GAZA CITY, Gaza Strip — The fragile Palestinian economy in the Gaza Strip has been drawn into a deep crisis in the wake of the Russian-Ukrainian war, which has caused price hikes, confusion in local fees and taxes imposed on goods, and lower public sector employees’ salaries.

The Hamas movement, which has been in control of Gaza since 2007, has recently adopted several measures to tackle this increase in prices. Back in June, Hamas started off by reducing taxes on basic commodities such as cooking gas, but it was not long before this measure backfired and led the movement to grapple with a stifling financial crisis, while it mainly relies on local taxes to cover its expenses.

To compensate for the reduced taxes on basic commodities, Hamas imposed new taxes on other goods such as imported clothes, and is considering slashing a bigger percentage of the salaries of its approximately 40,000 government employees, which has deepened the crisis instead of solving it.

Since Egypt demolished in 2013 the border tunnels with the Gaza Strip on which Hamas relied to smuggle goods and cover its finances, government employees have been receiving only 60% of their monthly salaries.