Jerusalem’s Old City Economy Is in Shambles

“Whoever tells me that Jerusalem is fine, I say he is a liar, because Jerusalem is not fine, especially the Old City. I only open my shop in the Christian Quarter to feel that I am alive. In the past five years, so many days go by when no one enters my shop in the Old City. This is not fine; we are in a state of great destruction,”1 a 73-year-old local shopkeeper who sells Palestinian ceramics made in Hebron told Jerusalem Story.

He added that he only opens his shop once a week to preserve the merchandise and light up the dark street during the day. He revealed that he also opens his shop so he can talk to some of his neighbors who might open their shops at the same time. “We drink coffee and sit in front of our shops. Before the afternoon, we close the shops and go home, crying over the state we’ve reached in Jerusalem.”

People who walk on the main street in Haret al-Nasara (Jerusalem’s Christian Quarter) in the afternoon will feel that they are in an empty and disaster-stricken town.

“I spent my entire life in the Christian Quarter and witnessed days and nights when this street never closed its doors, especially during the Jordanian period and shortly after the Israeli occupation, when Jerusalem was the first tourist capital,” said the merchant. “I have never witnessed in my life worse days than what Jerusalem is going through now, and when I walk in its alleys from my home to my shop, I feel that Jerusalem is sad, angry, and alone in confronting the tyranny of the occupier and the failure of the Arabs, Muslims, and Christians alike.”

In Khan al-Zeit, a market in the Muslim Quarter of Jerusalem’s Old City, Muhammad Abd al-Ghaffar, a 46-year-old clothing store owner, strolled through the market with an unusually calm presence, as if he were a visitor and not a shopkeeper. “There is no movement,”2 he said in reference to the shop’s sales, even though his shop is on al-Wad Street, which used to be one of the busiest streets within the walls of the Old City.

The 2023 Gaza genocide has severely impacted local shops in Jerusalem and the city’s economy.

A young bread seller, Raed al-Qabbani, who inherited the profession and bakery from his father, spent decades in the same shop. His shop is extremely small, its area does not exceed one and a half meters, and its height does not allow the seller to do anything but remain bent over. The shop is considered the most famous in Jerusalem’s Old City as it is located at the intersection of Bab Khan al-Zeit and the entrance to Hosh al-Jabsha, which leads to the Christian Quarter. Bread sellers are keen to display their bread at Raed’s shop, as it sells an array of breads, including wheat, white, pita, samuni, and hamam.

Muhammad purchased two loaves of bread: “I was thinking about what I would have for breakfast, since the market is empty, so I headed to the nearby falafel shop, al-Hidmi’s, and bought some falafel. After that, I will buy labneh from the grocery store and eat a tomato from the nearby greengrocer,” he said. “I will not forget to buy some olives and pickles from the pickle seller at Bab Khan al-Zeit, and I will return to my shop to eat breakfast in peace and without any disturbance, as I have not seen our customers since last week, even though hundreds of passersby pass by my shop, but no one is buying clothes,” he added.

Since the start of the Gaza genocide and Israel’s subsequent increased restrictions of entry into Jerusalem and its Old City, there has been a significant drop in the volume of trade exchange and purchasing movement within Palestinian Jerusalem. “This has inflicted heavy losses on the Palestinian economic enterprises in the city, particularly the commercial and tourism-oriented enterprises as well as the transportation sector, which depend on inbound tourism.”3 According to the International Labour Organization (ILO), by the end of May 2024, 87.2 percent of households in the West Bank had reported a decrease in income, and the closures of businesses, particularly in East Jerusalem, “have further weakened the economy, with 80 percent of businesses in the Old City ceasing operations.”4 In all, the Gaza genocide has negatively impacted 98.8 percent of businesses in the West Bank, leading them to “face operational and financial challenges.”5

Additionally, in 2022, according to official Israeli data, 58 percent of Jerusalem’s Arab residents lived below the poverty line, and in 2023, it increased to 60 percent. This figure is significantly higher than the poverty rate among the Arab population in Israel, which was 39 percent in the same year.6

Historically, Jerusalem’s markets and its economy have relied on foreign tourists and local visitors who come to the city to pray at al-Aqsa Mosque and the Church of the Holy Sepulchre. With the successive Israeli sieges, measures, and wars, however, Jerusalem has been losing its visitors. Before Israel’s genocide in Gaza began, in the month of October 2023, about 89,007 tourists visited Israel, which was a 73 percent decrease from the previous year’s 333,005 visitors in the same month. In December 2023, a total of 52,008 tourists visited Israel, which was down from 266,002 tourists in December 2022, indicating an 80 percent decline.7 The city’s residents have also been exhibiting low purchasing power, and they have started to shop at large Israeli shopping malls in Jerusalem or at places in nearby Bethlehem and Ramallah to buy their essential needs at lower prices, instead of shopping at the neighborhood grocery stores in the Old City.

Social researcher, prior director of the Palestinian Center for Nonviolence, and resident of the Old City Nafez Assila explained that poverty is widespread everywhere and to an unprecedented extent among families.

Ziad Hammouri, lawyer and director of the Jerusalem Center for Social and Economic Rights, told Jerusalem Story that one of the greatest threats to businesses in Jerusalem is the annual property tax (arnona); some businesses owe the municipality more than NIS 2 million (about $600,000), making it even more difficult for these shops to continue operations.9

According to statements made to Jerusalem Story by officials who requested anonymity, in the Jerusalem Chamber of Commerce and Industry, the Chamber is doing all it can to alleviate the crisis for merchants in the Old City, particularly by providing grants. For example, the Chamber provided shopkeepers with one-time grants of $1,100, and they are currently working to raise more money to provide additional grants. However, these efforts fall far short amid the economic crisis plaguing the Holy City.10

The Chamber officials added that the number of economic interests in East Jerusalem is about 5,920 establishments, 40 percent of which are involved in tourism, 25 percent in commerce, 25 percent in services, and 10 percent in industry and agriculture.

Moreover, the number of patients referred from the rest of the occupied West Bank to East Jerusalem hospitals sharply declined due to the Gaza genocide, which resulted in a sharp decrease in the income of East Jerusalem hospitals. According to data provided by Makassed Hospital, the hospital’s monthly bill declined from NIS 9 million in September (in the pre-genocide period) to approximately NIS 4 million in November 2023. The Jerusalem Princess Basma Centre, which treats people with disabilities, also indicated that the rate of its visitors declined to approximately 50 percent due to the mobility restrictions during the past two years.11

A simple tour of the Old City reveals that a large portion of its facilities are completely out of service, while others are only partially operational. “The situation in the city is sad, even deplorable, but to whom do we complain and to whom do we turn for help? There is only God, and we are in the Old City only because we consider ourselves the city’s guardians and defenders and that is our job, even if we don’t make any financial profit,” Muhammad said.