Now, after more than a year of war in Gaza, a company with roots dating back centuries sees its future slipping away.

Production costs rose more than 20% and exports fell nearly 30% due to Israeli movement restrictions in the West Bank. Total annual revenue fell from about $5 million to less than $1 million. The staff was reduced from 28 before the war to eight. The company is also purchasing less olive oil, a staple of the local economy, used in its famous soap.

Palestinian business owners say the cost of doing business is rising as importing materials and shipping products becomes more difficult. Rising unemployment hurts local consumers. Tourism, an important source of foreign income, has fallen sharply.

“We’re not just suffering, we’re trying to survive,” said Mojtaba Tbeleh, owner of the soap company. “We can’t even plan on an hourly basis, let alone a year, as we should.”

The war between Israel and Hamas flared up after the militant group attacked southern Israel in October last year, killing 1,200 people and taking 250 people hostage. The fallout increasingly threatens the economy in the West Bank, a separate mostly Palestinian enclave a few dozen miles away, and could have destabilizing consequences for the security of Israel and the Middle East at large, senior U.S. officials said in letters to the Israeli government. . .

The risk of separation from Israel’s financial system also looms. An Israeli exemption allowing correspondence between Palestinian and Israeli banks was set to expire last Thursday, severing a relationship that supported more than $13 billion in annual trade. At 11:00, Israeli Finance Minister Bezalel Smotrich, who said that Palestinian banks were used to finance terrorism, extended the exemption for another month. The United States is pressuring Israel to hand over that agreement for at least another year, saying the Palestinian Authority, which governs part of the territory, along with various international organizations, is adequately managing the risks of illicit financing.

“Unfortunately, the very short-term duration of this extension will lead to another looming crisis by November 30,” Secretary of State Antony Blinken and Treasury Secretary Janet Yellen said in a joint statement Thursday. “Cutting these banking ties would create significant economic turmoil.” “It threatens the security of Israel in the West Bank and the wider region.”

Before the conflict in Gaza began last year, the West Bank economy was relatively stable. Even before the war, Israeli and Jordanian ports served as gateways to the world for Palestinian businesses, despite some access difficulties. Tourism to historical sites in Bethlehem and Jericho brought in revenue. More than 100,000 Palestinians have entered Israel legally to work, and relatively low unemployment has kept West Bank residents spending.

That all changed after the Hamas-led offensive and the Israeli military offensive it triggered that killed more than 43,000 people in Gaza, mostly civilians, according to health officials here. The numbers do not indicate how many people were combatants. Israel has tightened movement restrictions in the West Bank, revoked the permits of more than 100,000 Palestinians working legally in Israel, and carried out almost daily military raids, killing more than 700 people. Israeli settlers’ violence against Palestinians has increased.

The result: All major economic sectors in Palestine are shrinking, according to Palestinian officials and economic analysis. According to the Palestinian Central Bureau of Statistics, the unemployment rate in the West Bank has more than doubled from pre-war levels, rising to an estimated 31% in the second quarter of 2024; the previous year it was about 13%.

The Palestinian public sector, which accounts for about 20 percent of jobs in the West Bank, is also struggling. The Palestinian Authority is expected to face a budget deficit of approximately $2 billion this year, according to the World Bank.

“We are taking loans to pay partial salaries,” said the authority’s economy minister, Mohammad Alamour.

In the private sector, banking exemptions are a source of uncertainty. Al Arz, an ice cream producer based in Nablus and focusing mainly on the Palestinian and Jordanian markets, imports most of its food ingredients from around the world. The company generally relies on Palestinian-Israeli banking correspondence to transfer money.

“Our suppliers are waiting to see whether Israel will extend the banking-correspondence exemption to ensure we can pay them,” said Zahi Anabtawi, CEO of Al Arz.

The company’s shipments to Gaza have come to a halt since Israel began its military offensive, shutting the company out of a major market. In the West Bank, people are buying less ice cream. Its CEO said the company is now barely breaking even and is moving towards expansion in places like the Seychelles, Mauritius and neighboring Middle Eastern countries that are trying to support Palestinian brands.

“Ice cream is something that is considered a luxury, and people here are buying less of what they don’t need,” Anabtawi said.

The ice cream maker is particularly sensitive about Israeli restrictions on the movement of Palestinians in the West Bank. The temperature of the product needs to be controlled and the ingredients are consumed quickly. The company’s hundreds of employees come from all over the West Bank and are occasionally forced to sleep in the factory during street closures or waves of settler violence.

“Sometimes, when soldiers are searching, they take all our products from the trucks and leave them outside in the sun, so we cannot use them,” said Saed Anabtawi, Zahi’s brother and the company’s factory manager. “Our imports are also delayed and these materials spoil quickly. It’s a logistical nightmare.”

More than 70% of Nablus Soap’s customer base, which promotes traditional Palestinian soap-making methods, is located outside the Palestinian territories and Israel, according to owner Tbeleh. But shipments to East Asia that once took a month now take three months, he said, and late deliveries and high insurance rates have spooked foreign customers, leading some to cancel orders.

“There are delays at every stage of the supply chain, starting from leaving the factory,” Tbeleh said, pointing to the Israeli checkpoint a few hundred meters away, which sometimes led to delays lasting hours. The soap can then be held at other checkpoints. in the West Bank and then in Israeli ports on the Mediterranean or in land transit with Jordan.

The difficulties faced by businesses such as the soap company can have an impact on the economy.

“Before the war, we had difficulty finding workers because we could not compete with Israeli wages,” Tbeleh said. “Now the unemployed are begging us for jobs, but we don’t generate enough income to hire more staff and we certainly can’t hire people from outside the area because of the Checkpoints.”

West Bank workers who used to work in Israel linger on the streets, looking for odd jobs. Once-bustling commercial districts are now quiet. Residents say they are noticing more young people begging, which was previously a rare occurrence.

Imad Kandeel, who lives in Nablus and is a father of four, said he worked in Israel for nine years before his permit was canceled in October last year, most recently earning $65 a day at a bakery in Tel Aviv.

Since then, he has been unable to find work, except for occasional jobs as a handyman or cleaner, working for $15 a day.

Qandeel said she is trying to ensure that all four of her children do not have to drop out of school to provide for their family, as she did in her youth. But opportunities are limited in the West Bank, and he said he did not want to risk sneaking into Israel for under-the-table work, which could threaten his ability to obtain a work permit if restrictions ease.

“The walls are getting closer,” he said. “There is no other option left.”

Suha Ma’ayeh contributed to this article.