Published by Global Banking & Finance Review®
Posted on February 4, 2026
5 min readLast updated: February 4, 2026
US-led Gaza reconstruction faces funding delays due to Hamas disarmament issues, leaving Gaza's population in limbo.
By Rami Ayyub, Emily Rose and Alexander Cornwell
JERUSALEM, Feb 4 (Reuters) - The U.S. has yet to secure funding commitments for its Gaza reconstruction plan as potential donors voice concerns that disagreements over Hamas disarmament could lead Israel to resume full-scale war in the enclave, sources told Reuters.
Hamas laying down its weapons is a key requirement under Donald Trump's plan to end the Gaza war. It calls for Israel's military to withdraw troops as Hamas disarms and for Gaza's reconstruction to be overseen by a "Board of Peace" chaired by the U.S. President.
Trump's plan got a boost this week with the reopening of Gaza's Rafah border crossing with Egypt. But sources close to Hamas say the group has yet to start talks on disarming, meant to precede the start of rebuilding Gaza's destroyed cities.
Two sources with direct knowledge of the Board's planning said that countries were hesitant to commit funds to a rebuilding plan unveiled last month by Trump's son-in-law, Jared Kushner, until Hamas disarms.
"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 the sources said.
"If we pass that obstacle, then funding will not be an issue."
NO DATE FOR FUNDING CONFERENCE, SOURCES SAY
Seven Western diplomats told Reuters that the funding holdup, which has not been previously reported, was also being driven by a demand by some potential donors for funds to be managed by the United Nations rather than the Board of Peace.
The funding delay leaves Gaza's devastated population in limbo, unable to begin clearing rubble or rebuilding basic infrastructure, and feeds into worries among U.S. allies that a fragile October truce, shaken by repeated Israeli attacks in Gaza, could break down and lead to a resumption of heavy fighting between Israel and Hamas militants.
Alongside governments, potential donors could also include private sector contributors, the diplomats and the two sources said. They estimated the potential rebuilding cost to be in the range of $100 billion.
That money would fund a "New Gaza" rebuilt from scratch to include seafront residential towers, data centres and industrial parks, Kushner said at the World Economic Forum in Davos on January 22.
The plan does not call for compensation for Palestinians who saw their homes destroyed. Two of the diplomats said that it was not clear how the "New Gaza" plan would address land rights.
Kushner said in Davos that an event would be held in Washington in the coming weeks "where we'll announce a lot of the contributions that will be made ... from the private sector."
But the two sources familiar with the Board's planning said a date for that conference had not yet been set.
"In the meantime, we're not waiting for the event. There is discussion one on one," one of the sources said, without identifying specific donor targets.
A senior European diplomat said that no European or Western country had yet committed funds for Gaza's reconstruction.
"We need some serious private money ... The Europeans are not capable of funding it," the senior European diplomat said, citing fiscal constraints and growing domestic opposition within Europe to foreign aid spending.
Wealthy, oil-rich Gulf Arab states have expressed hesitation at financing Gaza's reconstruction without a broader political solution that includes Hamas disarming.
Representatives for the Board of Peace and for its Palestinian technocratic committee did not immediately respond to requests for comment for this story.
'PEACE AREA PRICING'
After a two-year Israeli assault that left most of Gaza in ruins and Hamas weakened, the group is still believed to possess rockets, which several Western intelligence sources estimate to number in the hundreds. It is also estimated to possess thousands of light weapons including rifles.
Senior officials in Israel, which launched the assault after the October 7, 2023, Hamas attack, say they do not believe Hamas will lay down its weapons without the use of force and that the military is preparing to return to war.
The first phase of Trump's plan left Hamas in control of a bit under half of Gaza, where the group polices streets and has reestablished its hold. Israel accuses Hamas of planning or attempting to carry out attacks on its troops, prompting strikes that have killed hundreds.
Hamas has agreed to discuss disarmament with other Palestinian factions, but neither Washington nor regional mediators had presented the group with any detailed or concrete disarmament proposal, two Hamas officials told Reuters.
One of the sources with knowledge of the Board's planning said it would be difficult to secure private sector financing without at least some progress toward disarmament.
"We came to the conclusion that if you really want to (rebuild) with the full spectrum of financing, you need peace area pricing," the source said, suggesting the cost of financing would be risk-adjusted to the level of security in a given area.
"Now it doesn't mean that we wait for the full process to be done, but we want to see that it's really happening with full cooperation."
One of the first tasks will be clearing an estimated 68 tonnes of rubble and war debris in Gaza. The Board of Peace was in talks with several parties to award potential rubble clearing contracts, the source and a U.S. official familiar with the matter said.
Several rubble clearing contracts could be awarded, the source said, adding that the aim is for tenders and the awarding of contracts to eventually be managed by a Palestinian technocratic body overseen by the Board.
(Editing by William Maclean)
Hamas disarmament refers to the process of Hamas, a Palestinian militant organization, laying down its weapons as part of peace negotiations and agreements aimed at reducing violence and enabling reconstruction efforts.
A funding environment refers to the overall conditions and factors that influence the availability and accessibility of financial resources for projects, investments, or initiatives, including economic stability and donor willingness.
Reconstruction funding is financial support provided to rebuild and restore infrastructure, housing, and services in areas affected by conflict, disaster, or significant damage, aimed at facilitating recovery and development.
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