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Hello and welcome to World Business Report from the BBC World Service.
I'm Roger Hearing and on this edition, as a ceasefire is announced between Israel and Hamas, we're going to look at what can now be rebuilt from the rubble of the Gaza Strip.
What should be the first things to reconstruct to help the two million inhabitants?
How much will it cost and who will pick up the tab?
We'll be hearing from the head of the United Nations Development Programme.
And one other story.
Just ahead of Donald Trump's inauguration, U .S.
banks announced bumper earnings and U .S.
inflation still seems to be in check.
What will that mean for the Fed's interest rate policy?
But first, a deal's been reached between Israel and Hamas to end the fighting in Gaza and secure the release of Israeli hostages.
The Prime Minister of Qatar, which had been a key mediator, said the agreement would take effect on Sunday.
Celebrations have erupted across the Gaza Strip where Palestinians have endured 15 months of war and destruction.
Pictures from Khan Yunis and Deir al -Bala showed people cheering and waving Palestinian flags.
And, of course, there was much joy from people living in Gaza.
I can't find words to express my feelings.
Mixed feelings of sadness for those we lost, more than 70 ,000 matallas, more than 110 ,000 wounded and 400 ,000 destroyed homes.
At the same time, I feel an indescribable joy for the end of this massacre because with every second that passed we were afraid that we would be bombed.
Thankfully, this is over.
We hope that it will end forever and that joy will spread to every home in the Gaza Strait.
I will set up the tent in front of my house and wait for the reconstruction.
I introduced last spring.
You know, those of you who have followed the negotiations can attest the road to this deal has not been easy.
I've worked in foreign policy for decades.
This is one of the toughest negotiations I've ever experienced.
I've reached this point because of the pressure that Israel built on Hamas, backed by the United States.
That was President Biden.
In Israel, feelings aren't pretty mixed.
The president, Isaac Herzog, said aspects of the deal were deeply painful, but that it had to be seized.
As the president of the state of Israel, I say in the clearest terms, this is the right move.
This is an important move.
This is a necessary move.
There is no greater moral, human, Jewish or Israeli obligation than to bring our sons and daughters back to us, whether to recover at home or to be laid to rest.
President Herzog. So if the ceasefire holds, how long will it take to rebuild Gaza from the rubble?
What would be the priorities?
How much would it cost?
And who will pay? I've been speaking about all this to Professor Yara Asi of the Arab Center in Washington.
We know that more than 90 % of homes have been destroyed.
Every university, most schools have been damaged or destroyed.
Almost no hospital has been spared from destruction.
all the arable land where they were able to grow crops has been destroyed primarily, almost all livestock has been killed or slaughtered.
So this is tens of billions.
There was an estimate in the early fall that it would be about 80 billion, undoubtedly more now.
Rebuilding a society from the ground up, not just homes, but as you noted, everything required for a society, mosques and schools and hospitals and everything else, and roads even.
And the money, you mentioned the money there, and I know you've written and looked at this even before this all happened, way back in 2021, the way in which past attempts to rebuild, reconstruct after periods of destruction, the money just didn't come through as pledged or wasn't used or got wasted
or went in corruption.
I mean, what happened?
There's a lot of reasons, as you know.
So this is not the first time Gaza has seen wide scale destruction.
Of course, this is unprecedented much more than we've seen in the past.
But typically what will happen in these settings is many external countries from the Gulf to Western nations through UNRWA and other NGOs will pledge hundreds of millions, billions of dollars for reconstruction.
Some of that money will actually get delivered.
Many of it will not simply because a lot of countries over -promise, under -deliver.
And there's also a lot of humanitarian crises that are pulling these countries in multiple directions, looking at Syria, for example.
so aside from that the Israeli restrictions on what can be imported into Gaza which as far as I know will maybe still hold after the ceasefire really delay a lot of projects such that many donors give up or they are not able to import the kinds of equipment for example hospital equipment that really
allows facilities to serve the purpose so aside from the money there's all the questions about what will the import restrictions look like will Israel maintain control of the reconstruction process, as it has done essentially since 2014 with the Gaza reconstruction mechanism.
