The political economy of asymmetric warfare: Unpacking the enduring conflict dynamics between Israel and Hamas

This paper examines the persistence of asymmetric warfare in Gaza and its embeddedness within the broader Israeli-Palestinian conflict through a Neo-Institutional Political Economy (NIPE) framework. Hamas, as the governing authority in Gaza since 2007 and the self-designated vanguard of Palestinian armed resistance, is the primary non-state actor under analysis. The main thesis is that the conflict continues not so much because of military imbalance, but because of institutional asymmetry - differences in fiscal capacity, institutional structures, revenue systems, and access to external patronage. The study is of a structured qualitative nature with a case-study design that includes secondary macroeconomic, fiscal and defence data, and process tracing of key escalation cycles from 2007 to 2024. Israel's unified sovereign institutions, multiple taxation, sovereign debt, and external security support allow for capital-intensive deterrence and buffer against repeated shocks of conflict without systemic economic disruption. Hamas, on the other hand, runs Gaza under blockade conditions, with limited sovereignty, high aid dependence and limited revenue capacity. These limitations force Hamas to pursue low-cost, labour-intensive, attritional warfare in order to survive as an organisation, not as an equal military force. At the same time, the blockade undermines the productive economy of Gaza, and strengthens the ability of Hamas to control the limited resources of the territory, which it does in a coercive manner. The main argument of the paper is that the persistence of conflict is the result of a structurally stable but unequal balance between two institutional orders with different cost structures and survival logics.