Donors hold back on U.S.-led Gaza rebuilding as disarmament stalls

Efforts to finance a U.S.-led plan to rebuild Gaza have stalled as potential donors say they will not commit until Hamas begins to disarm, leaving a White House-chaired reconstruction architecture without secured funding or a set conference date. The impasse underscores how security conditions are driving economic decisions and risks leaving Gaza’s recovery in limbo.

The rebuilding plan, unveiled last month by Jared Kushner and framed as part of former President Donald Trump’s proposal to end the war, hinges on Hamas laying down weapons and Israel withdrawing its forces as disarmament proceeds. The initiative envisions a Board of Peace to oversee reconstruction, chaired by the U.S. President. But two sources with direct knowledge of the Board’s planning say countries are hesitant to pledge money while disarmament talks have not started.

“Countries want to see the funding will go for reconstruction within demilitarized places, and not to throw the money into another war zone,” one of those sources said. “If we pass that obstacle, then funding will not be an issue.” Two other sources familiar with the Board’s planning said a date for a donor conference had not yet been set, and that “in the meantime, we're not waiting for the event. There is discussion one on one,” without identifying specific targets.

A senior European diplomat framed the problem in fiscal and political terms, telling officials that “we need some serious private money ... The Europeans are not capable of funding it,” and noting growing domestic opposition in Europe to large foreign aid outlays. Wealthy Gulf Arab states have also expressed hesitation at financing reconstruction without a broader political solution that includes Hamas disarming, officials said.

Sources close to Hamas said the group has yet to start talks on disarming, which were meant to precede the start of rebuilding Gaza’s destroyed cities. Potential donors voice concerns that disagreements over disarmament could lead Israel to resume full-scale war in the enclave, a fear that has hardened reluctance to make large, upfront commitments.

The pause in pledges comes even as the plan got a logistical boost from the reopening this week of Gaza’s Rafah crossing with Egypt, a development U.S. planners see as easing movement for aid and materials. But analysts warn that logistics alone will not solve the political and financial obstacles.

Commentary published in November by Jonathan Lincoln in War on the Rocks placed the technical scale of the challenge in stark terms: the last major international reconstruction after Gaza’s 2014 war cost about $4.5 billion, while Lincoln described current needs at an estimated $70 billion. He also noted that U.N. Security Council Resolution 2803, enacted last year, authorizes an international administration and stabilization force for Gaza and amounts to a historic endorsement of the U.S.-led plan. Reports cited in that analysis said Azerbaijan and Indonesia have indicated readiness to send troops, while cautioning that Israel will be reluctant to accept forces from countries it views as adversaries or with ties to Hamas.

For markets and aid-dependent sectors, the consequences are immediate. Contractors, insurers and supply chains that would underpin a multibillion-dollar reconstruction face uncertainty in contract volume and payment guarantees. For donors and private investors, the requirement for demilitarized zones raises legal and operational hurdles that increase perceived risk and the need for political risk insurance or U.S. guarantees.

Policymakers face a narrow window to translate diplomatic architecture into finance and security frameworks that reassure reluctant funders. Without clear progress on disarmament and troop-contributor arrangements, officials warn that the pledged financing, public and private, may be slow to materialize, leaving Gaza’s reconstruction ambitions a long-term prospect rather than an immediate recovery plan.