And yeah, I mean, you can't rebuild to this scale without a long term plan of how much money there will be and how that money will be spent.
So if history gives us any indication here, we really have no idea even of what is pledged.
And I believe the U .S.
Secretary of State, Tony Blinken, has indicated he has some sort of rebuilding plan that he will announce maybe next week, where will the money come from?
Will countries who will pledge now in the immediate aftermath of this be in for the long haul of the years or potentially decades that it will take for rebuilding to really happen?
And I suppose there's also the feeling, which I know has happened in the past, I've travelled in cars and myself many times, there have been many attempts in the long distant past to try and rebuild and it gets destroyed.
So you can, I suppose, understand nations saying, well, do we throw good money after bad?
Do we attempt to rebuild when it might get knock down in six months, a year or two years time?
100%. We've literally heard donors saying we did all the we spent all the money, we did all the permits to build this greenhouse to support this hospital to, you know, fund this school.
And time and time again, we see it destroyed.
The reality is the ceasefire is just the first step.
Without a political resolution, preventing this from ever happening again, there is no guarantee that it won't.
Yara Arsi there speaking to me earlier, but how far then will the international community be prepared to help with this enormous reconstruction task?
Well, joining me from the UN headquarters in New York is the head of the United Nations Development Programme, Achim Steiner.
Mr. Steiner, thank you so much for being with us here on World Business Report.
Yara Arsi was talking there about a need for a long -term plan.
She's suggesting perhaps the americans have one does the undp have one thank you for having me and let me also um echo what has today i think been a universal moment of relief that the killing is coming to an end hostages can be released and we are now able to talk about a ceasefire plan and where i
think the united nations the international community undp are very much working hand in hand is first of all a 100 day response because the most urgent um needs right now are humanitarian You have heard the Secretary General today appeal to the international community and to all parties that we need
to rapidly scale up humanitarian aid.
But as your previous speaker highlighted very well, the extent and the scale of destruction is on a level that not only has set back Gaza in particular by decades in terms of its development, I mean, it will take years to rebuild and that early recovery phase that would follow an initial response and then a reconstruction phase
will indeed be rolled out over a number of years.
I think the international community and we in the United Nations Development Programme as part of the UN system have been very much focused on preparing the pathways here together with the Palestinian Authority and the international donor community.
So that's the point at which we are.
So you actually have a plan in place.
You said you have been working on this in the last, I suppose, 15 months to see what could be rebuilt.
Well, first of all, we have been monitoring from a socioeconomic perspective what the impact of the conflict is, the level of destruction.
And there will be another report that will be issued in the very near future between the World Bank, the United Nations and the European Union on the physical destruction, first of all, of infrastructure.
As you heard just now, we have been trying to assess the degree to which early recovery activities would enable people to, first of all, be able to survive.
We need to bring in, for instance, solar power, water treatment plants.
There is no clean drinking water anymore.
Sanitation, the removal of solid waste, which is creating major health hazards.
These kinds of activities have been mapped out and can be undertaken and scaled up very quickly.
The next step would then be to prioritize what kind of infrastructure.
And let me just give you one more number.
We estimate right now that there are 40 million tons of rubble.
Just the ability to remove that rubble, including unexploded ordnance, is another illustration of the scale of effort we need in order to begin to be able to talk about reconstruction.
And all these are areas in which we have planned.
And all this is going to cost a lot of money.
I mean, I've heard a few months ago, it was about $80 billion to do anything proper on this.
I mean, what sort of numbers are we talking about there?
And where will the money come from?
I think the number you just mentioned is an order of magnitude that is most likely to be over a longer period of time.
You're probably talking about a decade here.
The level of investment that will be needed.
Now, let us be very clear.
Some of this is emergency humanitarian aid.
Some of this will be early recovery and reconstruction support from the region, from the international donor community.
And then we will also have to see how the private sector can be a significant partner in actually investing and rebuilding the infrastructure that would essentially allow 2 million Gazans to begin to operate again.
But yes, this is sadly and brutally the cost of war.
It is an extraordinary financial cost on top of the whole human tragedy.
And I think we need to be very practical and very clear -eyed about this.
