While the current state of the Palestinian economy is nowhere near as bad as one might think from reading the Western press, writes Hillel Frisch, it is beset by serious problems:

According to the standards of the World Bank, West Bankers are middle-class and Gaza residents lower-middle-class. [But] it is a matter of serious concern that neither in Gaza nor in the territory controlled by the Palestinian Authority is [there] a functioning domestic economy. By far the most important element propping up Palestinian economic welfare levels is financial aid [from] donors such as USAID, the EU, and church-related organizations, which underwrites roughly one-third of the [Palestinian] gross national product in the West Bank and considerably more in Gaza. . . .

[T]he substantial economic aid the PA receives from the EU, USAID, and individual EU member states enables it to reward incarcerated terrorists, terrorists released from prison, and the families of terrorists both living and dead with generous stipends and financial support. . . . Such support acts as an incentive to commit acts of terrorism and lowers deterrence against those who would commit such acts even without incentives.

Yet the problem is even broader. The most important group of actors on the Arab side—the PA, its militia Fatah, and Hamas—have perfected a deadly political economy rather than built a functioning one. It is the use of force, or the threat of the use of force, that assures the flow of aid from international actors, many of whom want to pacify the situation. The [donors] thus become accessories to a form of protection racket that demands, “Support me or I’ll attack Israel and its Jewish citizens.” The EU, anxious lest Israel retaliate and create a refugee problem whose imprint will be felt in Europe, plays the game and pays up.

Unfortunately, this state of affairs will only worsen if a Palestinian state comes into being. Why is this? Because manufacturers in the PA and Gaza are shut out from their most important markets: Jordan and Egypt.

Surveying news websites and social media on Sunday morning, I immediately found some intelligent and well-informed observers arguing that Iran deliberately warned the U.S. of its pending assault on Israel, and calibrated it so that there would be few casualties and minimal destructiveness, thus hoping to avoid major retaliation. In other words, this massive barrage was a face-saving gesture by the ayatollahs. Others disagreed. Brian Carter and Frederick W. Kagan put the issue to rest:

The Iranian April 13 missile-drone attack on Israel was very likely intended to cause significant damage below the threshold that would trigger a massive Israeli response. The attack was designed to succeed, not to fail. The strike package was modeled on those the Russians have used repeatedly against Ukraine to great effect. The attack caused more limited damage than intended likely because the Iranians underestimated the tremendous advantages Israel has in defending against such strikes compared with Ukraine.

But that isn’t to say that Tehran achieved nothing:

The lessons that Iran will draw from this attack will allow it to build more successful strike packages in the future. The attack probably helped Iran identify the relative strengths and weaknesses of the Israeli air-defense system. Iran will likely also share the lessons it learned in this attack with Russia.

Iran’s ability to penetrate Israeli air defenses with even a small number of large ballistic missiles presents serious security concerns for Israel. The only Iranian missiles that got through hit an Israeli military base, limiting the damage, but a future strike in which several ballistic missiles penetrate Israeli air defenses and hit Tel Aviv or Haifa could cause significant civilian casualties and damage to civilian infrastructure, including ports and energy. . . . Israel and its partners should not emerge from this successful defense with any sense of complacency.