,825.6 million in 2024
- In Gaza alone (Jan–Jun 2025): 2.8 million transactions totaling over $550 million
- Digital payments became the primary means of economic transaction in crisis conditions
💡 Crisis-Driven Innovation
The I-BURAQ system represents a remarkable example of crisis-driven digital financial transformation, where the complete destruction of physical banking infrastructure accelerated the adoption of digital payment systems as a humanitarian necessity.
💳 Explore: Digital Finance Humanitarian Transformation
See the complete story of how Gaza's digital economy pivoted from commercial services to humanitarian lifeline, with $1.83B in transactions, 2.8M payments, and the rapid adoption of I-BURAQ system:
View Digital Finance Visualization →
🎯 Key Takeaways
- Digital occupation: systematic denial of 4G/5G spectrum (300+ MHz could be allocated), restrictions on ICT equipment import, forced use of Israeli international gateways
- ITU Resolution 12 (2019) calling for spectrum allocation remains unimplemented
- Post-October 2023 "Great Bifurcation" split the digital economy into two distinct crisis scenarios
- Gaza: systematic annihilation—75% telecom assets destroyed, 89% sector value decline, 39% with no internet access
- West Bank: systematic strangulation—17.1% ICT sector contraction, stalled World Bank projects (33.4% disbursement)
- Digital finance as lifeline: I-BURAQ payment system enabled $550M+ in Gaza transactions (Jan–Jun 2025)
- E-wallet transactions reached $1.83 billion in 2024, demonstrating crisis-driven digital transformation
- JTC (Joint Technical Committee) described as dysfunctional platform hindering telecoms issue resolution
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