What has been destroyed here is decades of infrastructure, development, livelihoods, economy, 90 % of the population displaced, more than 75 % probably living in extreme poverty.
That's the departure point for actually rebuilding and reconstructing a foundation for two million gazans.
But to come back to my point, Mrner, again, the problem is who is going to pay for this?
Because when I was speaking to Yara Asi, we were talking about the fact that in the past, people have promised money, not delivered it.
They've also perhaps been put off by the threat that it may be destroyed, whatever it is they build.
I've seen in Gaza myself the ruins of airports that was being built at one point, a seaport, even a club Mediterranean that was being built at one point.
I mean, this is not an encouragement for people to put money in.
No, you're absolutely right.
But I think the counterfactual is not to say, well, let's just leave it as it is.
It is politically unviable.
It is from a humanitarian point of view impossible.
And I think ultimately, from a political pathway forward, it is quite clear, unless the population of Gaza can rebuild and actually people can sustain themselves and earn a living and have a livelihood, this is an untenable situation.
Now, the international community, including in the region, has stepped up in the past and a lot of conversations have happened over the last few months.
I would expect that there is, in fact, a willingness, given the extraordinary nature of this whole drama and tragedy over the last 15 months, that the international community will step up with financing, with technical support.
and as the secretary general has committed today the whole united nations family is ready to play its part in this but we do indeed depend on the financing and the support from that international community and you mentioned just now about it's not just living if you like there's livelihoods to be made
you need to re -establish an economy don't you i mean that is quite a challenge in itself absolutely and as your previous speaker already demonstrated so well what has happened in Gaza is essentially a total destruction of an economic infrastructure, starting with schools and hospitals, but also water
treatment plants, the sanitation system, the power system, the communication system.
We are literally talking about an infrastructure reconstruction rehabilitation project for two million people.
And that is the scale of rebuilding an economy.
In that sense, yes, it is across all sectors and it touches every aspect of a community's livelihood.
Do you expect that this will happen anytime soon?
You talked about the need for humanitarian emergency aid, if you like, to start with, but the process will be a long one.
If you and I were talking in two to three years' time, would you expect that there will be hospitals, schools, business going on, that there will be ways of the Ghazan people being able to survive economically?
do you expect that will happen is it feasible yes we have done it before and never on the level of destruction that you have seen now but there are two enabling conditions one access is fundamental one of the greatest frustrations over the last 50 months as you and your listeners know is that the international
humanitarian community struggled to have access to gaza and the population so many restrictions, so many constraints, and most recently, such a lack of security.
So that is the first enabling condition.
And the second one is obviously to have the ability to quickly have the financing to invest.
But can I imagine a Gaza where schools and hospitals begin to operate again in two to three years time?
Absolutely. It's been done before.
And I think with everything that has now happened there is a commitment to support that kind of rapid recovery but let me be very clear those are the first schools the first hospitals there is no way that even in five years time would you be even close to where gaza was 15 months ago akim steiner thank
you so much for speaking to us that was the head of the un development program speaking to me there from new york well i suppose one would reach perhaps for seeing if there is a precedent for dealing with Gaza, because their destruction is on such a scale, it makes many people wonder if these things
are possible. Joining me now is someone who has studied this kind of project and the history of it, Mark Gerzombrek, who's an architectural historian professor at the Massachusetts Institute of Technology.
Mark, thank you for being with us here on World Business Report.
That number, 42 million tonnes of rubble, which has been mentioned a couple of times.
I think you were the one who came up with that, but it's...
I don't know. I mean, it's...
You've studied what happened after World War II.
Perhaps that's, you know, Europe in those days.
Some of the pictures, I suppose, the destruction in places like Berlin might approximate to what's happened.
What lessons should we learn?
Well, yes, thank you for the invitation to speak here a little bit.
And I was just listening to Mr.
Steiner's very optimistic, you know, tone, which I welcome and I hope eventually does come true.
But the question, if you want to think about, you know, what we've done it before, and maybe he was referring to Europe, but there's some big differences.
The rebuilding efforts after World War II were grounded in the reindustrialization of the local economy.
There's nowhere in Gaza do they make steel or cars or refrigerators.
There's no large industrial base, right?
This is a place where it exports fish and citrus fruit and the like or labor.
So unlike Europe, you can't start rebuilding the factories.
So what is the industrial infrastructure that he was talking about is not very clear.
Also, unlike World War II, the Allies found companies and political leaders in Germany and Italy and other places that they could work with.
In Gaza, who's going to vet these people?
Is it Hamas or the Egyptians, the Israelis, the Saudis?
There's going to be a big problem of finding the people on the ground who you will work with that will be suitable to the various players and not produce all sorts of complications and problems on its own.
Yeah and Mark I mean one of the things too it strikes me and I said I've been to Gaza a few times it's a very small area of land really and if you're going to rebuild you kind of have to move people around I mean where are people going to just live in the next few days in the next few years as rebuilding
takes place? That's right There will be all sorts of internal displacements, you know, required by the rebuilding.
So, you know, you've got to, you can't just rebuild that one house, right?
You're going to be rebuilding vast areas.
And so those people are going to have to be housed somewhere, right?
And the rebuilding itself is not going to happen, you know, in a few months, right?
It'll take a couple of years.
and then as I'm sure we've already seen in Iraq there'll be accusations of corruption and all sorts of strange things happening and it's not going to be a very pretty picture so it'll be one that will create all sorts of antagonisms and you know the question is can we as an international community not just
do the right thing but can we deal with all the vortexes of problems that are going to come up.
And you're really talking about a new environment almost I mean you talked about political leaders and how that helped after the war in in europe you kind of need to have a different a different way of dealing with things in order to progress this forward don't you have to build these institutions metaphorically
in order to build the institutions actually yes absolutely and you know um you know one thing that um you know um steiner addressed was you know the role of the israelis and my feeling is that this is not going to happen until the israelis understand that this rebuilding operation is part of a national
conversation that they need to have.
It's not just an international community ready to jump in.
The Israelis themselves have to develop a national consciousness about the rebuilding effort for it to really work.
And at the moment, of course, they're not likely to do this anytime soon.
Mark, thank you so much for being with us.
Very interesting insights into what could happen in the years ahead.
Mark Jazon back there from Massachusetts Institute of Technology.
You're listening to World Business Report from the BBC World Service.
Well, let's turn our minds to what's been happening elsewhere outside Gaza.
Of course, the markets have been moving on.
Susan Schmidt, Portfolio Manager at Exchange Capital Resources in Chicago, joins me now.
Susan, thanks for being with us.
I guess the most interesting thing, in a way, was the inflation read in the U .S.
and its implications for, I guess, the beginning of the Trump presidency.
and a sense of perhaps what the Fed might do in terms of interest rates.
Yes, and today's inflation reading from the CPI, that's the Consumer Price Index, was really important for investors to see.
The war on inflation has been stalled out.
We haven't seen a decrease in that number since July, but today we did actually see it drop down from a 0 .3 % month -over -month change that increased now to a 0 .2%.
It may sound small, but investors are taking a great deal of comfort in that number and using that to assume that the Fed is feeling good about their path and having success with the current plan and won't need to increase interest rates because they're not making progress with inflation.
And yet inflation, as we know, is a threat still.
And some say that if the Trump administration goes ahead with the tariffs it's been talking about, tariffs on goods coming into the U .S., that might be inflationary.
So I guess the Fed's got to bear that in mind, too.
They do. Now, remember that the Fed has publicly stated many times their target inflation is 2 percent.
We're still at 3 .2 percent over the last 12 months in the U .S.
And if Trump does institute tariffs, that is going to cause a one time increase in prices.
So it is still quite a tricky dance for the Fed and interest rates and knowing what will happen in the economy.
But investors are taking some comfort from this latest very small decline, but at least movement in the right direction.
Well, stay with me for a moment, Susan, because I want to bring in Lannan Nguyen, who is Reuters US finance editor.
Because, Lannan, you've been looking at what's been going with the banks, because we've had a very interesting day, a very welcome day, I guess, for the likes of Goldman Sachs, Wells Fargo, Citibank and JPMorgan Chase, all announcing bumper earnings above expectations and their shares really shot up.
And bank CEOs in the talk about the earnings, which they do, kind of suggested it's all to do with Trump administration coming in, deregulation, tax cuts.
This is all going to help in the future.
Lalanne, is that really the general feeling across Wall Street now?
Hi, Roger. Well, yes, I think the Trump bump is really helping to boost sentiment, but banks have been having a better time over the last few months as dealmaking and trading activities have really gained momentum.
So, over the last couple of months in particular, the banks have really benefited from that.
And that's really helped to lift JP Morgan's profits, for instance, the annual profits, to an annual record.
And we did see the stocks of the banks rising in some cases more than 6 % today.
So, it really is a more optimistic tone building on top of a strong economy that's helping to boost activity in the banks themselves.
So, I mean, in terms of regulation things, are they envisaging perhaps the stress testing that we saw so much, of course, after the 2008 financial crisis?
Some of that's going to go away, which allows the banks to do more of what they want to do.
Certainly, the lobbying efforts have been very, very strong over the last year, and we expect that that will continue.
And as the Trump administration comes in, we are hearing more sort of sympathetic noises.
and the banks are very optimistic that they're going to be able to roll back some of the regulations that they say are too onerous, too bureaucratic and holding back lending into the economy.
And Susan, when you look at Wall Street, do you see financial stocks then really looking at being one of the healthiest sectors now as we go forward?
They certainly have been in recent months.
And since we saw Trump win the nomination and we expect him to take over the presidency, financial investors have done quite well and have focused on bank stocks as being winners from the new Trump administration, knowing that there's likely to be less regulatory oversight and less onerous restrictions
put on them. And I suppose the obvious point is if interest rates come down, as there is some expectation that they will continue to do, that actually doesn't help with the banks so much because obviously they make money from interest.
Is that being weighed in as well?
That is being weighed in.
But there is always a balance for banks when interest rates come down, that is also a stimulative factor in the economy.
It makes it cheaper to borrow, and that enables consumers and businesses to borrow money in order to do the things they want to do, like buy goods or invest in their businesses.
So it is always a push -pull for the banks.
When interest rates are high, of course, they earn more from interest.
But if interest rates are lower, that might actually juice the economy and spur more activity.
And we can't talk about, I guess, what's going on in the financial sector ahead of the Trump presidency without perhaps referring to cryptos?
I mean, he's given signals very much that cryptos are something he favors.
Are the banks rubbing their hands with glee at this?
I think the banks are cautiously optimistic about this.
But, you know, the devil is always in the detail.
We need to see who the new regulators are going to be and what policies are going to be implemented.
But of course, the optimistic tone from the administration about crypto is getting people in the crypto community, as well as the banks kind of excited about the business opportunities here.
And Susan, in more general terms, Wall Street worried about crypto coming in.
It's one of those things people like but are wary of.
I think investors are wary of it.
There's certainly a subset that's very positive on crypto.
As it relates to the larger banks, they've taken a cautious approach on this.
I think it's a wait and see.
And while we expect President Trump to be supportive of crypto, everyone is, as we said, waiting for the details on how that will actually plan and play out.
And, Lanham, we know a number of bank CEOs are going to be turning up at the inauguration.
They'll be clapping, I think, perhaps, with perhaps more than usual glee, do you think, of what happens on Monday?
Again, we'll have to see.
They are very cautious, but enthusiastic about the potential for rollback in regulation, the pro -business agenda that Trump has been talking about.
And, of course, they'll also be going to Davos, where, you know, Reuters will be on the scene to catch any of the vibes there from the bank CEOs.
I'm sure you'll be keeping us very well informed.
It'll be very interesting to hear what the background talk on all that is.
Lannan, thanks so much for being with us.
Lannan, you're in there.
Reuters, US Finance, editor of my thanks.
Also, of course, to Susan Schmidt, Portfolio Manager at Exchange Capital Resources in Chicago for giving us a sense, really, as we move towards Monday, what the financial world is thinking will happen in the next four years under President Trump.
But that's it from World Business Report.
Thanks for being with us.
Bye -bye.
